RightCapital is designed with flexibility in mind, empowering you to adapt your approach for each client. For many clients, a crucial piece of this puzzle is risk assessment. How much uncertainty is a client willing to endure to achieve their financial goals? With RightCapital's Risk module, questionnaires, and scoring system, you can help clients better understand their own tolerance for risk and bolster their confidence in your individually tailored recommendations.
Key Takeaways:
See HouseholdRisk Scores, Current Portfolio Risk, and Risk Assessments for all of your client households in the Advisor Portal > Risk > Summary tab.
View and create personalized Risk Assessment Questionnaires for your clients in the Advisor Portal > Risk > Questionnaires tab.
Enable, create, and customize your own Risk Tolerance Categories in the Advisor Portal > Risk > Categories tab.
Risk is available on both the Premium and Platinum subscription tiers. If you are interested in upgrading your account, please reach out to sales@rightcapital.com.
For premium and platinum subscribers, the Risk module can be found in the top menu bar of your Advisor Portal. This is where you can view a summary of your clients' risk metrics, create risk tolerance questionnaires, and customize your risk categories:
A client-specific Risk tab can also be found in the Investment module within each of your client plans. This is where you can assign that client a questionnaire to complete, set the personalized risk score for that household, and analyze the risk of their current portfolio:
Looking for the Investment > Risk tab?
This article will provide an overview of the Risk module in the Advisor Portal. For more information on the Client-Specific Risk Tab, click here.
The Risk > Summary > Household tab is where you can view key risk information for all of your client households, all in one table. All of your clients will be displayed here by default, but you can filter by client group using the dropdown in the upper right:
From left to right you will see the client's name and group, followed by:
Allocation: The Equity / Fixed Income split for that client's current portfolio (i.e. all non-annuity investments entered into the Profile > Net Worth section).
Current Portfolio Risk: The risk score for that client's current portfolio. Current portfolio risk scores range from 1 to 100, and are calculated based on the standard deviation of that client's investment portfolio.
Last Assessment Date: The date in which that client most recently completed a risk tolerance questionnaire.
Risk Score: The personalized risk score for that household, set by the advisor in the Investment > Risk > Score & Assessments tab of that client's plan. Risk scores range from 1 to 100, and represent that client's personal risk tolerance.
Difference: The numerical difference between that client's assigned risk score, and the current portfolio risk score.
Curious about RightCapital's Risk Scoring System?
For more details on how Risk Scores are calculated for a client's portfolio, click here.
The Risk > Summary > Portfolio tab is where you can view the risk score and category for each of your model portfolios. This includes custom model portfolios created in the Models > Portfolios tab, as well as any models that have been imported via a 3rd party integration such as Nitrogen:
From left to right you will see the model name, allocation, return, and standard deviation, followed by:
Downside: The annual downside potential of the portfolio, as a percentage.
Upside: The annual upside potential of the portfolio, as a percentage.
Risk Score: The risk score for that model portfolio. Risk scores range from 1 to 100, and are calculated based on the standard deviation of the portfolio.
Category: The risk tolerance category that your portfolio falls into, based on the risk score of the portfolio and your customized risk category bands. *This column will only be displayed if risk tolerance categories are enabled in the Risk > Categories tab.
Upside / Downside Annual Percentages:
The upside and downside percentages are based on a 90% confidence interval, and are calculated using the total return and standard deviation of each portfolio.
The Risk > Summary > Assessments tab is where you can view risk assessment/questionnaire information across your entire book of business. See when questionnaires were completed, which questionnaires are still in progress, and which clients have never been assigned a questionnaire:
Using the dropdown menus above the table, you can sort by client household, by questionnaire, or by assessment status. You can also use the toggle arrows next to each column header to re-order the results. Launch directly into the Score and Assessments tab of a client plan by hovering over a client household, and clicking the 'Open Client' button to the far right:
Every RightCapital account will already have a 'Default Risk Assessment' questionnaire that is available for use. This is the 13-Item Risk Tolerance Scale, developed by Dr. John Grable & Dr. Ruth Lytton. The Risk Values for each response have been adjusted to fit RightCapital's 1-100 risk scale.
To create a new questionnaire, click the Add Questionnaire button in the upper right. This will create a blank slate draft titled "New questionnaire". You can also make a copy of an existing questionnaire, by clicking the downward-facing arrow next to this button and choosing "Copy Current":
Rename your questionnaire by clicking the Pencil & Paper icon to the right of the questionnaire name. An optional introduction can be added within the text box below the title. Remember to click the Blue Checkmark icon to the far right of each text box to save your changes.
To begin adding questions, click the + Add Question button on the right side of the page. This will open a drawer on the right side of your screen, where you can enter your question and add your responses:
You can add up to 10 responses per question. Each response must be given a corresponding Risk Value- higher values equate to a higher risk tolerance, while lower values indicate a more conservative stance. For the most accurate results, questions and responses that signal a higher tolerance for risk should be weighted more heavily with higher risk values.
After completing your questionnaire, click Publish in the lower right to move that questionnaire from the 'Draft' stage, to the 'Published' stage. You will then be able to use that questionnaire within each of your client plans.
Curious about Risk Questionnaires?
Feel free to take a look at our other resources, which provide deeper dives on:
The Risk > Categories tab is your opportunity to align RightCapital's risk scoring system with your unique perspective on risk. By enabling this tab, you will have the ability to create custom risk tolerance categories:
After enabling Risk Tolerance Categories, you will be able to see the risk category for each portfolio in the Risk > Summary > Portfolio tab of the Advisor Portal:
You will also be able to see an additional "Household Risk Classification" chart within the Investment > Risk > Summary tab of each client plan:
Keeping the Categories tab disabled will hide the elements shown above. Risk categories are an entirely optional classification, and can be toggled on or off at any time.
To create a new category, simply hover your mouse over the chart and click. Drag and drop each band along the chart to determine the upper and lower thresholds for each of your categories. Up to 10 categories can be added:
Categories can be renamed via the 'Category Name' column beneath the chart. To delete a category, hover your mouse over that category and click the 'x' icon that appears to the far right:
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