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For financial advisors, risk tolerance assessment is not a new concept. For several decades, investment professionals have been working with their clients in order to determine the amount of risk they should be taking with their investments. However, risk tolerance assessment software is a relatively new tool in the investment management industry. There are several software tools available for advisors to choose from, but Tolerisk® stands out amongst the rest for a wide variety of reasons.

The Tolerisk® Difference: Choosing the Right Risk Tolerance Assessment Software For Your Firm

• Computes both willingness and ability to take risk — Competitors offer more simplistic assessments that primarily evaluate personality traits. Tolerisk® uses a scientific computation that evaluates the non-linear relationship between the willingness and ability for clients to take investment risks.
• Computes the probability of running out of money – Tolerisk® incorporates all cash-flows, personality, and 1000+ historical scenarios, along with mortality probability curves. This highly sophisticated analysis even includes second to die mortality probability. While the math behind the scenes is complex, the output to the client is VERY simple!
• Monitors for inconsistency — A risk tolerance assessment questionnaire asks clients a variety of questions in order to determine their risk level. Most questionnaires use a basic evaluation formula, and do not account for inconsistencies in answers. Tolerisk®, on the other hand, identifies inconsistent answers. This allows advisors to discuss those inconsistencies and revise when appropriate.
• Computes risk level over time — The reports generated by Tolerisk® will not only identify the current risk level, but also the likely evolution as the years go on.
• Customizable — All cash-flows can be completely custom tailored to each client’s circumstances.       This includes savings across 3 different tax status, capital expenditures, capital inflows, and retirement income.
• Customize reports— Financial advisors have the ability to add their own logo and disclosure documents to the Tolerisk® risk tolerance assessment reports. They can also choose which charts and graphs they would like to include in each client’s report.
• Offers superior support — As with any software, advisors occasionally run into the need for assistance. Tolerisk® not only has numerous helpful tutorial videos and a comprehensive user guide, but also on-screen support also is readily available.
• Includes a glossary of terms — In order to eliminate confusion and to improve overall clarity, Tolerisk® includes a glossary of terms that is designed to help clients as they review their risk tolerance assessment.
• Cloud-based software — This allows advisors to access Tolerisk® from their preferred device, whether it’s their desktop computer in the office or their tablet while doing business on-the-go.
• Free trial is available — The best way to know if any type of software tool is the right choice is to try it out first. A free trial of Tolerisk® is available for those who are interested.
• Patent pending on software — This innovative, scientific approach to risk tolerance assessment cannot be found anywhere else!

To learn more about the features of Tolerisk®, the latest software updates and how it can benefit your firm, begin your free trial of this innovative risk tolerance assessment software today!

There is an increasing need for people to plan for their futures, and they want to work closely with their financial advisors in order to best prepare. While it’s not quite possible to foresee every circumstance that will arise, Tolerisk® is getting closer. The latest version of our risk tolerance assessment software — Tolerisk® 4.3 — allows you to scientifically calculate the probability that your clients will run out of money prior to death.

It might sound morbid, but it’s a reality that many of your clients are considering as they create an investment strategy that will provide them and their family with financial stability in the years to come. As you review their investments and their assets, it’s quite possible that you will get the question: “Will I run out of money before I die? Will my spouse run out of money after my death?”

Prior to the release of the latest version of Tolerisk®, it was challenging to provide your clients with a precise answer. With Tolerisk® 4.3, you will be able to use a simple output to provide your clients with an accurate percentage. How? Tolerisk® utilizes an intricate calculation that takes into account the mortality probabilities for every year from your client’s current age until the age of 110, using the IRS Unisex Mortality Probability Data.

Ultimately, each client receives an individual and accurate percentage chance that they will have sufficient assets through death or the death of their spouse. For example, based on the current assets and savings behavior, coupled with John and Sue’s retirement horizon and spending habits, as well as their personal life expectancy, Tolerisk® computes a 9% probability of running out of money. This means that in the 1000+ historical scenarios dating back to 1926, 9% of them ended with John AND/OR Sue still alive and their money gone. And, if a client isn’t comfortable with their probability of running out of money, you can discuss the possibility of working longer, saving more, spending less, or downsizing some assets in the future such as their home or vacation property. Tolerisk® easily recomputes the new probability of running out of money and simultaneously adjusts the right current risk level as well (The Tolerisk® Score).

As the cost of health care continues to rise and life expectancy continues to increase, planning for a longer life is becoming an important consideration for the average investor. While it’s never easy to face one’s own mortality, it’s critical that clients partner with financial advisors who understand their unique circumstances and can help them make the best decisions based on realistic expectations rooted in good science and math.

This is just one of the new features of Tolerisk® 4.3. There are more recent enhancements available, all of which are designed to help you as a financial advisor provide your clients with the most personalized and precise investment plan. In addition to helping your clients determine whether they have sufficient wealth for their lifetime and for their spouse’s lifetime, you also will be able to provide them with a customized risk tolerance assessment that helps to shape their overall wealth management plan.

Tolerisk® 4.3 is the tool that you need in order to increase your client’s confidence in you, to boost your customer satisfaction ratings and to increase your referrals. Find out more information about Tolerisk® 4.3 by contacting us today!

August 2016: Tolerisk® has a listing on Schwab OpenView MarketSquare ™. Schwab OpenView MarketSquare™ is an online resource that provides product information along with submitted ratings and reviews of technology. Advisors rate products for qualities such as service, value, and features and functionality, plus have the opportunity to give specific feedback on their experiences with products. This resource is exclusively for advisors who custody with Schwab Advisor Services™ and is available on the Schwab Intelligent Technologies™ website.

As the leader in risk tolerance assessment software, Tolerisk® is proud to be listed on the Schwab OpenView MarketSquare™. Schwab OpenView MarketSquare™ features ratings of Tolerisk® in categories such as service, value for cost, and features and functionality. See our ratings and consolidated review based on feedback provided by other advisors who custody with Schwab Advisor Services™.

Tolerisk® is pleased to have earned a listing on this platform, and it is also happy to work with any custodian or broker-dealer in the industry.

Financial advisors and other professionals in the investment industry are finding that Tolerisk® is the only risk tolerance assessment software that analyzes a client’s willingness separately from their ability to take risk. This tool utilizes a scientific approach in order to create customized and personalized reports that quantify an individual’s risk tolerance.

Features of this risk tolerance assessment tool include:

• Expert Analytics – Tolerisk® utilizes our patent pending method of incorporating willingness separately from ability to take investment risk. Advisors can incorporate assets, savings, and income by tax status as well as capital expenditures and capital inflows, facilitating a truly customized and robust risk tolerance assessment.
• Evolving Risk Tolerance – Advisors can illustrate to clients how their risk tolerance will likely evolve through time, as Tolerisk® automatically advances all cash-flows forward through time and can incorporate a dynamic growth rate reflective of evolving risk levels.
• Stress Tests – Automatically shock every input up and down to depict how each influences both risk level and financial longevity for their clients.
• Investor Worksheet Links — These links allow clients to fill out their risk tolerance assessment questionnaire at their own convenience. Once completed, the results are provided directly to the advisor, who can present the findings to their clients.

Advisor ratings and reviews for Tolerisk® are now available on Schwab OpenView MarketSquare™. 

Schwab OpenView MarketSquare™ is a service of Schwab Intelligent Technologies™ and provides consolidated ratings and reviews of technology solutions made by independent investment advisors. Unless otherwise noted, reviewed technology vendors are not affiliated with Schwab. Ratings and reviews do not express or imply any opinion or endorsement by Schwab of any participating vendor or product.

Please visit Schwab OpenView MarketSquare™ to see what other advisors are saying about Tolerisk®.

Tolerisk® has been proven to help increase an investor’s confidence in their financial decisions, while allowing financial advisors to develop more productive, longer-lasting relationships with their clients. To find out more information about this innovative risk tolerance assessment software and improve the service you provide for your clients, contact us at Tolerisk® today.

A simple risk tolerance assessment questionnaire will provide you with some insight into your client’s willingness to take risk — but what about their ability? Financial risk management is a critical part of your job as a financial advisor, but you need to understand the working relationship between ability and willingness in order to do so effectively. By utilizing a premier risk tolerance assessment software, such as Tolerisk®, you will get scientific results about both the willingness and ability of your client to take risks with their investments.

But how do you determine your client’s ability to take risk? Our risk tolerance assessment software evaluates the following factors:

Current assets — These are the financial assets that the investor currently has available. It is important that the tax status of these assets is identified.

Monthly Savings — The amount of money being saved every month/year (prior to retirement) is important. The tax status of those savings should be catagorized as taxable, pre-tax retirement funds, or funds in a Roth IRA/401(k), and differentiated accordingly.

Capital expenditures — Most investors will have major capital expenditures that need to be considered in their risk tolerance assessment report. Capital expenditures might include paying for a child to attend college, a wedding or putting a down payment on a home. Capital expenditures may be identified as near-term expenses, or at any time in the future, as they are expected.

General Annual Spending — The investor and the advisor should work together to determine general annual spending amounts. After a budget has been created for the individual investor, the advisor also needs to take into consideration the impact inflation will have on general annual spending over time.

Rainy Day Funds — Emergency funds should be considered so that the investor has the appropriate level of low risk assets available in the event of job loss, which would likely necessitate dipping into savings for some period of time.

Capital Inflow — Capital inflow might include the sale of a business, an expected inheritance or the downsizing of a home.  These can be important factors in an investor’s current risk tolerance assessment.

Retirement Income — Retirement income must be accounted for because it can have a significant impact on an investor’s ability to withdraw funds from their portfolio over the course of time. In addition to determining the amount and time frame for retirement income, the advisor also must consider the tax implications of the required minimum distributions from an IRA or 401(k) account.

The risk tolerance assessment software should produce a customized report that is ideal for that particular investor at that moment in time. Risk tolerance levels will fluctuate and vary based on a variety of factors; often, these reports are revisited time and time again. Each time, a personalized report will be generated based on a scientific approach to risk tolerance. This innovative solution inspires confidence in both the investor and the advisor, and it results in long-term relationships being formed between the two parties.

To find out more information about Tolerisk® and how it can improve your financial management business, contact us today.

For years, it was standard practice amongst financial advisors to provide clients with a risk tolerance assessment questionnaire. Often, it was a simple survey ranging from 6 to 12 questions, and the results were basic. Clients were ranked according to the level of risk they were willing to take, typically being described as “conservative,” “moderate,” or “aggressive.” These vague terms hardly provided advisors with the concrete information that they needed to move forward, and they certainly didn’t allow people to feel confident about the risk management of their finances. So, financial professionals are turning to a better option: risk tolerance assessment software.

What are the Weaknesses of the Risk Assessment Questionnaire?

• Results are inconsistent. The majority of clients who take a risk assessment questionnaire will receive a “moderate” risk level. First of all, this is a difficult term to define in relation to a person’s ability and motivation to take risk with their assets. Secondly, a moderate risk level may mean something different from one advisor (or client!) to the next. It does not offer clear direction as to what the client needs done with their portfolio, and it can cause more confusion than clarity.
• The questionnaire places too much emphasis on the personality of the investor, without considering the investor’s true ability to take risk. Most software solutions are just digitized questionnaires, still falling prey to this same failure.  There is an important, non-linear relationship that takes place between ability and willingness. For example, if a person has a high ability to take risk, their willingness to take risk  is very important. However, if they have a reduced ability to take risk, then their willingness may not matter as much.

What are the Benefits of the Risk Assessment Software? 

• Tolerisk® uses a scientific approach to risk assessment. This scientific process quantifies the degree of contribution for every major assumption, ultimately helping advisors understand what is driving the risk tolerance of each client.
• It helps both clients and advisors understand the right current level of risk to take, and how that risk level may evolve. The assessment can be revisited, as most people’s risk tolerance levels will evolve with time.
• The detailed report helps both parties understand the impact of risk selection on financial longevity. The report is designed to provide in-depth information as to a person’s individual risk assessment level. While it’s valuable to the advisor, it’s also simple enough for the investor to read and understand. Together, the advisor and the client can utilize the Tolerisk® report in order to determine a long-term plan for financial success.

While financial advisors have long felt that the risk assessment questionnaire was lacking, they haven’t had other options available. Now, with Tolerisk®, they can receive expert risk assessment reports that have been personalized to fit the individual needs of their clients at that specific moment in time. Now, their clients are more confident and they can make better decisions as an advisor when it comes to managing their portfolio. Tolerisk® is the only risk assessment software that uses a scientific approach to risk tolerance, incorporating the client’s willingness and ability to take investment risk

To find out more information about this innovative software program, contact us today.

When it comes to managing financial assets, clients know that they need to take risk — but exactly how much risk can be an intimidating concept. In general, most people recognize that low risk yields less reward, while high risk can generate a greater return on investment. The same level of risk might be too low for some and too high for others. The key to managing risk is determining the right level of risk for the individual client. This is where expert risk tolerance assessment software comes into play.

What is Risk Tolerance Assessment Software?

Tolerisk® is investment risk tolerance assessment software designed for financial advisors to use in order to determine the amount of risk to take when managing the finances of individual clients. Through Tolerisk®, advisors can incorporate factors such as individual personality, current financial assets, savings amount, continued market growth, tax rates and inflation, as well as capital expenditures, capital inflows, and retirement income. The result is a personalized report that identifies the risk level that is right for that particular person at that point in time. It helps financial advisors tailor their service and develop better working relationships with their clients, providing them with the results that they need and expect.

Why Do Clients Request Risk Tolerance Assessment Services?
Clients request investment risk assessment services for a variety of reasons, including:

• They are searching for scientific reasoning behind their risk tolerance assessment. The majority of simple risk tolerance questionnaires will provide clients with that all-too-comfortable rating of moderate. While this might seem like a reasonable approach to managing finances, it leaves many people less than confident in their ability to manage their portfolio. Will a moderate risk level grow their assets effectively enough? What if the market drops? Will there be enough money to withdraw in the event of an emergency? This unease leads them to request a survey from scientifically-based risk tolerance assessment software that delivers personalized results.
• They want a risk tolerance assessment survey that will take into account both their willingness and ability to take risk. Most basic risk assessment programs focus primarily on the personality of the investor, rather than incorporating both their ability to risk their funds and their willingness to do so. Tolerisk® captures the non-linear relationship between these two factors, and incorporates that into the results.

How Does Risk Tolerance Assessment Software Benefit Clients?

Ultimately, clients are able to receive a risk tolerance report that is uniquely suited to their needs and circumstances. They will feel confident taking the necessary risks at that moment in time, knowing that they can easily re-evaluate their risk level at any point in the future. It improves their confidence not only in themselves, but also in their financial manager. With scientific results rooted in fact, they can move forward with their investments and improve their financial situation in the years to come.

By considering a variety of factors, Tolerisk® creates a personalized risk profile for individual clients. It determines the right risk level for that particular person at that moment in time. Beyond that, the client receives a report that is easy to read, interpret and understand. It gives them the conviction to move forward in the market and to stand by their financial advisor.

For more information about Tolerisk® and its scientific approach to risk assessment, request a demo today.