What's a Risk Score?
What's a Risk Score?
Risk tolerance is an investor's ability to remain invested during downward market cycles in exchange for a potential return.
It's important that investors understand their risk tolerance so that they can help guide the design of their investment strategy. This approach looks to balance the investor's desire for returns goals with their ability to stay confident and invested throughout market cycles.
To help investors understand their risk threshold we deploy a proprietary algorithm rooted in the well-known Value at Risk (VaR) measurement that helps us quantify their sentiment toward financial uncertainty, specifically their emotional tolerance with respect to the magnitude and speed of potential investment loss. This Analysis provides them with a VaR Score that can help determine if their existing portfolio aligns with their risk tolerance.
Intelligent, Disciplined Investing
with AssetLock®
AssetLock® is Simplicity Wealth's proprietary, investment portfolio monitoring service that delivers personalized communications to advisors and investors in a secure environment.
This technology keeps investors informed about the progression of their portfolio in accordance with their risk tolerance determined by the investor's household portfolio VaR Score.
The AssetLock® Advantage
AssetLock® monitors the investor's household portfolio value and AssetLock® Value, and communicates key changes to both the investor and financial advisor. This approach helps the investor capture portfolio gains and reduce the potential for losses by keeping the portfolio strategy and investor's risk tolerance aligned.
How AssetLock® Works
This hypothetical example demonstrates using AssetLock® on an initial portfolio valued at $100,000. The investor's Value at Risk score determined a 10% AssetLock® Threshold desired in the portfolio) making the starting AssetLock® Value $90,000. If the portfolio experiences growth to a High-Water Value of $146,793, the AssetLock® Value would then increase to $132,114. If the portfolio then experiences a 10% loss, reaching the AssetLock® Value of $132,114, the financial advisor and investor will be notified to discuss the possibility of portfolio allocation adjustments.
AssetLock®® is tracking software used to monitor the performance of a client's household portfolio, and to predetermine the amount of downside the client is willing to tolerate. It is NOT an actual stop order and will NOT automatically sell the individual securities in the household portfolio. The AssetLock®® Value is a reference point to encourage a conversation between the advisor/firm and the client to determine if the client's household portfolio should remain unchanged, reset the AssetLock®® Threshold by reallocating to a different risk profile, or liquidate part or all of their household portfolio. AssetLock®® will send the client and their advisor alerts when the household portfolio reaches the client's determined values, new all-time highs and/or the maximum targeted amount of downside the client is willing to accept. The client and their advisor are notified about changes in the client's household portfolio. This notification requires that the client is subscribed to receive text message and/or email alerts from AssetLock®®. Message frequency varies. Standard message and data rates may apply.
