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A Client’s Personality Determines Their Risk Rating

StratiFi

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By understanding your client’s behavior and investment personality and using it to guide them towards portfolios that reflect acceptable risk levels, advisors can achieve one of the most difficult feats in investing: helping clients sit tight and strategically respond to opportunities and risks when others are panicking. Below are some examples of the ratings and their targeted risk levels that StratiFi advisors use for managing client emotions:

  1. Maximum Loss between 20-30%: Target rating between 2-4 
  2. Maximum Loss between 30-40%: Target rating between 4-6 
  3. Maximum Loss between 40-50%: Target rating between 6-8 

Clients can view their personal PRISM rating as a mirror image of their portfolio rating. For example, if someone’s target risk rating is at 3, it indicates that they should avoid investing in a 9 portfolio that may be full of bio-technology stocks because they lack the temperament and ability to withstand sharp swings in the value of their investments. If someone’s PRISM rating is 9, and they have a portfolio PRISM rating of 2, the opposite disconnect exists.

StratiFi’s advisors use these ratings as a benchmark to create and manage portfolios that have risk characteristics that are in line with a client’s risk profile. StratiFi advisors leverage the platform and its’ automation and alerts to put in place the crucial processes and procedures that allow them to educate their clients and minimize negative reactions by taking the emotion out of investing especially when dealing with their money.

Our PRISM™ risk analysis software uses a blend of risk tolerance questionnaires, historical market events, and current market signals to provide advisors with all the data they need to know their customers and plan accordingly. Contact us to find out how StratiFi can help your practice.

Akhil Lodha
Akhil Lodha Author
Co-founder & CEO StratiFi Technologies

Building the industry standard for understanding portfolio risk through cutting- edge technology at Stratifi.

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