StratiFi's Risk Managment is a Powerful Differentiator for Advisors

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Investing

Nick Trepp | July 10

"All investments are subject to market risk." We've seen this sentence countless times. Risk is an inescapable reality of the investing world. The strange dynamic among advisors is that, despite the ubiquity of risk, risk management is rarely mentioned as a factor in advisor differentiation. We think that provides advisors with a great opportunity to use risk management to stand out in an increasingly crowded landscape.

The Power of Managing Risk:

Adopting a unique approach to risk management may have a halo effect across an advisor’s three main areas of focus:

  • Client Management: Effective risk reduction should lead to more predictable investment outcomes. This predictability helps to manage client expectations and decrease the probability of emotion driven decision making. Enhanced predictability also helps build trust and satisfaction as the management of risk moves from a threat to a mechanism to increase client satisfaction and retention.
  • Investment Management: Having a differentiated approach to addressing portfolio risk beyond traditional diversification is incredibly powerful in today’s uncertain financial and geopolitical landscape. In providing that investment focused differentiation, StratiFi understands that advisors want to be engaging in business development and not tethered to a trading desk. Therefore, implementation and ongoing management are simple and intuitive, as we’ve come to expect from best-in-class technology solutions. Importantly, we are also non-disruptive to the current investments and simply complement existing advisor allocations. This means that, in most cases, advisors do not need to change a client’s existing investments to partner with StratiFi.
  • Practice Management: Meeting the fiduciary standard, whether mandated by regulation or otherwise, will increasingly become the baseline expectation for all prospective clients. An intelligent, proactive approach to managing all manner of risk in client portfolios is a smart step in demonstrating an advisor’s commitment to being a responsible steward of capital.
Implementing StratiFi:

The current financial advisor landscape still considers traditional asset class diversification as the solitary tool through which risk - in all its many shapes and sizes - is addressed. While effective in some market conditions, StratiFi believes that adopting an active approach to risk management can provide powerful differentiation for an advisory firm while also providing superior and more predictable investment outcomes.

Our advisor platform is an end-to-end solution for options based risk management. The entire experience revolves around uncovering and mitigating portfolio risk. Implementation within an advisor’s practice is easy. All an advisor needs to do is link their custodial platform or input model allocations, and she or he can begin using StratiFi. From there, our investment process is equally as straightforward:

  • Advise: Use PRISM, our proprietary risk scoring tool, to identify hidden risks in each client’s portfolio. Create custom proposals with option overlays for clients. Provide strategy investment policy statements, education and marketing materials.
  • Invest: Select Option Overlays based on client investment objectives. Customize the overlays based on risk exposure within existing portfolios. As stated above, these strategies complement, not displace, existing client portfolio holdings.
  • Manage: Seamlessly scale overlays across different client portfolios. Benefit from systematic investment management and trading processes. Set-up autopilot to adjust and rebalance hedges based on portfolio changes.
  • Report: Receive client-facing composite reporting that can be customized to include the advisors branding.

The ability to credibly manage risk in an increasingly complex world may define which advisors grow their practices in uncertain times versus those whose businesses could be at considerable risk. StratiFi offers advisors the ability to be elite fiduciaries with a service that is simple to implement, manage, and is easy for clients to understand. If you are an advisor who wants to stand out by delivering superior risk-adjusted client investment outcomes, we'd love to work with you.

To learn more about how you can work with StratiFi, please schedule a demo.

Every investment involves some degree of risk. Please read full StratiFi disclosures before thinking about investing: StratiFi Full Disclosures

To learn more about the truth behind asset correlations and volatility, click here for our complimentary eBook "The Five Myths that Put Portfolios at Risk: Revealing the truth and improving investment outcomes using options."