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Tolerisk Completes Wealthbox Integration
January 25, 2018
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Is Risk Tolerance an element that Advisors are overlooking?

During a recent appearance on RVN-TV, Tolerisk founder Mark Friedenthal joined host Bill Borton to discuss the importance of risk tolerance assessments in investing. Mark explained that identifying a good custom risk directive is something that many in the advisory industry often find difficult, and said, “I think of it as the Goldilocks exercise. You don’t want risk to be too high, or too low. You want to find the perfect balance of what’s right for that client at that time.” Finding this balance is a unique science that challenges advisors. With this challenge in mind, Mark weighed in on the benefit that Tolerisk can provide to advisors, and explained that the financial technology tool uses a psychometric profile and cash-flow chronology to more accurately represent a client’s willingness and ability to take risk.

 

Throughout the segment, Bill and Mark touched on a variety of other topics, such as the genesis of Tolerisk. Mark explained the “a-ha” moment when he realized that advisors needed a better way to measure risk tolerance for their clients. “The SEC’s description of risk tolerance acknowledge the client’s willingness to accept risk and ability to take risk, pointing to two separate exercises, and we needed to figure out a way to measure them separately and combine them intelligently. When it comes to ability to take risk, I took my experience in managing large fixed income and derivatives portfolios for big financial institutions and took traditional fixed income mathematics and pointed it towards household cash-flows. That became a very unique approach to computing a client’s risk,” he says.

 

 

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