TIFIN Wealth's Risk Alignment assessment lets an advisor gain a more comprehensive view of a client's risk profile, create a tailored recommendation and generate a personalized proposal by comparing 3 risk scores:

• Risk Capacity – amount of risk an investor can or cannot take given their current life situation.

• Risk Preference - how much risk the investor is willing to take.

• Portfolio Risk - calculation of an investment portfolio’s exposure to potential downside losses.

While these scores can range from 1-99, most user scores fall within the Conservative to Growth range of 6-55.

Ideally, your investment strategy (Portfolio Risk Score) would fall between your Risk Capacity and Risk Preference scores on the Risk Band.

This represents a hypothetical target that you would seek to keep your investments within.

Most risk tolerance tools only address one aspect of risk at any given time. Some look at risk preference (a risk score based on an investor’s feelings about risk), while others base their score on a timeline toward retirement. The prevalent practice of ONLY measuring an investor’s feelings toward risk is insufficient as this can be quite different than the losses the client can actually withstand given their unique personal and financial situations.

TIFIN separates risk capacity, risk preference, and the portfolios risk score. Risk capacity only changes as life situations change and is based upon facts versus feelings: an objective, stable, and relevant anchor for accurate risk assessment. Psychological risk preferences are included, however, these questions serve as a reference rather than the sole basis of advice.

In short, advisors are able to compare all 3 scores using a common methodology in order to make wise investment decisions appropriate for their household at that time. In addition, the ability to revisit the questionnaire annually serves as a touchpoint for the advisor and client to reconnect and reassess the client’s risk tolerance, adjusting their portfolio as needed. With TIFIN Risk, facts over feelings lead to a more accurate risk assessment, a better investment strategy, and a stronger advisor/client relationship.