The Vision Behind Riskalyze

Riskalyze is built on the groundbreaking idea that an investor’s risk tolerance can be distilled into a single, actionable number. This innovation simplifies financial advising, enabling advisors to create portfolios tailored precisely to their clients’ comfort with risk. Founded by Aaron Klein, Michael McDaniel, and Matt Pistone, Riskalyze emerged from Auburn, California, as a transformative tool for financial advisors.

By converting theoretical risk into a tangible metric, Riskalyze has revolutionized how advisors market their services and align client portfolios with individual risk preferences. Its ease of use and effectiveness have earned it widespread acclaim within the financial advising community.

How Riskalyze Works

The core of Riskalyze’s offering is its patented Risk Number technology, a system rooted in a Nobel Prize-winning economic theory from 2002. Here’s how it functions:

1. Risk Questionnaire: Clients complete a series of questions designed to gauge their tolerance for financial risk.
2. Risk Number Assignment: The answers generate a unique Risk Number, providing a clear measure of the client’s comfort zone.
3. Portfolio Integration: Advisors input their client’s current investments into the system, revealing any discrepancies between their Risk Number and the portfolio’s actual risk level.

This approach empowers advisors to craft portfolios that strike the perfect balance of risk and reward, making complex financial strategies more accessible and compelling to clients. Advisors can also demonstrate when a client’s current portfolio carries more risk than they’re comfortable with, adding a layer of trust and transparency to the relationship.

Who Uses Riskalyze?

Riskalyze’s products are tailored for:

• Registered Investment Advisors (RIAs)
• Independent broker-dealers
• Hybrid advisors
• RIA networks
• Plan custodians
• Local banks
• Asset managers

By 2012, advisors had used Riskalyze to build over $2 billion in portfolios. Although the company operates primarily within the U.S., its tools have garnered interest from global investors and advisors.

Available Tools

Riskalyze offers a suite of tools designed to streamline financial advising and compliance:

1. AutoPilot

An automated investing platform for managing retail and retirement accounts. AutoPilot simplifies portfolio management while maintaining alignment with clients’ risk profiles.

2. Compliance Cloud

A comprehensive compliance solution that monitors advisors’ books of business, sending alerts when regulations are breached. Key features include:

• Identifying mismatched objectives
• Detecting over-concentrated positions
• Automating workflows
• Prioritizing accounts intelligently

3. Stress Testing

Advisors can simulate scenarios like market crashes or interest rate spikes, showing clients potential vulnerabilities in their portfolios and strategies to mitigate risks.

4. Portfolio Mapping

Using advanced modeling, advisors can project with 95% accuracy whether a client’s portfolio will achieve their desired returns, adding a layer of precision and confidence to financial planning.

Integration with MoneyGuidePro

In November 2016, Riskalyze partnered with PIEtech to integrate MoneyGuidePro, a financial planning software, into its platform. This integration bridges short-term risk profiling with long-term financial planning, offering advisors a comprehensive view of their clients’ risk exposure and capacity.

Kevin Knull, president of PIEtech, praised the collaboration: “By coupling Riskalyze’s near-term time horizon risk tools with MoneyGuidePro’s holistic approach, advisors can better evaluate risk and create strategies that align with their clients’ goals.”

The Bottom Line

Riskalyze has revolutionized the financial advising industry by simplifying the complex world of risk analysis. Through tools like its patented Risk Number technology, AutoPilot, and Compliance Cloud, it empowers advisors to build trust with clients, align portfolios with individual risk tolerances, and navigate regulatory challenges effectively. With its innovative approach, Riskalyze continues to set the standard for modern risk management in financial planning.