Riskalyze Inc. has rolled out a professional version of its free risk assessment and analysis tool for investors that I foresee garnering a lot of interest from financial advisers.
Interestingly, it was really a number of advisers using that investor-focused version in a roundabout way with their clients that formed the genesis of RiskalyzePro (Pro.riskalyze.com), which was launched seven weeks ago.
Simply put, an adviser sends an online questionnaire to a client. The questionnaire takes no more than 10 minutes to complete and is tailored to look as if the adviser's firm devised it.
The investor is asked a series of simple questions with multiple-choice responses. Some have built-in logic that expands to ask more questions, if necessary.
Taking the inputs, Riskalyze quantitatively measures a client's risk tolerance using the system's proprietary algorithm. It then reports back to the adviser, who can generate any of several reports — some for meetings with clients or prospects, others for the compliance file.
“These days, I only see prospects that are referrals, and ahead of the first meeting, I send out the questionnaire and ask them to please fill this out, and the results then become a major focus of our meeting,” said adviser Michael McDaniel, whom InvestmentNews contacted through Riskalyze.
Mr. McDaniel, principal of McDaniel Wealth Management, said that he had been using the consumer version for about six months before the professional version was rolled out.
“Documentation is paramount, and a tool like RiskalzyePro not only gives me a sandbox to design the most-efficient portfolios but helps me document why I allocated a client portfolio like I did,” he said. “Think about how important the projected performance range, especially on the downside, is for a client.”
The regulations that Riskalyze can help an adviser or registered representative prepare for include Financial Industry Regulatory Authority Inc. Rule 2090 (Know Your Customer) and suitability requisites found in Finra Rule 2111, as well as aspects of Securities and Exchange Commission Rule 3a-4.
Riskalyze founder Aaron Klein said he has begun to notice how the service provides a shortcut in terms of complex aspects of a portfolio.
“Let's say, and this is a rather extreme example, that you have a client that invested 10% of their portfolio in Apple [Inc.] five years ago, and it has now grown to 20% of their portfolio's overall value,” he said. “Our analysis will easily illustrate for them how we need to perhaps shave some of that risk away from an allocation of a volatile tech stock.”
A subscription to RiskalyzePro is $99 a month or $999 per year.
LPL goes paperless
Cue the tree hugger applause: LPL is going down a paperless path.
That means that DocuSign's eSignature technology is available across LPL Financial's BranchNet tech platform and is just one part of improved work flow processes being rolled out at the firm.
Importantly, that technology will be available at no additional cost to financial advisers and their clients.
It is worth noting that though LPL Financial LLC is an independent broker-dealer, the e-signature capabilities from DocuSign are being integrated into LPL Financial Holdings Inc.'s custodian operations and its institutional service provider operations as well.
In a nutshell, DocuSign's eSignature system will be used to do away with as much paper as possible and begin the process of streamlining document processing.
“This is an integral part of a work flow, not just introduction of e-signature technology,” said Christopher Giles, senior vice president of adviser-facing technology at LPL Financial.
Prior to speaking with him, I was skeptical of the announcement.
After all, I have now reported on numerous bits of news related to document management implementations in financial services. In fact, among them are several announcements specifically related to DocuSign eSignature technology.
The four largest custodians for registered investment advisers — most recently Schwab Advisor Services a few weeks ago — have announced partnerships with the company and integrations of its technology.
And I have also followed rollouts at other broker-dealers of not only DocuSign technology but that of competitors.
So I asked Mr. Giles: What differentiates LPL's project?
“If [documents] are signed in near real time, that completed and signed form will be available within an hour, typically,” he said, adding that this specifically refers to clients whose assets are also being held on LPL's custodial platform.
Principally, the announcement and the technology therein will help in the streamlining of LPL's account-opening processes and should shorten turnaround time of documents that have been submitted.
That, in turn, raises the potential for eliminating traditional paper mailings or faxes.
The technology also provides the ability to automate the routing and tracking of e-documents, even to multiple signers, and makes it easy to set up features such as reminder e-mails for documents that have gone unsigned.
Another improvement over some of those first announcements I covered is multiple electronic ways of signing. Early iterations, no matter the provider, tended to rely on electronic signature pads, such as those used by banks and stores.
DocuSign's relationship with LPL allows for three different signature mechanisms: click-to-sign, a secure e-mail that allows signers to click and acknowledge; iPad, with other tablet support to follow; and the electronic keypad, which costs extra.
The eSignature technology had been available to advisers for a few weeks before the announcement, and 5,000 advisers already had begun accessing or using it, Mr. Giles said.
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