Defeating Advisor Biases + Turning Statements into Sales Tools

By Michael McDaniel, Chief Investment Officer

“It’s amazing what you find when you follow the math.”

That’s a statement that we’ve heard from many of our advisors, once they use Riskalyze for the first time in a prospect meeting or client review. There are two key discoveries we’ve been watching our advisors make over and over again.

Winning New Clients Gets Easier

In the experience of our advisors, about 4 of 5 prospective clients have far more risk than they realize, or is allowed by their risk tolerance. For this reason, they love showing a third-party, objective and quantitative representation of the risk in a prospect’s existing portfolio, while comparing it to their target portfolio.

In effect, the advisor is turning the prospective client’s existing statement into an amazing sales tool. Instead of that prospect trying to decide which advisor is more credible than the other, the Riskalyze advisor gets to set the benchmark for that assessment using data.

I personally love to see the look on a prospect’s face when they see the six month probability range for their current portfolio. Every single prospect who I’ve shown that analysis to — I’ve won their business.

Other things we hear: “Riskalyze is the best proposal system ever,” “this tool closes prospects for me,” and “I’ve replaced my sales pitch with simply showing prospects how much risk they have compared to my suggested portfolio.”

Defeating Advisor Biases Gets Easier

Advisors tend to have a bias towards managing client portfolios for their own risk tolerance, instead of the client’s. I first noticed this phenomenon with my own book of business (and since then, have been told the same thing by other advisors).

My personal risk number is 32, and no matter how many times I retake the questionnaire, if I’m using accurate dollar amounts that are meaningful to me and answering honestly, I can’t get it to come out as a different number.

Lo and behold, most of my client portfolios were clustered near my risk number, despite having clients with much higher risk tolerances. On the other hand, I’ve spoken to other Riskalyze advisors who had personal risk numbers in the 80s, and you guessed it — they were shocked when the bulk of their client portfolios had similar risk numbers.

You can imagine the implications of this bias. On the one hand, you can have clients falling short in the return department if they aren’t taking all of the risk they desire. On the other hand, clients could find themselves with far more risk than they can stomach.

Equipping themselves with the tools to quantify and match each client individually with the right portfolio has been a powerful way for advisors to defeat this bias and better deliver the personalized service to their clients that they’ve always been committed to.

Want to see how advisors are winning new clients, capturing and meeting expectations, and quantifying suitability with Riskalyze? Join a 20-minute guided tour.