Having worked in financial services for over 25 years, Sheila Ohlund recognized that understanding risk capacity is critical to knowing clients and providing suitable investment products. However, little guidance has been provided to establish what exactly is required to know the client’s risk capacity and recommend appropriate investment solutions.
At the same time, Professor Luigi Guiso has been leading research into how best to determine and translate individual risk capacity into portfolios with the appropriate level of equity assets. Both Sheila and Luigi realised that developing a user-friendly system would bring all the benefits of the rigorous academic research to the financial industry.
“Attavita Risk was developed to achieve our goal of providing
individual investors with beneficial investment advice.”
Why Risk Attavita® Risk?
Attavita Risk’s practical approach makes intuitive sense in determining the appropriate level of investment risk. Attavita Risk enhances the financial advisor’s ability to provide the highest level client service, while increasing efficiency. With Attavita Risk investors can invest appropriately to realize their financial goals.
Investors are often uncertain about their risk capacity. They know better investment returns are available with riskier assets, but may not understand how much risk is appropriate.
Investment risk capacity can be compared to driving a car. Both involve some risk, and both are necessary to achieve your goals. Cars take us where we want to go. Investments provide returns to meet our financial goals. Techniques to manage the driving risks are well known: always wear a seat belt and reduce speeds when road conditions are adverse.
Investment risk is often managed with techniques such as diversification. Less familiar are the techniques required to manage investment risk as an individual’s risk capacity changes. Attavita Risk uses the latest academic research and proprietary algorithms to provide insights into each client’s risk capacity.
|Risk Management||Personal Preference||Conditional Risk Mitigation|
|Driving||Individuals make different choices in the same circumstances. Some individuals prefer to drive slowly, other prefer to drive more quickly.||Driving speeds depend on weather and road conditions.|
|Investing||Some individual prefer risky investments, other prefer less risky investments.||Risk asset allocation depends on factors such as: age, wealth, family circumstances, employment status, and plans for major purchases.|