Morningstar creates new tools to assess risk tolerance
The company says the tools that are currently available don't focus enough on clients' needs.
Calling traditional risk profiling inadequate, Morningstar Inc. has introduced two new risk measurement tools “to provide a more rigorous and manageable client profiling and investment planning process for firms and their advisers,” the company said in a release.
Starting next week, the company’s new Portfolio Risk Score will be available on its Advisor Workstation. The Portfolio Risk Score is also available now on third-party platforms through Morningstar Enterprise Components, along with the company’s new Risk Comfort Range.
Both tools will roll out across Morningstar’s other platforms over the remainder of 2021.
The Portfolio Risk Score measures a portfolio’s level of risk compared with Morningstar’s Target Allocation Index family and can be applied to client portfolios, model portfolios, proposed portfolios or individual managed investments, the company said in a release.
The Risk Comfort Range is a methodology “to align client expectations about the risk exposure of their portfolios based on their risk profile and investment objectives to an appropriate range of Morningstar Portfolio Risk Scores,” according to the release.
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