Risk scoring
for goals-based investing
Feel confident managing risk at each stage of investment
As a goals-based investment management firm, Horizon Investments is focused on understanding the changing nature of the risks investors face throughout their financial journey.
Focused on the nature of risk
Could risk management this intuitive be revolutionary?
Horizon Investments has pioneered the development of Goals Based Performance Standards®. Our groundbreaking approach to goals-based investing and risk scoring empowers advisors to:
- Mitigate changing risks at each stage of the financial journey, from accumulation to preservation to distribution
- Recommend products and services specifically designed to achieve investor goals
Measuring risk in goals-based investing
In some cases, an investment manager’s only measure of risk is volatility, and perhaps the investor’s self-estimated risk tolerance.
Horizon Investments redefines how portfolio risk is measured, offering goals-based strategies that account for the changing nature of risk as investors move closer to their goals.
Mitigating risks as investor goals change
When it comes to scoring investments, the question of how to measure risk depends on the investment stage.
STAGE
Seek to manage volatility, while maximizing capital growth
Goal:
Grow wealth
STAGE
Seek to manage drawdown risk, while continuing to grow assets
Goal:
Protect wealth
STAGE
Seek to minimize shortfall risk, while generating desired income
Goal:
Spend wealth
OUR WORKFLOW INNOVATION
Goals-based portfolio risk scoring
1
Assess product fit for the goal
In a goals-based framework, products are first scored against the goal to assess the viability of those products to meet that specific goal.
Unlike many workflows that first map investor tolerance to product volatility, Horizon’s approach seeks to optimize the plan for the goal.
2
Consider investor risk tolerance
Consider a client’s risk tolerance only after scoring product to the goal. This empowers you to engage in more meaningful conversations about the suitability of the plan for your client.
Because we believe the best time to discuss how well products align to an investor’s risk tolerance is after determining that those products offer the best chance of success.
Increase RTQ accuracy
Does the traditional RTQ mislead advisors?
The traditional risk tolerance questionnaire (RTQ) plots all investors on a single spectrum from conservative to aggressive. The challenge is that people’s answers to those questions can change over time and as they move closer to their goals.
Pointing you in the right direction
Horizon’s goals-based risk tolerance questionnaire, built into Horizon’s technology platform, asks investors questions specific to each of the three stages of the investment journey. This not only helps identify what stage of the journey your client is in, but also sparks more productive conversations about the plan’s tradeoffs and potential fit for your client.
