Kwanti’s Risk Profiling tool allows advisors to create and assign risk questionnaires for prospects and clients to complete. The Prospect/Client Risk Score is derived from a comprehensive Risk Questionnaire, which assesses both Risk Tolerance and Risk Capacity.
Key Components of the Risk Questionnaire
- Risk Tolerance: Measures a client's comfort level with the volatility (fluctuations) in the value of their investments. It essentially evaluates how much uncertainty a client is willing to endure to achieve their financial goals.
- Risk Capacity: Evaluates a client’s financial ability to absorb losses, considering their long-term financial objectives, time horizon, and immediate financial needs.
Creating a Questionnaire
To create and send a questionnaire to a prospect or client, you first need to create a Client profile in Kwanti (see Creating a Client for details). Once the Client profile is set up, click the 'New Questionnaire' button to begin. Select your next step to launch the questionnaire or copy the link to send it directly to the prospect or client.
Understanding the Risk Score
Upon completion of a questionnaire, the risk score is displayed within the client interface. The questionnaire generates both a Risk Tolerance Score and a Risk Capacity Score. Kwanti uses the lower of these two scores as the client's final Risk Score. The scores are calculated on a scale of 1-100, ensuring consistency regardless of the original scale used during the questionnaire's creation. The highest possible score of 100 represents maximum risk tolerance or capacity, with other scores scaled relative to this maximum.
Using and Customizing Questionnaires'
Kwanti’s platform simplifies the task of assessing a client's willingness and ability to endure market uncertainty by offering multiple questionnaire options:
- Default Questionnaire: Every Kwanti user has access to a 'Default Questionnaire' that is available for immediate use.
- Custom Questionnaires: Custom questionnaires can be added and managed in the Global Settings. To create a Custom Questionnaire:
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- Click Settings
- Selects 'Risk Questionnaire' from the left side menu
- Under 'Templates' select 'Add'
- Enter the Title of your custom questionnaire.
- Add questions and Answers
- For each question select if it is a tolerance or capacity based question. In addition, users can designate a question as a "Fact Finding" question which will not impact the score of the questionnaire.
- For each answer, assign the points (weight) it will receive when selected to calculate the score. Higher values represent greater risk tolerance or capacity, while lower values indicate a more conservative approach. To ensure accuracy, responses that indicate a higher tolerance or capacity for risk should be assigned higher points.
- Click Create
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Editing Opening and Closing Message on Questionnaires
The opening message is displayed on the first page of the questionnaire, and the closing message appears after the questionnaire is submitted. These fields are universal to any questionnaire, whether it is Kwanti's default or a custom questionnaire created by the advisor. To edit these fields:
- Click Settings
- Selects 'Risk Questionnaire' from the left side menu
- Edit the Opening Message and Closing Message Fields
View Questionnaires
Advisors can view sent questionnaires in two places:
- Client Risk Profile: Accessible within each client’s profile, this section shows all questionnaires specific to that client and their statuses.
- Settings > Risk Questionnaire > View Questionnaires: This section displays all questionnaires created by the advisor.
By utilizing these tools, advisors can accurately assess and manage their clients' risk profiles, ensuring that investment strategies align with both their comfort levels and financial capabilities.