Weekend Read for Financial Planners (Mar 26-27) – Kitces

New Tool Promises Fresh Approach To Risk Analysis (Joel Bruckenstein, Financial Planning) – A new player in the world of financial advisor risk tolerance tools is Totum Wealth, which aims to take a more holistic look at a client’s “multidimensional” risks than the available alternatives. Created by Pacific Life’s former director of investment risk management (Min Zhang) and Causeway Capital Management’s co-founder (Mark Cone), the software looks not only at a client’s investment portfolio, but also considers his/her health, the rest of the balance sheet, and even the industry in which he/she is employed. In other words, the software actually implements some of the recent research around adjusting a client’s portfolio based on their human capital, including the risks of their employment situation and their job industry. The software can not only evaluate the client’s current risks relative to their portfolio, but can also take in details of the advisor’s model portfolios, to show clients a comparison proposal. Bruckenstein also notes that the software has a very “welcoming and user friendly” design, although the underlying calculations are essentially a black box with little transparency about how they’re determined (perhaps not surprising, as those analytics are Totum’s proprietary process?). In addition, Totum lacks integrations at this point, so advisors who want to use the tool with existing clients would have to re-key all the data, and the output can only be displayed on screen or in a PDF (but not exported via widgets into other client portals or software). Totum is available with a 90-day free trial, and then has a cost of $128/month for its risk analysis tool or its portfolio proposal solution ($248/month for both).

Read more here.

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