Technology is going a long way to meeting the financial industry’s quantitative, compliance and workflow needs — but can it also meet the industry’s psychological needs?
After all, behavioral finance suggests that an advisor’s job is as much about managing client behaviors as it is about managing their money, and tools like Riskalyze and Financial DNA allow advisors to glimpse into their client’s risk tolerance and financial outlook and design a portfolio based on their feelings.
Now, a digital tool from Denver-based AssetLock helps advisors react to changes in a client’s portfolio that may exacerbate their risk aversion or pessimism.
The AssetLock software allows advisors and money managers to discover a drawdown or investment loss within an account that will create an adverse reaction from a client, and then deliver messaging and advice based on that amount.
“The whole idea is to help clients stay invested,” says Jason Jenkins, AssetLock’s CEO. “Clients customize their own AssetLock level, usually less for conservative investors and more for aggressive einvestors. When the portfolio experiences a loss that approaches the client’s level, we ping the advisor, who then calls the client and does their job as a fiduciary.”
AssetLock is not a stop-loss strategy, it does not automatically sell any client assets. Instead, it acts as a monitoring notification service to give advisors and clients peace of mind that an account will not decline below a certain level without their knowledge.
Money managers also are able to see a client’s risk tolerance based on the AssetLock percentage they select.
“We’re trying to enhance the advisor, the money manager, by putting strategies and tools between them and the client,” Jenkins says. ”Investment is so personal, why not build a communication plan around a client’s downside threshold? For seem reason this doesn’t seem to be taking place between clients and advisors, so it makes sense to have a communication tool to help all of the parties involved.”
The software monitors accounts on a real-time basis, communicating with the advisor on a daily basis. When accounts reach a new all-time high, the AssetLock level adjusts.
Sarasota-based Global Financial Private Capital, an RIA with almost $6 billion AUM, is an early adopter of the tool.