How the 3D Risk Tolerance Questionnaire and Custom Proposal Tool Create Quick Wins

Establishing trust is an essential first step in any business relationship, but it’s especially crucial in financial advising.

Investors trust their advisors to guide them through the markets in an effort to achieve their financial goals and dreams. They want to feel assured they’re putting their money (and their futures) in the hands of someone they know, like, and trust.

Advisors who can build trust early help distinguish themselves from competitors and pave the way for a smooth transition from prospect to client. Fortunately, tech solutions exist to help advisors provide the personalized attention that wins trust.

Let’s explore how two tools — a risk tolerance questionnaire and a custom proposal — can help advisors nurture trust and close new business.

 

Why Start With a Risk Tolerance Questionnaire?

To fulfill your fiduciary duty and provide sound financial advice, you must understand the investor sitting across the table from you. No two clients are exactly alike — each person enters with their own financial situation, dreams for the future, and feelings about risk.

A comprehensive risk tolerance questionnaire provides advisors with a baseline understanding of a prospect’s current reality, mindset, and goals. Armed with that information, you can present recommendations tailored to each prospect’s situation.

By building a personalized strategy, you not only deliver on your fiduciary duty but also set the tone for the kind of one-on-one attention an investor can expect from your firm. And survey after survey shows that today’s consumers are more focused than ever on doing business with brands and service providers that offer a personalized experience.

 

Investigating the Multiple Dimensions of the 3D Risk Tolerance Questionnaire

Not all risk tolerance questionnaires create a complete picture of an investor’s appetite for risk. As this article from 2017 shows, traditional risk tolerance questionnaires often fail to account for the emotional side of investing.

In recent years, however, things have changed. Advisors now have access to a comprehensive risk tolerance questionnaire that provides deeper insights into investors' attitudes and mindsets.

The 3D Risk Tolerance Questionnaire (3D RTQ) from Orion Risk Intelligence measures risk tolerance on three key dimensions:

  • Capacity: How able is the investor to take on risk based on concrete factors like age, income, current net worth, and financial understanding?
  • Tolerance: How willing is the investor to accept increased risk for the potential of increased upside?
  • Composure: What is the investor’s expected behavior in times of market elation or stress?
The 3D RTQ provides a jumping-off point for a more informed conversation with prospects. 

With greater insight into an investor’s mindset, you are better positioned to ask questions that get to the heart of an investor’s goals or anxieties. And when you pair this insight from the 3D RTQ with emotional intelligence skills, like active listening and empathy, you create trust and connection with new prospects.

 

Why Create a Custom Proposal?

Once you’ve developed a baseline understanding of your prospect’s attitudes, goals, and risk tolerance, you can create a personalized plan to address their unique situation and needs.

Just as important as the plan itself is how you present it. A visually-driven proposal makes it easier for a non-financial professional to see the direct connection between your initial discussions around goals and risk and how you’ve adapted your strategy to suit their situation.

The proposal builder from Orion Risk Intelligence leads with images and charts, helping prospects see how your plan aligns with the future they hope to build. It details:

  • Portfolio allocations
  • Stress test summaries and risk statistics
  • Hypothetical performance history and drawdown analysis
  • Fee attributions
  • Geographical and sector-specific risk analyses
As you walk your prospect through the comprehensive plan, you have the assistance of visuals to help investors of all stripes see the throughline of your plan, plus in-depth data provide more seasoned investors with even greater context.

 

Risk Tolerance Questionnaire Feeds Your Custom Proposal: How It Works

Each tool provides value individually, but the 3D Risk Tolerance Questionnaire and custom proposal builder are even more effective when used in tandem.

Here’s how to get the most out of your prospect conversations with Orion Risk Intelligence.

  1. Start with the 3D RTQ. Our advanced risk tolerance questionnaire sets the tone for future conversations. By incorporating tech and behavioral finance into this first prospect touchpoint, you signal that your firm is focused on personalization and delivering a modern investing experience.
  2. Lead with EQ in your first meeting. Once your prospect has completed the 3D RTQ, you have insights into their attitudes, emotions, and financial reality. Use this information to spark meaningful conversation around the deeper “why” driving a prospect’s investing goals. Actively listen and leave space for your prospect’s questions; this is how you make them feel seen, heard, and valued.
  3. Start constructing your recommendations. Build recommendations in Risk Intelligence, which provides the flexibility to include various asset classes, plus leverage the custom asset builder tool for nonmarketable securities. Stress testing allows you to see how a strategy might perform in hypothetical macro scenarios.
  4. Share your custom proposal. Once you’ve finalized your recommendations, create your proposal in Risk Intelligence. The proposal is easy to share in virtual or in-person meetings. Remember to highlight the connection between your earlier conversations around risks and goals and how you’ve accounted for that in your proposed strategy. This will help solidify your standing as an empathetic and trustworthy advisor.
 

Ready to introduce these two advanced Risk Intelligence tools into your prospecting process? Contact our sales team today to schedule your tech demo.

 

Access to the services presented is provided solely as a service to financial advisors. Orion Risk Intelligence does not make recommendations or determine the suitability of any security or strategy. Past performance of a security or strategy does not guarantee future results. Orion Risk Intelligence research and tools are provided for informational purposes only. While the information is deemed reliable, Orion Risk Intelligence does not guarantee its accuracy, completeness, or suitability for any purpose, and makes no warranties with respect to the results to be obtained from its use.

0413-OAT-2/10/2023