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Why are Risk Scores Important?
Where are the Risk Scores in Redtail?
How are Risk Scores Enabled and Calculated?

Enable the Stress Test Risk Score

Enable the Investor Risk Score

Risk Score Calculations

Investor Risk Score

Stress Test Risk Score

 

 

Why are Risk Scores Important?

• Effortlessly analyze existing account (portfolio/investment) risk
  
  
• Understand your client's comfort level with risk so you can drive impactful, connected conversations
  
  
• Learn the difference between the risk scores available to you in Redtail and learn how to enable them

  

Where are the Risk Scores in Redtail?

NOTE: Depending on your Redtail plan, you may see different risk information displayed throughout your Redtail experience.

• Not sure which Redtail Plan your firm is using? Check out our Managing Your Subscription article.

 

Under Contacts > Accounts:

(1) Investor Risk Score: 

• Found at: Contact record
  
  
• Populated by: The 3D Risk Tolerance Questionnaire (See the Risk Score Calculations section below for further details)
  
  
• Available to users with: Redtail Growth Plan or above

 

 

(2) Stress Test/Investment Risk Score (RISK): 

• Found at: Contact > Account record
  
  
• Populated by: Orion Risk Intelligence (See the Risk Score Calculations section below for further details)
  
  
• Available to users with: Redtail Launch Plan or above

  
 

How are the Risk Scores Enabled and Calculated?

Enable the Stress Test Risk Score

• Stress Test risk scores are available for Launch subscribers and above. No additional enablement is necessary.
  
  
• See the Risk Score Calculations section below for information on calculating the Stress Test Risk Score.

 

 

Enable the Investor Risk Score

• Ensure your firm has a Redtail Growth Plan.
  
  
• Invite your client to complete the 3D Risk Tolerance Questionnaire (3D RTQ) in Orion Planning.
  
  
• Review the Risk Tolerance Questionnaire in Orion Planning to learn more about the 3D RTQ, including information on how to enable it for your clients.  

 

Risk Score Calculations

Investor Risk Score

• The investor risk score is sourced from the 3D Risk Tolerance Questionnaire (3D RTQ). The questionnaire measures a client's overall risk based on their personal willingness and ability to take risks with their investments. The investor risk score is based solely on the questionnaire results.
  
  
• See the Enable the Investor Risk Score section above for more information on Orion Planning and the 3 DRTQ.

 

 

Stress Test Risk Score

• Orion Risk Intelligence powers the stress test risk score.

 

Stress Test Risk Score Calculation - Prerequisites

• Orion Risk Intelligence calculates a Risk Score based on the assets inside an account, using holdings that meet the following criteria:
  • The holdings have a valid Ticker or CUSIP
    
    
  • The holdings have a non-zero quantity & value.
    
    
• If an account holds a mix of assets, some of which have a valid Ticker/CUSIP while others do not, the stress test risk score for the account will be calculated based on the assets with a valid Ticker/CUSIP.
  
  
• If an account does not hold any assets that can be evaluated for a stress test risk score, you will see a risk score of "None" for the account. 

 

 

 

Stress Test Risk Score Calculation - Method

• Potential downside (aka a portfolio's potential risk) is calculated
  • Potential downside is the worst possible risk score for the portfolio compared to a suite of default scenarios selected by the Behavioral Finance Team, set within Orion Risk Intelligence.
    
    
  • Redtail-only users do not see the potential downside value itself (that value is available within Orion Risk intelligence.) Redtail-only users see the stress test risk score output.
    
    
• Potential downside is converted into a Stress Test Risk Score

 

 

 

Potential Downside vs. Stress Test Risk Score

• The risk score is scaled so that the broad equity market exposure score will give you a result of 90-100 on the 100-point scale.
  • A portfolio with a potential downside of -41% would generally display a Stress Test Risk Score of 82 in Redtail.
    
    
  • A portfolio with a potential downside of -25% would generally display a Stress Test Risk Score of 50 in Redtail.