New tools to prove you acted as a fiduciary

Bob Veres recently conducted a review of SmartRisk Pro, one of the risk tools Covisum recently acquired through PrairieSmarts.

Here's an excerpt:

With Smart Risk, you can import a client’s portfolio holdings from Orion, Redtail or a spreadsheet, and the software will calculate your “downside expectation” – that is, the maximum potential loss in the portfolio – over a day, a week, a month or a year. “The idea is that the advisor would show the client how much the portfolio might be down, in dollar terms, over a single month,” says company co-founder Ron Piccinini.


The output also gives an “asset interaction” score that defines how diversified the portfolio is – or, in some cases, is not. “Some investors will select a lot of different funds in their 401(k),” Piccinini explains, “and they think they’re diversified. But when you look under the hood, you see that they’ve bought a lot of different versions of the same investment.”

Finally, there’s an evaluation similar to the traditional beta measure, which shows how the portfolio might react if the S&P 500 were to drop 10%, 20% or 30%. The software allows users to perform this evaluation on a dozen different indices, basically stress-testing the portfolio against different types of bear market.

Check out the full article here.

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