SmartRisk helps advisors determine a portfolio’s downside potential, allows the advisor to set reasonable expectations with clients prior to the next downturn, and potentially make adjustments to mitigate the risk.
SmartRisk is a product designed to help advisors set proper downside expectations for clients. Unlike Social Security Timing and Tax Clarity, which model scenarios based on legislated tax law and Social Security regulations, SmartRisk is a product dealing with the unexpected and arguably, the unknown. Simply put, SmartRisk deals with unforeseen consequences.
Prior to the advent of SmartRisk, discussions of risk were often centered on statistical simplicity rather than modeling accuracy, if for no other reason than the computational requirements of so called "heavy tailed" modeling. Today, those computing limitations no longer exist, and risk considerations can now be managed to avoid the destructive, voluntary investment decisions that often accompany major market adjustments. In truth, the actual risk of significant losses in client portfolios is much greater than the traditional "bell curve" standard deviation calculation would suggest.
Overall, SmartRisk, while not meant to be predictive, allows advisors to have a conversation with their clients in advance of the next downturn, and to set reasonable expectations. In addition, once that larger downside potential is identified, adjustments can be made to mitigate the risk.