The risky business of choosing an RTQ

Author

Joe Moss
August 24, 2024

SPONSORED BY

Happy Saturday!

I’ve been demoing risk tolerance software and I’d like to share my thoughts. If I may. I’m starting to feel like this guy:

the food critic in Ratatouille

I’ll slice and dice this a few ways. First and most importantly…

LinkedIn Followers

*Morningstar’s risk and Orion’s Hidden Levers excluded because they’re part of a much larger LinkedIn page

Riskalyze has a commanding lead in this area, not even any close competitors… somebody should get on this.

Next up, advisor satisfaction scores based on scores from Kitces and T3 surveys:

Advisor Satisfaction Score

Kitces and T3 both use a 1-10 scale. I’m combining the scores and dividing by 4 to create a 1-5 scale or dividing by 2 if only one of them has a reported a rating. This is just the risk category… Tools that were included in another category but happen to have a RTQ have not been included.

You’ll notice the larger players have scores in the 3s while the stand-alone offerings have scores in the 4s. Best-in-class anyone?

So what next? You’ll notice I’m going from most objective to most subjective in my rating systems.

Now let’s talk:

Pricing - $$$

Comparing apples to apples across all the feature sets would take more time than I have, so I’m going to go with basic starter plan pricing/mo but at the yearly rate because some only offer the yearly rate.

Now there are many risk tolerance questionnaires you can find for free and plop into Google or Microsoft forms, so free is also an option, or not doing RTQ at all like I mentioned in my last email.

So there’s quite a range on pricing here. I do want to mention that Nitrogen just brought back a very basic version of Riskalyze for $99/mo, they were much closer to the $400/mo per user mark not long ago. I guess they didn’t want to lose all of their onesie/twosie advisors.

A word on Compliance / Client Acquisition

I heard a few times during demos that most people are looking for RT software because of two reasons - compliance around portfolio management and in order to win new clients.

Both of which the value can get pretty high. Advisors will spend a lot of money to get new clients because the ROI is excellent. And the negative ROI of not being compliant or having some consistent system for investing other people’s money is also quite serious.

So if you’re slapping on some RTQ to your 20 other advisortech softwares, there are some pretty cheap options available. But if RTQ is a main part of how you win and manage clients, much more robust systems are available too.

Now a word from our Sponsor (and the beginning of my next comparison - value per $ spent on RTQ):

PreciseFP’s RTQ, which you can get started with at $89/mo includes much more. The RTQ is really just a small part of the offering, but there’s a lot to it:

PreciseFP also includes:

  • All manner of data gathering forms

  • Fact finder and financial planning templates

  • 34 major advisortech integrations

  • Esign-ing

  • Account opening forms

  • Client data completion percentages

  • KYC

  • Workflows

In fact, here’s list of all the features: https://precisefp.com/features/

Which brings me to:

Very subjectively, Value per $ spent

On the ones I’ve personally demoed/used, I won’t include those I haven’t.

Now how in the world to rank this. PreciseFP is very high obviously, you get a whole lot per dollar spent there. And I’m not going to rank them for obvious reasons.

I suppose I’ll use general categories:

Very high value per dollar spent:

  • Yourstake does a whole lot for $83/mo. AI statement upload and analysis, RTQ, auto-presentation creation, chat with AI bot about the analysis… and probably a few other things

  • OnPointe also has an incredible feature set for its low price including even some annuity and permanent life insurance sales tools if you’re into that. I’m not.

Medium value:

  • Tolerisk - very clean and simple UI, straightforward risk scale based on stocks/bonds ratio (no fancy proprietary stuff), has both capacity for risk and appetite for risk which I like:

Low value:

You’re paying a lot for what you get: Nitrogen, Orion Risk, StratiFi

  • The first advisor I worked for used Riskalyze and I loved it, the clean UI, the GPA score… its just an often complaint I hear about it now is that it’s too expensive

  • Orion (Hidden Levers)… Sorry, but I’m strongly biased against Orion - I feel like everything I’ve used has been frustratingly designed and overpriced

  • With StratiFi, there is a possibility with a lot of users, and not many accounts, where the value would be very good, but c’mon, these numbers are huge. But I think it’s a strong alternative to Nitrogen if you like paying big numbers. More thoughtful UI, some really great visuals… They do have the 2nd highest advisor satisfaction score on T3.

Comparing actual risk scores:

I wanted to see how a simple portfolio would score across tools. And generally, we all think in terms of 0-100 when it comes to risk tolerance:

Portfolio: 75% VTI / 25% GLD

Risk Scores:

  • Advyzon: 85

  • RightCapital: 78

  • Tolerisk: 77

  • Stratifi: 6.7

  • Investipal: 58

  • OnPointe Risk Analyzer: 56

Advyzon does most things superbly well, but their risk scoring needs some help. RightCapital and Tolerisk are in line with a straightforward 1-100 stocks/bonds volatility scoring system. StratiFi is actually 6.7 out of their 10 point PRISM scale but I’m calling it 67. Investipal and OnPointe are doing something more fancy I think - when you put stocks and gold together, you get a much smoother ride I guess.

So what would Joe Moss choose?

Now you’ve done it. Put me on the spot.

So based on the demos I’ve had, and I’ve only demoed about half the options…

And I have a bias toward Simplicity.

After all:

❝

Fancy fails. Simplicity scales.

I would choose Tolerisk. I like the normal scoring system. I like the simplicity and cleanness of the UI. I like the capacity vs appetite for risk. I like that Bitcoin scores a 717 or something crazy.

But in ‘Merica, you got choices. So choose wisely. And have fun.

And maybe skip the LinkedIn followers as a metric to consider. :)

Warmly,

Joe Moss

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