Riskalyze – Quantify that (Risk) number not roll the dice

Company profile:

Online or offline – whenever one is trying to look towards future through an investment lens, there is always the talk of future gains, maybe short-term losses but a long-term strategy always is a return based on your risk profile. Creating a risk profile – the questionnaire that assesses – is not complex. What if – someone could offer you – ‘your risk number’? Riskalyze does just that. They are the world’s first risk alignment platform.

Founded in 2011 by Aaron Klein, Riskalyze has over 100 employees, is based out of Sacramento, California and can be found under Their typical clients are Wealth Management and Advisor firms.

The Business

Riskalyze is a B2B offering, for investment advisors to capture a quantitative measurement of client risk tolerance. They have a patented Risk Number™ technology that objectively calculates an investor’s true risk tolerance. It empowers advisers to show the investor their Risk Number and enables them to build a portfolio that contains just the right amount of risk. The platform also allows advisers to set expectations within a 95% probability range. Not only does Riskalyze provide advisers with the Risk Number, their Autopilot platform empowers advisors to execute digital advice and Compliance Cloud enables compliance teams to spot issues, develop real-time visibility and navigate changing fiduciary rules.

The Engine

How many times do we hear people say they do not understand one or the other financial instrument they are invested in or they cannot decide which risk profile they really want to follow. It is hard. It is even harder when it pertains to our finances as we tend to incorporate the risk bias in our heads and hope that advisor view will bring about the desired outcome. Riskalyze for the end-investor provides a realistic quantifiable number that helps the investor bring the fears of the brain to live real demonstration. Riskalyze allows its clients to participate with the customer to bring the risk number out in open. What is the Risk Number™ all about? Simply put, it is about how far an investor’s portfolio can fall, within a fixed period of time, before they will capitulate and make an emotionally-charged poor investing decision. “The Risk Number empowers advisers to create fearless investors,” says Aaron Klein, CEO at Riskalyze.

This is what Riskalyze is offering its entire client segment of advisers. Their product is designed to cover the online and traditional advice markets.

The pricing model is relatively straightforward with charge per user for managing certain number of clients.

The Intrinsic Value

There are two advice models prevalent – Robo-advice and Financial advisory, traditional version. Both versions are relatively clear in terms of defining risk for the investor. They are both focused on creating a client risk profile based on a questionnaire, essentially subjective semantics. If you had to put a risk number against your profile, it would have to be an advisor driven calculation based scenarios or a DIY model. Riskalyze adds a system, a tool, a real number empowering advisers in both models, allowing them to create clarity around each investor’s risk tolerance.

Riskalyze is acting as an enabler to the two models. It is not displacing anything existing but instead it is adding value to the process of quantifying risk and helping advisors help their end-customers make better decisions.

Competition in this case is an activity in the process that has always been ‘spoken and discussed’. Riskalyze is bringing in technology and tools to make the process efficient with substantive evidence.

The Profitability Conundrum

Riskalyze is investing and growing and developing their business. With $139 billion assets under management already, there should be no doubts about their profitability number.

The Verdict

Riskalyze is a one-of-a-kind service for advisers. Their proprietary, patented technology makes them the leader today in this space. With a committed leadership team positioning the business further towards growth there is more to come from Riskalyze. They have grown from 4 employees to over a 100 employees in 4 years and today help advisers manage over US $139 billion  dollars in assets with over a thousand advisers as their clients.

What they are doing is unique and it makes their customers stick to them as this is a solution unforeseen before. They have the key, the lock and also own the door to the putting a number to the investor risk. They are out there to impact more than one process. Question is whether this is going global in the same segment or going diverse (different customers) and managing geographies. Riskalyze quantifies risk, keeping the investor from having to roll the dice.

Founder comments

Riskalyze is about empowering advisers to become fearless investors. We were confident that introducing the Risk Number into the industry would be a game-changer, and honestly, these past few years have given us by far the best 5 year start we could’ve ever hoped for. We serve some pretty incredible advisers who make it easy to continue our mission to align the world’s investments with each investor’s Risk Number. It’s an honor to be highlighted by Sush Bapna at SQUEX! – Aaron Klein, CEO at Riskalyze.

Disclaimer: This material is for informational purposes only and should not be construed as research or as investment advice, nor should it be considered information sufficient upon which to base an investment decision.  Further, this communication should not be deemed as a recommendation to invest or not to invest.

The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete in its accuracy and cannot be guaranteed.