The core premise of ATA RiskStation™ is that no single measure of risk is perfect and reliably models downside exposure in all market conditions and for all portfolio types.
Recognizing that individual risk models can include debatable assumptions about how market data is distributed, the stability of those distributions, the volatility of individual positions and the correlations between the portfolio holdings, it becomes clear that the final risk projections are highly dependent on many assumptions that may, or may not, hold true in the future. Furthermore, additional assumptions about the “correct” period of time to use for a risk analysis or the confidence level selected, further increase the range of projected risk outcomes from even a single risk model.
As advisors move toward a fiduciary role, suitability issues will become more complex. Previously, if an advisor placed an investment in a client account, it just needed to be “suitable” at the time it was made. Now, as advisors assume a fiduciary duty to clients, they will need to pursue closer alignment between currently embedded portfolio risks with the client’s current goals and risk tolerances.
ATA RiskStation™ technology can, on a daily basis, systematically monitor and report on portfolio risks for any defined scenario against the risk tolerances expressed by the client to an advisor at the most recent meeting. If risk mismatches for any client are identified during nightly processing, e-mail risk alerts are automatically sent to the advisor and all other authorized oversight groups or individuals at the firm.