Any time that a product provider launches a tool to aid 'understanding risk' or something that purports to be helpful, my natural cynicism leads me to think it has just been designed to sell more products. It is probably true in Architas’ case, but it is still reasonably useful.
There are three parts to Architas' recently launched fund tools: understanding risk, comparing risk and exploring their funds. The 'understanding risk' section seems to be the key component.
To aid this review, I decided to complete its 'understanding risk' questionnaire myself. I answered it honestly and it said I was a risk profile seven, but with a 35 per cent chance of being a six.
At least it did not say I had no tolerance for risk.
The main difference between a six and a seven is a much higher emerging market weighting in seven (27 per cent), compared to six (7 per cent). Personally, I am comfortable with the result, but I imagine that many advisers and clients would look at the asset allocation and probably go for the slightly lower risk portfolio.
That emerging market weighting does jump dramatically between the two highest profiles, which does not sit completely comfortably with me. It then takes you through to a choice between passive and active – neither solution seems that cheap – but it does provide a good breakdown of funds, performance and then, finally, a customised report.
Actually this part is a pretty slick process with reasonably clear explanations in the report.
The 'comparing risk' section handily looks at seven different risk model tools and gives you the equivalent Architas score. And finally, the 'compare funds' section allows you to compare performance, charging, asset allocation and underlying funds of up to three Architas funds at a time.
Should an adviser be using risk tools developed by the product provider? I will leave that as an open question, but my instinct is to say that it creates too cosy a relationship.
If you are already using Architas funds and solutions then its new fund tool centre is a useful add-on; however, if you do not use them then really something independent is far more appropriate. I will give this three out of five.
Ben Yearsley is director of Shore Financial Planning
