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New solution offering enterprise-level risk insights; goals-based risk framework shared at 2017 investment conference
Morningstar, Inc. (NASDAQ: MORN), a provider of independent investment research, shared unique risk-related insights at the company’s 29th annual investment conference for financial advisors, offering multiple angles from which to view and assess risk.
The conference’s Innovation Lab will feature interactive demonstrations of the research and development work Morningstar is advancing to help firms and advisors gain a clearer picture of business risk and portfolio suitability across an entire book of business.
Using proprietary algorithms, Morningstar’s solution can help identify unintended overexposure across multiple client portfolios managed at advisors’ discretion. The approach identifies a suitable portfolio given an investor’s goals, prioritizes investigation into sources of overexposure, and informs a firm’s strategy for defining advisor roles and pinpoint opportunities for advisor training and development.
The upcoming offering, in development as Morningstar Data Catalyst, may also assist advisors with best interest requirements as well as firms looking for new business opportunities with their existing investors. Morningstar expects to launch the solution through software services and data feeds.
Morningstar Data Catalyst will build on the Global Risk Model, introduced in 2016 to help identify and assess the amount of risk in a portfolio by tracking each stock’s underlying economic exposure to 36 factors, including six style measures unique to Morningstar. Morningstar plans to expand the Global Risk Model to additional asset classes, beginning with corporate, sovereign, and municipal bonds later this year.
Morningstar sees an unmet need to view risk through multiple, additional lenses,” Tricia Rothschild, chief product officer for Morningstar, said. “We work to understand risk at the firm level, and how it may create unintended risk consequences within individual client portfolios. We take into account underlying exposures within individual securities using our Global Risk Model. And we examine how the psychology and related choices of the individual investor can introduce unintended and often unmeasured sources of risk, particularly in the face of significant market events.