Investment Product Design

There is increasing pressure from regulators to ensure that retail investment solutions are suitable for customers' risk profiles and financial needs. Relying on a client's attitude to risk or broadly defined fund sectors is no longer sufficient; firms are expected to verify that the customer can sustain potential losses associated with the recommended investment.

For advisers and distribution platforms, this means being able to offer risk-graded investment solutions with well-defined risk characteristics, which can be mapped explicitly to client needs.

For manufacturers, this means designing products or funds which can be integrated easily into the risk-grading framework of different advice processes and distribution platforms.

Reinforce product governance, compliance, and suitability

Stress test new product designs or existing products, including products with guarantees or path-dependent investment rules, against independently defined economic stress scenarios. Perform what-if analyses that allow managers to test the impact of updated views or active management tilts on alignment of actively managed funds with retail risk targets or fund risk gradings. Perform the necessary analyses to address specific issues of compliance or suitability. For example, these solutions support analyzing the probability that a product beats a specified benchmark or deposit rate, potential loss in a bad year, and economic value of a guarantee.

Improve your product design and communication

Product manufacturers and asset managers can use the product risk dashboard as a basis for product design and marketing, for communicating product risk to advisers and clients, and to align products or portfolios with specified customer objectives and risk profiles. This includes both wealth accumulation and income products. Demonstrate and compare the effectiveness of different product design options, providing an independent analysis for the comparison of new products against industry benchmarks used for product promotion. Help build optimized, risk-graded investment solutions, according to defined investment objectives and risk targets.