To help advisors and supervisors comply with the SEC’s Regulation Best Interest (Reg BI), LPL introduced account-level risk scoring in mid-2020.

Risk scoring adds a layer of protection for advisors, their clients, and supervisors by ensuring that brokerage account investment allocations are aligned with an account’s stated investment objectives.

Knowing whether a trade is in line with an account’s investment objective promotes a deeper understanding that may result in:

  • Making adjustments to an investment allocation, investment objective, or both
  • Documenting the best interest rationale for trades
  • Conversations with clients about their goals and risk tolerance, leading to stronger client relationships and better alignment on goals

The benefits to advisors of this scalable technology don’t end with compliance with Reg BI. The technology is currently available in the LPL Proposal Tool, powered by AdvisoryWorld, and the AdvisorSleeve Model Hub, and will soon be expanded to Model Wealth Portfolios (MWP).

In the future, we plan to integrate risk scoring across our digital ecosystem, which will provide advisors with greater insight into the recommendations they make and how they construct portfolios, as well as providing their clients with a greater transparency and understanding of the investment decisions they make.

LPL advisors can learn more on the Risk Scoring page on the Resource Center.

This article is intended for Financial Professionals.

 

risk scoring