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(4/05/2011) Voyant Launches Market Crash / Loss Capacity Simulator

Leading financial planning application supplier, Voyant today announced the launch of a market crash simulator, designed to give advisers the ability to examine a client's capacity for loss, within its 'Voyant Adviser' online planning solution.

This vital part of the holistic planning and client risk profiling process was recently highlighted by the FSA in last month's 'Finalised Guidance: Accessing Suitability Document, ref 1.8 1: 'although most advisers and investment managers consider a customer's attitude to risk when assessing suitability, many fail to take appropriate account of their capacity for loss'

The Voyant Loss Capacity Simulator, the first of its kind available to UK advisers, provides 2 other powerful pieces of data to the adviser:

  1. the calculated average annual percent return needed from a client's plan outset for the long-term plan to complete successfully with a market crash event simulated
  2. the average annual percent return needed after a major (simulated) crash event for the plan to complete successfully.


Taken together this new 'capacity for loss' data provides both advisers and their clients with a vivid visual and scientifically-based analysis to support the accurate measurement of a client's attitude toward risk.

Bob Freeman, vice president of Voyant UK explains:

"Market cycles are a concept not normally discussed between adviser and investor. Product providers, risk profilers, and stochastic modeling systems do not touch upon the concept of what could happen to a client's financial condition if a market downturn happens at a particular time in their financial timeline. It is a fundamentally important part of the investment discussion that is most often ignored.

Freeman continues:

The FSA recognises the importance of this shortcoming and in its latest standards mandates advisers and clients have a discussion about liquidity and capacity for loss for any investment advice to be considered suitable.

"This new tool is a simple to use but very powerful service. Advisers can enter a simulated market downturn event, similar to recent market events and see the effects visually on a client's portfolio. The event is movable, so advisers and clients can fully review each individual client's potential issues with plan success and liquidity, while fully discussing the client's willingness and capacity to accept these kinds of losses now and in the future.