Profile

This page covers the following location(s) in NaviPlan:

Plan Management – Asset Allocation – Profile

Plan Management – Asset Allocation – Profile - Asset Class Weightings dialog box

Plan Management – Asset Allocation – Profile - Optimize dialog box

Planning Objectives :: Procedures :: Related Information

Planning Objectives

ClosedWhat do the different investor profiles mean?

An investor profile is an asset allocation strategy based on your clients' tolerance for risk as defined by their answers to the Investor Profile Questionnaire.
There are five possible investor profiles in NaviPlan:

Investor Profile Description
Conservative A conservative investor is typically either close to retirement or has a low tolerance for risk. Their focus is on preserving capital and income. They are concerned about volatility and the possibility of market loss; therefore, investments are low risk (for example, T-bills, deposits, etc.). The return rates are generally low and the investments are vulnerable to loss due to inflation. Earnings might not be reinvested at the same rate of return.
Moderate Conservative A moderate conservative investor typically accepts some risk but is still relatively conservative. They are still somewhat concerned about volatility and market loss. Their investment choices generally have low volatility. Earnings are lower than those on more aggressive investments. This factor could make the investment vulnerable to inflation. Earnings might not be reinvested at the same rate of return.
Moderate A moderate investor is a middle-of-the-road type. They typically tolerate some market fluctuation, but not high volatility. They have a decreased willingness to accept both the risks of inflation and a possible lower rate of return on reinvestment. This investor generally has some investments that fluctuate, balanced with investments with less frequent fluctuation.
Moderate Aggressive A moderate aggressive investor typically takes risks and tolerates the possibility of a market loss in order to experience greater return. They have a larger percentage of investments subject to fluctuation. They are reasonably comfortable with volatility and expect values to change on a relatively frequent basis.
Aggressive An aggressive investor typically has a long investment time period. They are willing and even eager to accept the possibility of market loss for the probability of higher returns. They posses some affinity for speculative investing. Their focus is frequently on short-term rather than on long-term market timing. They have little concern for the effects of inflation and the ability to reinvest. This investor is comfortable with dramatic market changes.

Procedures

ClosedHow do I define a different investor profile for my clients?
  1. Select the Override Investor Profile option.
  2. Select a new investor profile for your clients from the Select an investor profile: menu.
ClosedHow do I make changes to the suggested asset mix?
  1. From the Profile page, select for Customize Asset Mix and choose Weightings... from the menu.
  2. Select Override default asset class weightings.
  3. Enter new class percentages for each class you wish to modify.
  4. When you are satisfied with these options, click OK.
ClosedHow do I modify risk assumptions?
  1. From the Profile page, select for Customize Asset Mix and choose Optimize... from the menu.
  2. Select Override Standard Deviation.
  3. Enter the standard deviation in the Risk field. Once a new standard deviation is entered, the graph updates to show the manually entered standard deviation.
  4. When you are satisfied with these options, click OK.
    Note: Clicking a point on the Efficient Frontier line shows the return rate and standard deviation of that point. Double-clicking at a specific point on the line of the Efficient Frontier graph selects that point as the new suggested asset mix. Alternatively, clicking on the line (which opens a balloon message), and then pressing Enter has the same effect as double-clicking that point which selects that point as the new suggested asset mix. Use this process as an alternative to overriding the standard deviation manually.
ClosedHow do I define the maximum or minimum allocation for assets?
  1. From the Profile page, select for Customize Asset Mix and choose Optimize... from the menu.
  2. Select Individual Constraints...
  3. Select the check box for each class you wish to edit and enter new Minimum Holding and Maximum Holding data where desired.
  4. At the bottom of the dialog box, leave a note explaining the changes you made.
  5. When you are satisfied with these options, click OK.

Related Information




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