Wealthguard: Review and Alert thresholds explained
When creating a model in Wealthguard, you'll be prompted to enter a percentage threshold for the "review" and "alert" states. These thresholds determine when you and the client are alerted to a drop in account value.
Basis
Implicit in all WealthGuard calculations is the notion of a "basis". Basis is the dollar amount we compare to current market value to evaluate the condition of an account. It signals WealthGuard to send New High, Review and Alert messages to both advisors and clients.
While Basis embodies the idea of an all-time high or high watermark value for an account, it is a more sophisticated measure. When you activate an account on WealthGuard, the initial basis is set as yesterday's balance. From there, Basis is adjusted for deposits and withdrawals into the account. Adjustments for these cash flows preserve the relative gain/loss in an account in order to focus WealthGuard alerts on market-driven changes to client accounts. For example if the account lost 5% relative to the Basis, and the client makes a deposit into the account, the Basis is increased by the deposit but also preserves the 5% loss post-transaction. Likewise for withdrawals, the basis is reduced and preserves the relative gain/loss post-transaction.
Basis is also adjusted any time the market value exceeds the current basis in order to help WealthGuard monitor and preserve market gains.
The Basis is not affected by changes to the "review" and alert" thresholds.
Review
A Review message is designed to give advisors an opportunity to have a pre-emptive conversation with a client at a time when their experience is becoming more challenging but before reaching their personal risk tolerance.
When an account balance falls below the Review threshold it will be marked for review in the advisor's WealthGuard dashboard, included in the Advisor's WealthGuard summary SMS message and an SMS message is to the client.
In the WealthGuard dashboard, you will see accounts in a "review" status highlighted in yellow.
For example, if you select a review threshold of -10%, the account balance would need to fall by 10% (relative to the Basis) in order to trigger a review status.
Below is an example of what the client will see:
WealthGuard Reminder
Your Advisor is reviewing your account [ACCOUNT NAME]
Question? Contact [ADVISOR NAME AND CONTACT NUMBER]
Help? bit.ly/reviewWG
Alert
An Alert message is designed to notify both advisor and client that the account value has reached a critical value at the limit of the client's risk tolerance and may indicate action is necessary.
The Alert threshold works in the same way as Review. For example, if you select an Alert threshold of -15%, the account balance would need to fall by 15% (relative to the Basis) in order to trigger an Alert status. The WealthGuard Number is a representation of the Alert threshold expressed as a dollar value. When the account balance falls below the WealthGuard Number, the account is marked for Alert in the advisor's WealthGuard dashboard, included in the Advisor's WealthGuard summary SMS message and an SMS message is to the client.
In the Wealthguard dashboard, you will see accounts in an "alert" status highlighted in red.
Below is an example of what the client will see:
Your Advisor is activating your WealthGuard strategy on [ACCOUNT NAME].
Account Questions? Contact [ADVISOR NAME AND CONTACT NUMBER]
Help? bit.ly/alertWG