Knowledge and experience are a necessary part of client onboarding. The number of questions can be customized as well as the questions themselves. It is also possible to include or exclude particular questions from affecting the risk score of the client.

Advanced suitability assessment is a feature introduced to provide investment firms with a compliant way to assess investors suitability for different investment instruments. When used, investment firms can define which instruments that requires advanced suitability assessment, which assessment that should be done on the investor and how these assessments affect the suitability status of the investment instruments. The goal is to provide the users of Deep Alpha a compliant and efficient way of assessing the investor and reducing the chance of giving investment advice that includes instruments not suitable for the investor.

Investment firms are able to define what class of instruments or product types should be checked. Multiple instruments can be connected to the same checks and each of the instruments can have up to three checks.

Below is a list of examples of checks that can be relevant:

Note that the checks in use will differ based on the investment universe available, and it can freely be decided when setting up the solution. Each of the checks will require input from the investor, as illustrated in the picture below.

In order to use advanced suitability assessment tenants need to define few things.

During configuration instruments can be labeled with selected checks. This is not mandatory for each instrument. Once checks are defined, it needs to be followed with logic for assessing suitability. This is achieved by defining what are the thresholds for a checks to be positive on instrument level.

In the end logic requires to specify what are the questions that will be asked about checks. Tenant can set up up to 5 questions that will have appearance of a table. Right after that answers need to have score affiliated with it to verify if threshold for each check is met.

In order to assess suitability DAAP needs to verify on an instrument level if all checks assigned to an instrument has met its thresholds.

A core component to the advanced suitability assessment is the configuration of model used in the feature. The model consist of the following:

The model for scoring is defined per check. This model defines how many answer options that will face the investor and how each option gives a score. These are used to decide the investor´s suitability score per check.

It is possible to define which instruments in the investment universe that requires suitability assessment and which checks that are relevant for the instrument. This also includes defining the threshold score that needs to be achieved, in order to mark the instrument as suitable.

The advanced suitability assessment supports up to 5 assessments that should be performed on the investor. Each assessment is presented with a table, and the defined checks will require answers to the assessment. Examples of relevant assessments are: 

Label of the assessments can freely be decided when configuring the feature.

The feature supports usage of educational modals. These modals are placed in the knowledge table and are unique per check. The objective of the educational modals is to allow investment firms to unify how advisors communicate information about the checks when educating the investors. Acknowledging content of educational modals does not affect any previous assessment of the knowledge per check. However, it will allow advisors to educate investors and can be helpful for assessing the knowledge level of the investor.

The pictures below shows examples of educational modals and how the educational modals are visualized in the knowledge table.

All instruments that requires advanced suitability assessment will get one of the following two statuses:

Status suitable is achieved when all checks for the instrument are passed. This means that investor's score is equal to or greater than the defined threshold for the instrument.

Status not suitable is achieved when one or more checks for the instrument fails. This means that investor's score is less than the defined threshold for the instrument.

The suitability status is available in the custom portfolio tab in the advisory page of Deep Alpha:

This allows the advisors to clearly see which instruments to include in the portfolio. Note that instruments that are not suitable can still be included in a portfolio. Therefore, we recommend having internal processes on how the advisors should document selecting these kind of instruments, when constructing a portfolio for the investor.