When Robert Calhoun became a partner of Paragon Financial Advisors in 2016, he understood the urgency to upgrade his firm’s tech. Paragon was expanding quickly and needed new software that could keep up with its growing client base.
As early adopters of financial technology, Paragon sought to implement the best tech available for their clients. At the time Morningstar Direct seemed like it had it all, but the Paragon team soon saw the shortcomings in its risk analysis. The team knew Direct was not the long-term solution.
Calhoun went to the 2016 TD Ameritrade conference unsure if he’d find an agile, data-centric risk analysis provider that Paragon could confidently use with its clients.
New Beginnings with HiddenLevers
When Calhoun met the HiddenLevers team at the TD conference, he knew this was the solution he was looking for.
A cloud-based, risk analytics + stress testing platform, HiddenLevers covered the Direct analytics with Sector Analysis, Style Analysis, Fixed Income breakdown, and Attribution Analysis. HiddenLevers elevated these Direct basics, empowering Paragon with efficiency + new insights.
Paragon also saw how HiddenLevers blew Direct out of the water with its forward-looking risk model.
“The big difference between Direct and HiddenLevers is that HiddenLevers uses regression analysis to isolate key metrics to determine risk,” said Calhoun. “It understands risk is fluid and applies this across the entire portfolio, giving us a complete analysis of the holdings.”
HiddenLevers allowed Paragon advisors to model risk in a dynamic and holistic way, a huge improvement over the stale MPT statistics in other analytics platforms.
“If a position didn’t exist in Morningstar, it was removed from portfolio and increased the other security holdings pro-rata, which didn’t show an accurate description of risk,” said Calhoun. “HiddenLevers showed model portfolios that were categorized as ‘aggressive’ in Direct were actually ‘moderate’. At that point we knew HiddenLevers was the real deal.”
HiddenLevers Keeps Clients Happy
After switching to HiddenLevers, Paragon advisors saw a significant difference in client satisfaction. “With HiddenLevers, we’re able to confidently present risk and reward to clients, set their expectations, and overall better service their goals,” said Calhoun.
Paragon advisors used HiddenLevers scenario stress testing to not only determine clients’ threshold for risk, but also prepare these clients for market turbulence. Stress testing helped clients understand risk and reward in any market environment.
“Before HiddenLevers 10% of our clients would call us in a panic when the market corrected,” said Calhoun. “But after HiddenLevers and the market sell-off at the end of 2018 happened, we had about 1% clients call. That’s a significant difference.”
Why Wait to Switch?
With its ease of use and sound risk analytics, Calhoun and the Paragon Advisors team quickly integrated HiddeLevers into the firm’s daily workflow.
“The ability to build out a portfolio in the first meeting was a game changer for us,” said Calhoun. “Before the first meeting was a simple review and quick conversation, but now we can build out a model portfolio right in front of the client, allowing us get to the meat of the conversation right away.”
Rather than waiting for the second meeting to dive into portfolio analysis, Paragon Advisors use HiddenLevers to start analysis and stress testing right away, leaving clients impressed and feeling confident about their portfolio.
After switching to HiddenLevers, the Paragon team saw immediate value not only in the software’s core model for portfolio analysis, but also in its client engagement workflow.
The Paragon team can now confidently say it uses the best tech available for its clients.