INTERVIEW WITH MIKE MCDANIEL: CO-FOUNDER, RISKALYZE

I had the opportunity to interview Mike McDaniel, Co-Founder and CIO of Riskalyze.

Tell us about yourself?

I was born worrying, now I get paid to worry. Family man with an entrepreneurial heart. I love managing money. I love managing risk. I started managing assets during the tech bubble and prior to 9-11. I am grateful to have earned respect for the market during my freshman year (2001) as stocks plummeted. I have worked for a big brokerage firm, large independent broker/dealer and now I operate as my own RIA. I co-founded Risklyze as a way to make a lasting impact in an industry that needs a revolution that favors investors.

What is Riskalyze?

Riskalyze is a tool that uses math/science to align investor risk tolerance with the most efficient portfolio possible. Advisors use Riskalyze as a proposal system to close new accounts and as an ongoing portfolio management system, all while focusing on risk and reward. Riskalyze infuses math and science into investment decisions that have historically been emotionally based.

Retail investors tend to be notoriously bad market timers and their portfolios suffer. How does Riskalyze solve that problem?

Riskalyze aligns each investor’s appetite for risk and return with the most efficient portfolio BEFORE the next market drop occurs. We know that investors get emotional when their losses approach or exceed their threshold for financial pain. Riskalyze makes sure that investors enter bear markets and pull backs with the right amount of risk, thus decreasing the propensity of making poor, emotional sell decisions at market bottoms. Knowing how much is at risk is powerful. Knowing each investors pain threshold in the portfolio design stage- before the next market drop- is paramount.
In today’s low interest rate environment, the biggest issue for retirees and their advisors is trying to generate income without taking on too much risk. How do you go about achieving this?

I have been less and less dependent on interest bearing investments over the past few years. I believe that the risk reward relationship in bonds is and will continue to be horrible. I favor cash over bonds. I have been using stock market returns with timely sells to generate income for clients. I expect that it will be years before yields on bonds rise enough to get me interested again. I use the Riskalyze “Interest Rate Stress Test” to evaluate and analyze various bond investments. That tool has won me new clients and saved me from getting to heavy into bonds.

Thanks Mike.
note: I own TBT and PST in my personal portfolio

http://blog.riskalyze.com/post/54013148848/two-ingredients-for-being-a-risk-aware-advisor

The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.

Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA. For more information, visit www.aaronkatsman.com, www.gpsinvestor.com or email aaron@lighthousecapital.co.il.