And the results are coming in…
So, after a week of user-testing – we have some results. Before I go any further – I realized that in the last couple posts, I never clarified as to what we at Accevia are trying to accomplish:
We want to make investing easy for people like me (finally have some savings in the bank account). We want to do this by having professional advisors create portfolios catered towards smaller investors (i.e. include only mutual funds & ETFs, minimize transaction costs, etc.) that would act as a starting point for someone like me. So, instead of having to start from scratch with the mutual fund screener at TD – I can quickly get started with a pre-made portfolio of TD mutual funds and ETFs, which already has solid performance and risk statstics as verified by Accevia. I can also ask any specific questions (such as tax or IRA questions) to an advisor and pay as I go, instead of being completely shunned because I’m too small of a client.
So, on Accevia – not only can people see details on advisors but also details on the portfolios that they are recommending. Now, during our last user-testing phase, people mentioned to us that they found the information given on portfolios far too complicated. We went through and completely redesigned our portfolio pages’ designs and used Usabilla to user-test these designs – if you want more details, check it out on our last post here.
Here’s a heat-map of the improvements that people would like us to make on the most important screen in the entire website – an advisor’s portfolios:
One of the comments that I would like to highlight is about the bottom right forecast graph. It went as follows:
This needs to become more clear. Why does it have 2 colors? Where do the probabilities come from? Now that I think about, this is seriously missleading. What kind of model are you using to predict this? Couldn’t there be compliance implications if the portfolio performs way worse than predicted?
The colors bit is an easy fix but I would like to take this opportunity to clarify that all forecasts are exactly just that – forecasts.
Our original idea behind forecasts was to give investors a basic idea of how they can expect a portfolio can do in the future, purely based on historical performance. This was based off the fact that these forecasts are also generally presented to high net-worth clients when they first start exploring investment strategies.
Our particular model is based off of using Monte Carlo. I’m not going to bore you with the math but basically, we simulate a portfolio 10,000+ times and each time the value for an investment in the portfolio is randomly picked based on an underlying distribution (generally normal – think bell curve). The final distribution for a portfolio, which is used to determine the probabilities, is based off the simulations. So, if out of the 10,000 iterations – 3,000 times the value of a $10,000 portfolio in 2015 was > $10,000 – then there is a 30% chance that the portfolio’s value will be greater than $10,000.
What are the compliance implications of this forecast? Every forecast has a disclaimer associated with it stating that the forecast is supposed to give you a rough idea of how this portfolio would perform in a “normal” market, i.e. if there is another credit/oil/war crisis, then the portfolio value would probably fall out of the bounds of the forecast. But seriously, if we could predict how a portfolio was going to do in every situation, I certainly would not be here right now.
We hoped that people would use the forecasts to get more comfortable with the idea of investing and with their own risk profile – sometimes, it helps to see how a portfolio can be expected to do in the future to see if you’re comfortable enough with taking the step to go through and invest in it. But then again, that’s my opinion.
It’s precisely these issues that come up during user-testing. So, tell us what you think - please user-test our screenshots, if you haven’t already done so! We want to see if you get it or not because hopefully, Accevia will be what you’ll be using some day to make your investing decisions easier.
That’s it on user-testing – my next post is going to be on Pivotal Tracker. Even if you don’t have a startup – definitely use this in order to organize your life – more on this next week!