Morningstar - Investment Risk

In 2018, I joined a new innovation lab at Morningstar that blends behavioral science research with human-centered design. The lab focuses on creating digital experiences that help people overcome behavioral obstacles that get in the way of good money management. Our goal is to rapidly prototype and test these experiences so that by the time they reach product teams, they’re ready to be developed at scale.

For this prototype, our goal was to build a tool that could help investors choose a balanced portfolio that accounts for both their financial and emotional needs. The current industry standard for measuring investor risk is an assessment called a Risk Tolerance Questionnaire (RTQ), which research has shown isn’t a very accurate measure of an investor’s risk tolerance.

User Problems

“I’m thinking about retirement and want to know how I should invest to reach my financial goals. How aggressively should I invest? Is that realistic or do I need to make adjustments to other parts of my plan to reach my goal?” - quote from a user interview

“I’m ready to invest and I know I have to take on risk to get return. 8% a year sounds great! Sign me up. But if I lose money, I’m out!” - quote from a user interview

Competitive Research

I started by researching our competitors in the risk tolerance market. First, I looked at the current Risk Tolerance Questionnaires. Almost all financial institutions have a proprietary version of the RTQ, so I wanted to get a sense of the variations as well as read some of the research about their efficacy. I also looked at a few of the alternatives, one of which, called Riskalyze, is shown in the images below.

Discovery

I interviewed advisors and stakeholders to discuss different approaches to investment risk. Our team focused on a method of measuring risk created by a Morningstar researcher that puts the investor into a mock portfolio and simulates what the actual ups and downs in the market would look like. I conducted design thinking workshops to explore how we might implement this methodology and created user journey maps and a high-level user flow. I also conducted white-boarding sessions with the developers to ideate on some of the design decisions.

first Prototype Design

Then, I began designing possible solutions, gathering feedback from my team and design leadership along the way. These designs went through several iterations, examples of which are shown below. I worked with our developers to build out a coded prototype that users could test by entering their personal information.

First Prototype testing

Next, I organized a user test on the prototype to see if the idea was resonating as a possible alternative to current risk tolerance options in the industry. As a success metric, I ran a quantitative study using the Single Ease Question (SEQ) which asks about the difficulty of the task. I also ran a qualitative study and recorded our observations. Unfortunately, the prototype didn’t test very well in either study, in part because users were confused by the amount of information. We decided to take a step back and try again.

Second Prototype dEsign

I went back to the discovery research and, with my team, we brainstormed possible solutions for the pain points that users identified. For this iteration, I designed my wireframes for mobile screens, which helped limit the amount of information I could present on each screen. I broke the process down into smaller segments and created screens to scaffold my visuals. I focused first on designing the content which allowed me to answer two questions for each screen: 1) What information does the user need?; 2) What action does the user have to take?

Second Prototype Test

Then, I created a version of the screens with visual sketches. During the test for the second iteration of the designs via Invision, the concept was more understandable to users and the SEQ scores were above our established benchmark.

Outcome

I collaborated with the other designer on my team to create the UI and data visualizations shown in the mock-ups below. We defined success through two measures; 1) an increase in portfolio contributions; 2) a decrease in portfolio adjustments (made by clients who used our tool compared to clients who used the Risk Tolerance Questionnaire).