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How Orion Advisor Services Is Helping Advisors Manage Credit Risk

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Financial advisors who are clients of Orion Advisor Services can now get up-to-date automated information on the changing risks in their clients’ bond portfolios.

As a result of Orion’s new partnership with Moody’s Analytics, those advisors will have access to the bond ratings of Moody’s Investors Service at no extra cost.

More specifically they will have access to the ratings on the debt of more than 120 sovereign nations, 11,000 corporate issuers, 21,000 public finance issuers, and 72,000 structured finance obligations.

“Our mission has always been increased transparency, and our integration with Moody’s provides advisors and their clients with a clear picture of their portfolios, enabling advisors to make better decisions on behalf of their clients,” said Orion CEO Eric Clarke in a statement. “Whenever we are able to automate processes for advisors, we consider that a huge value-add that enables them be the best possible fiduciaries.”

(Related: The Low-Yield Bond Market Is Back)

Timely information about bond credit ratings can be invaluable for advisors in the current low yield environment. They can either move out the yield curve, into longer term bonds, to collect higher yields for clients, but that’s risky if rates rise. (Rates are rising in the U.S. but so far only in the short end of the yield curve.)

Or they can move down in credit quality, buying bonds that have a greater risk of downgrades, which themselves are based on the risk of delinquency or default.

(Related: Fiduciary Rule Readiness Check: June 9 Effective Date)

Information about the credit quality of bonds is especially important in light of the Labor Department’s fiduciary rule. 

“Our advisors have to be able to justify what they doing and how they’re doing it,” Orion President Randy Lambert told ThinkAdvisor. For example, said Lambert, “They may have to have a certain asset class and rating of bonds in a portfolio, and this helps them manage that. Having real time information is important, to make sure it’s not dated and to share with clients.”

It’s a tool that advisors had been asking for, said Lambert. They wanted an automated service to update bond ratings rather than information that they had acess to but had to manually update.

More than 1,000 firms use Orion’s technology solutions to help service over 1.5 million accounts and $450 billion in assets under administration.

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