AKG ratings are widely used in the market, both directly from AKG and often from the rated entity itself. But also in a variety of leading portals, software systems and publications. The scoring approach used for all AKG ratings is that of a balanced scorecard, with a combination of rated criteria and no dominant factors or measures. The criteria used for AKG ratings are described in the relevant AKG Rating Guide: Financial strength ratings communicate the customer-centric assessment of a company`s ability to maintain its operational performance to meet customer needs. These assessments are specifically designed for use by consultants working on behalf of these clients. This contrasts with the credit rating performed at the level of the group or parent company, where investments or debt investments, etc. are carried out. This is entirely reasonable for creditworthiness, but unreasonable and inappropriate for a customer-centric assessment. AKG therefore adopts this focus on operational performance and does not aim to evaluate Group/Holding companies. Our assessment is generally at a lower level than other types of rating, although taking into account these aspects related to the group and the parent company remains a very important contextual criterion. This fundamental objective is different from that of global credit rating agencies or those issuing ratings whose main perspective is to meet the needs of another audience. AKG ratings are not credit ratings and the strength and sustainability interests of market investors who may use the ratings are different and may even be at odds with AKG`s customer perspective.
For more information on how AKG applies this financial strength analysis to support the market by providing ratings and reports in various sectors, see the related links. The ratings and ratings that sit next to it are created using AKG`s approach to providing a long-term perspective. However, assessments and assessments are constantly put to the test, and AKG has the ability to review and republish assessments at any time. Although the assessment behind AKG assessments is complex, the scale used for the presentation is deliberately simple to ensure accessibility and comparability. The scales used are a scale (the lowest) – (the highest) for star ratings and A (the highest), B+, B, B-, C, D (the lowest) for the overall rating of financial strength. All AKG ratings for financial soundness at the company level are included in the AKG rating portal to provide transparent and easy access. It is also important to understand the sectoral approach (comparative peer groups) used in our financial soundness assessment and rating process. Only this client perspective, reflected in AKG`s scoring approach, is relevant to the due diligence and advisor selection activity to provide the required perspective of results for the client. From the customer`s perspective, the financial strength of companies should be focused on the operational level, especially the company that selects a customer`s product or service. This is important because, from the customer`s point of view, it is this company (and not a superior business unit) that must survive in a form that retains the operational characteristics necessary to meet its fair requirements. And at this level, clients` consultant selection needs must be met. We hope you find the animation useful and please let us know if you have any questions for the AKG team.
For more than 30 years, AKG has focused on the financial strength requirements of the market, particularly those of financial advisors who must determine a company`s ability to deliver sustainably on behalf of their clients. First of all, this financial strength is purely a question of solvency. This is not the case. While solvency is always important and a factor in assessing financial strength, it is not the big picture. There are a few common but understandable misconceptions associated with assessing financial soundness. Many companies such as platforms, DFMs, asset managers or even financial advisors can sometimes make this mistake. I`m like, “Well, the assets are held by a custodian bank, or there`s a policy protection system that`s going to come into effect, so my financial strength won`t matter.” At AKG, this in turn is motivated by the end customer`s point of view and the fact that the evaluation is designed exclusively for this purpose, i.e. as a component that helps clients` consultants to choose between comparable companies that provide a relevant product or service. Unfortunately, this is simply not the case. The path to asset recovery or protection of funds/compensation is not the experience the client reasonably expected when they signed up.
And uncertainty, delay and difficulties cannot be so easily dismissed. This definition is then also relevant to the misconception that financial soundness is only about the recovery of clients` assets. Is that enough? Effective in saying that if this part of the customer value chain fails or is compromised, there will be no change in the customer experience. The criteria combine to account for attributes in four general areas: We believe that different types of businesses need to be evaluated in separate peer groups based on how they compete to provide customer offerings. Asset recovery is, of course, crucial, but limiting financial strength to it could be misleading and does not meet the requirement to provide a wider range of results to clients. The client-centric and operational definition of financial soundness makes sense here and we at AKG believe that an assessment of financial soundness should include the following objective definition: . go beyond simply considering solvency (although this is always an important part of the mix) and thinking about the format in which an organization can survive to meet the reasonable expectations of clients and their advisors. Therefore, it is expected that the experience of these two groups will include operational capabilities and ongoing performance.