Technological Advances in HFA Financial Planning Services

In an effort to expand services we offer to HFA clients and prospects, we recently attended a financial planning software conference, in order to enhance our skills in preparing financial plans and retirement projections completed at our firm.  The type of planning and projections that can now be done is truly impressive and with technological gains increasing at such a rapid pace will only become more robust and useful over time!  We will investigate some of the planning functionality and its benefit to our clients and prospects. Consider these frequently asked questions.

  • Question:  I am thinking of retiring in ten years, how much do we need to be saving each year to maintain our current lifestyle in retirement?

We get asked this question often and financial planning software can easily calculate a projected figure based on your current income and expenses, assets and liabilities, anticipated retirement cash flow and any other future needs.  It can also adapt if you have retired and have been exceeding your retirement budget or perhaps saddled with unforeseen health care issues and related expenses.   Today’s planning can account for much more dynamic fluctuations in a client circumstance, which makes them a lot more useful compared to the static plans of the past.

  • Question:  My wife and I have just retired and we’ve owned these life insurance policies for many years –  should we retain the policies and just keep paying the premiums or is it time to get rid of them? 

In analyzing all current and future cash flows coming in and out through retirement, another feature of the software is the ability to make level-headed calculations as to protection needed from insurance – whether it is life, disability, long term care (and in some cases, health care)!  If appropriate, the planning would also include an assessment of estate tax liability and the potential of an insurance –based solution to a problem.

  • Question: If inflation comes back like it was in the late 1970s; can my portfolio withstand an extended period of high inflation?

Financial planning software uses a baseline inflation figure based on historical or projected figures, usually in the vicinity of two to four percent.  With some of the tools available in the software today, we are also able to project periods of extreme inflation in order to test its long term impact for any given client situation.

Proper asset allocation (which is certainly nothing new) is worth a mention here, as a client should begin with an appropriate mix of equities, fixed income and cash based on their particular risk tolerance and time horizon.

  • Question: What happens if I retire into a “bear market” and my assets suffer from losses?

Today’s planning software does a terrific job of stress testing a portfolio, including the ability to examine the impact of a near term “market correction” coincidental to retirement.  Today’s  planning tools are able to project different sequences of market returns, including average returns and “bad timing” returns when the market is down for a couple of consecutive years.  The software also calculates a probability of success, which is based on simulations of varying account returns.

  • Question: Should I retire early?  Or on the other end of the spectrum, does it benefit me to continue to work past age 65?

Planners are now able to review different scenarios for clients and the probability assigned for each one, whether early retirement, late retirement or “on-time” retirement.

  • Question: I’m not sure of what our retirement picture is going to look like; what can be done to help us gain better insight into this question? 

In addition to working with our firm to provide this invaluable service, the planning software includes a few interactive features which provide clients with the ability to observe the impact of changing projected retirement ages, projected investment returns, living expenses or even adding health care expenses into the plan.

Today’s financial planning software can also analyze multiple Social Security benefit scenarios, stock options, restricted stock, concentrated stock positions and is better able to answer many other questions.  However, now it can be done in “real time” and with interactive tools to enable you to learn more about what we care most about…helping you!