These tech tools know how to take annuities into account
The question that nags at the back of many investors’ minds — “Do I have enough for retirement?”…
The question that nags at the back of many investors’ minds — “Do I have enough for retirement?” — can be difficult for an adviser to answer neatly when a client owns or is thinking of buying an annuity.
To date, there has been little in the way of nonproprietary technology to help advisers build retirement financial plans that incorporate or can accommodate a variety of annuity options.
Sure, many large insurance companies and at least one major custodian that offers insurance products provide such tools or calculators, but they are product-specific.
Enter Fiserv Inc.’s new Retirement Illustrator product (fiserv.com) and Income Discovery (incomediscovery.com) from Fiducioso Advisors.
Neither is perfect, and both are very much works in progress. But the two products offer at least a solid starting point to address the challenge of building a multiproduct or multivehicle retirement income plan that incorporates annuities.
“Retirement Illustrator is really for face-to-face meetings with the client in a collaborative fashion, and it is designed to be a sales illustration tool,” said Pierre Bossaert, a member of the retirement solutions product management team at Fiserv.
Although the topmost layer of the application appears simple, intuitive and straightforward, it is actually complex and can be classified as a rich Internet application, meaning that much more information than meets the eye is percolating just below the surface.
‘WHAT IF?’ SCENARIOS
For example, hover over the many bar charts and graphs generated during a collaborative session, and much of the underlying data will be displayed without the user’s having to dive deeper into the interface.
That said, there are much-more-detailed views for advisers that usually go unseen by the client during a normal meeting. These contain comprehensive explanations of the program’s underlying assumptions and data that can be altered to edit the plan.
“We found that this is a really good way to model the behavior of different types of products and work through “what if?’ scenarios with clients — for example, how an annuity with a guaranteed-minimum payout does in light of different market conditions,” Mr. Bossaert said.
The ease of altering the system’s market assumptions is what makes it so flexible, allowing it to run multiple scenarios and compare them.
Although an adviser doesn’t have to input a large volume of client holdings or account data to produce analyses, doing so makes for a more comprehensive and accurate report.
For now, such input is a manual process, but integration with account aggregation providers is on the way.
The first to be completed in the near term will be that with Albridge Solutions Inc., a popular provider to independent broker-dealers, followed by others, including CashEdge Inc., which Fiserv acquired last year.
Fiserv is a multibillion-dollar conglomerate and provider of information management and electronic-commerce systems to the financial services industry. This means that independent advisers probably won’t be signing up for Retirement Illustrator as a stand-alone subscriber. In fact, Fiserv doesn’t plan to market the application that way.
Rather, hybrid advisers affiliated with independent broker-dealers, especially those already on Fiserv’s AdvisorVision platform, or those at insurance companies, might get access through those firms.
A license is $750 per seat, per year, though volume discounts are available for enterprise-level subscribers.
INCOME DISCOVERY from Fiducioso Advisors
The better option for most independent registered investment advisers — at least those that are also hybrid advisers — is likely to be Income Discovery.
Any adviser comfortable with working in a spreadsheet program such as Excel will have no trouble understanding the gist of how the Income Discovery interface is laid out.
“It is a single-screen application. You don’t leave the screen, and you can do everything from within there,” said Fiducioso Advisors chief executive Manish Malhotra, an MBA-toting engineer and veteran of Bank of America Corp. and Citigroup Inc.
“[Income Discovery] is all about retirement income planning, being able to take a lot of different income strategies and perform side-by-side comparisons to justify the strategy and the product types to be used,” said Mr. Malhotra, who started his firm last year.
Income Discovery doesn’t have the abundance of charts that Retirement Illustrator boasts, though advisers can create colorful charts for clients.
Still, Income Discovery is a very comfortable interface.
UNDERLYING COMPLEXITY
I doubt that Mr. Malhotra would like my oversimplification, but advisers can liken the Income Discovery interface to a technically sophisticated, yet simple-to-look-at work sheet.
That description belies Income Discovery’s underlying complexity, which — similar to Retirement Illustrator — is right under the surface and out of view until you need it.
Like Retirement Illustrator, Income Discovery also can be considered a rich Internet application.
Hover over just about every field or input on the screen, and you will bring up extensive “help” information and explanations of what those fields mean, or the assumptions or calculations being performed.
“We have combined powerful optimization of the calculations and complemented it with the flexibility of being able to construct custom plans,” Mr. Malhotra said.
Built on Java and JavaScript, the interface makes it easy for an adviser to re-order the various scenarios and charts that they have created prior to producing a multipage PDF that can be e-mailed to a client for detailed study.
Income Discovery already has 200 paid users. It costs $99 per month for a single subscription (or $899 for an annual license) and also offers a volume discount for larger installations.
Head over to our Intechblog entry for more detail on Income Discovery and additional screenshot detail on the application.
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