To introduce brokerage customers to its life cycle mutual funds, John Hancock Financial Services Inc. has unveiled a free Internet tool that allows advisers to generate investment plans for clients.
With the recent launch of Proposal-Builder, the Boston-based financial services firm helps representatives select from among John Hancock mutual funds, based on the information that they enter for individual clients.
The technology makes it easier for advisers to offer the funds, according to Carey Hoch, senior vice president and head of marketing at John Hancock Funds LLC.
From its launch at the end of August through last Wednesday, the product had generated 2,400 proposals — two-thirds of them by advisers, she noted.
Fully 70% of the proposals were created for investors in savings mode, while 30% came from income-oriented invest-ors, Ms. Hoch said.
To use the tool, advisers indicate if their client plans to save for the future or generate retirement income.
Advisers then have the option to select John Hancock's target risk lifestyle portfolio or its target date or target income life cycle retirement portfolios or customize a portfolio of their own.
Once an option is selected, the adviser is prompted to estimate when their client will retire and how much money they plan to withdraw each year.
The software then runs a Monte Carlo simulation that considers 5,000 scenarios covering 15 asset classes.
Last, based on a client's portfolio holdings, the simulation determines the probability of reaching a specific retirement or investment goal.
Once the simulation has been completed, an adviser reviews the proposal, selects a cover sheet and either downloads a portable document format file or requests that John Hancock Funds mail the proposal to the adviser.
The nine-page proposal suggests asset allocations, provides the probability that the portfolio will meet the needs of the client, and explains what an investor needs to know before investing.
A checklist of life cycle events, fund fact sheets and other brochures, such as “The Power of Asset Allocation and Diversification,” are in-cluded.
At least one analyst feels that the product needs to be used with come caution.
“In the hands of the right financial adviser, this is a good tool,” said Robert J. Ellis, New York-based senior analyst at Celent LLC of Boston.
This is the first technology where a Monte Carlo simulation is combined with life cycle funds for the purpose of creating adviser handouts, he said.
“In the hands of a less careful person who doesn't do a diligent job telling the client what they need to know, this is just more smoke and mirrors to confuse the client,” Mr. Ellis said.
For instance, he said, the product doesn't note that John Hancock charges higher fees than
The Vanguard Group Inc. of Malvern, Pa., and assesses and makes assumptions about taxes and inflation rates.
Fidelity Investments of Boston has launched a free web-based retirement program to help financial advisers prepare customized retirement plans (
InvestmentNews, Oct. 1).
Fidelity's tool, which is expected to be rolled out to 135,000 advisers by yearend, will also be available on Fidelity's adviser-oriented websites.
Aaron Siegel can be reached at [email protected].
