In this session, we are continuing from the previous lesson which covered the comprehensive initial scenario set-up.
Today, we will continue from that initial plan creation and projection set-up to learn how we can now leverage the powerful planning pages, which are currently showing the result of our previous data entry. We are going to cover the structure and navigation of the planning pages, show you multiple ways you can customize and optimize your plans, and explore the automated Recommendations module.
We will start on the Combined Page for Bill and Vicki, which is exactly where the previous lesson on the data entry portion left off. You are going to see how quickly we are able to provide customized recommendations that result in better client outcomes.
Personalization in the planning process is key—without losing Advisor efficiency.
Watch the financial planning video
Planning elements covered in this financial planning tutorial:
The Planning Pages
Snap’s planning pages are how you can quite literally show your clients their entire life on one page.
For a spousal scenario, you will have three planning pages. If there was a Corporation to add, we’d have a 4th page and additional modules to work with.
The Combined Planning Page
On the combined planning page, we can see things on the household level. We are seeing the total income, spending, assets, debts, and total obligations for the household. Additionally, we can see the net worth, estate before tax, and as well as taxes owing on estate for every single year of the plan.
This provides the high-level view of the results, which can be changed and re-calculated from the individual page level.
The Individual Planning Pages
We can next access the individual planning pages for Bill and Vicki, where we can refine strategies and make improvements.
This is the main planning page in Snap Projections financial planning software. Advisors can show their clients their whole life on one page.
Any values that are blue or purple can be changed directly from the planning page. For larger changes, you can hop back over to the Scenario Setup area.
For example, we can add a contribution to Bill’s RRSP and TFSA directly from the main planning page—once the information is entered, you can click “Run Scenario” to re-run the projections with the updated figures. A few clicks, and few seconds, and we’re done. This is how you can run projections and make updates with your clients present, in real time.
Cash-flow management
Cash-flow management enables automatic withdrawals and contributions to meet your clients’ long-term after-tax spending target. It’s typically used at the time of retirement, but it can be enabled at any time throughout the projections.
When it’s enabled, Snap will automatically contribute and/or withdraw to assets to reach the desired spending amount throughout the length of the projections.
We can see the difference between pre and post retirement, signalled by the radio button at age 65 when the cash flow management is being activated.
The default logic in the software is designed to reduce the client’s taxes in each given year. The underlying logic is to automatically contribute to RRSPs first, then TFSAs, then Non-Registered assets. Automatic withdrawals are made in reverse order. This sequence of withdrawals and contributions will be optimal for many cases, but the Advisor has compete control over the accumulation and decumulation strategy.
It’s simple to modify the default algorithm to achieve an even more desirable order, depending on what you wish to optimize for, considering the client’s unique goals, needs, and priorities.
Tax Tables and information
From the main planning pages, we can access multiple tables and charts to show our clients the more granular details of their projections.
We can access two different income tax charts, both of which can be exported into Excel for verification or any tax planning purposes.
We can open the Taxable Income chart to see how we arrived at the amounts shown on the main planning page. You can see the full breakdown of income, deductions, investment income, and corporate distributions (if applicable), to arrive at the total taxable income.
This is the Taxable Income Chart, which we can easily access from the main planning page. Advisors have total transparency on how the calculations they’re presenting to their clients were made.
Next we have the Total Tax payable chart, which shows what goes toward federal and provincial taxes in any given year.
We can also access the Estate Before Tax chart for any given year of the plan, which shows us both the combined and individual breakdowns of financial assets, debts, insurance proceeds, and taxes on estate.
Interactive Charts
Next, we can access the Charts function to view multiple interactive charts that help you tell the client a story—their story. With these interactive and colourful charts, you can easily show your clients how their plan will ensure their goals are met.
If you are on the combined page, you will see combined charts. For individual charts, access the Charts module from the individual’s page you would like to view.
The Cash Outflow chart gives us the full breakdown of planned spending, ensuring the client has peace of mind knowing that everything that matters to them has been accounted for. The dotted line indicates the total inflows, showing this particular plan is fully funded. All of these charts are interactive, allowing the Advisor to click to select what is showing at any given time. This helps Advisors to walk the client through their own personal story, ensuring client engagement with genuine plan comprehension.
The Cash Outflows chart gives the client a visual, ensuring they have confidence that all their goals and plans have been accounted for within their financial plan.
The Net Worth chart provides a clear, visual representation of the client’s financial health and progress toward their goals. It helps them understand their current financial situation and track their progress over time.
The Net Worth chart gives the client a clear visual on their annual asset balances as time moves on, highlighting each category for clarity.
Building what-if scenarios for optimizations
Now we can make a copy of the base plan, and make changes to it. In this case, we can modify the after-tax spending target. In this example, we’re creating a shortfall because the clients do not have enough income and assets to sustain this increased level of spending.
We can continue to make changes in real time, creating multiple what-if scenarios to consider. Or, we can use the automated Recommendation feature and have the software do the heavy lifting for us.
Automated Recommendations
We can access the Recommendations module to easily run and assess multiple retirement options. When you open the module, you can see the current retirement ages and whether or not this particular plan is fully funded. When the plan is not fully funded, we have multiple options to consider.
This is the automated Recommendations module which is accessed directly from the main planning page. These are not cookie-cutter or generalized recommendations—all calculations are personalized to the individual’s plan data.
We can start by running the sustainable spending feature, answering the million dollar question—“how much can I afford to spend so I won’t run out of money?”
Other options to consider include calculating required savings, a different retirement age, or required lump sum investment to meet the desired spending target. With a click, you can copy the current scenario and create a new one to model your potential recommendations.
Compare Scenarios
As you build out multiple plans, you will want to compare them. This module does the work for you, and allows you to easily highlight the net difference of working together to your client. You can easily compare up to 5 different plans on one page. This module is highly customizable, allowing the Advisor to select which metrics they wish to compare and draw attention to.
Select just two plans to compare to automatically include the ‘Difference” column which highlights the net value of working together.
If we select the Trends button within the Comparison module, we can access a different view of the plan comparison. In this case, we can see the inflection point of when one plan becomes optimal when compared with the other.
Next steps
Stay tuned for next week’s video, which is Part 3 of this series: how to create a financial plan report your clients will truly understand.
Canadian Financial Advisors, Planners, and Investment Managers are eligible to start a 14-day Free Trial of Snap Projections financial planning software.
