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Optimize the Performance of Every Person in Your Firm
Advent for Family Offices is the first front to back office solution
designed to meet the specialized needs of single-family and multi-family
offices.
- Integrated Portfolio & Family Relationship Management
- Custodial Data
- Trading & Order Management
www.advent.com/solutions/family_offices/apx_platform
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FEATURE STORY
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Retirement Income Navigator
This program prepares goal-driven portfolio allocations for
post-retirement planning.
By Donald H. Kelley
Kelley Rating (one asterisk = lowest, to five asterisks = highest):
- ease of navigation, design of interface and learning curve ***
- instructional documentation and help system ***
- carries out the goal of the product as advertised ****
- overall usefulness ****
Competitive Products
NaviPlan
version 10.0 addresses post-retirement planning, including allowing
users to enter as many expenses as desired and have each expense start
and stop at specified times.
EstateProfiler and Cygnus IncomeMax are needs
analysis and retirement-planning tools for pre-retirement financial
planning that do not include goal-driven portfolio allocations.
eMoney
Advisor and Money
Guide Pro are designed for use by financial managers. These
programs provide web-based portfolio management with reports for direct
client viewing and interaction.
Other programs focusing on portfolio and withdrawal planning for retired
clients are becoming increasingly popular, and many of these programs
are in development.
What Does It Do?
Retirement Income
Navigator is a software tool for managing money during
retirement when funds are being drawn out, as opposed to designing
portfolios during the pre-retirement years when the object is
accumulation based on personal risk tolerance. The goal of the program
is to calculate the optimal balance between fixed-rate investments for
income and investments in stocks for growth. Though the program has a
bit of a learning curve, it is uniquely helpful to both the layperson
and the financial professional.
This program is designed by Roger A. Katzenmaier and Kevin R.
Katzenmaier and is based on their financial management work and
Investment Scenario Generator methodology. It includes their book
Financial Retirement Planning with the Retirement Income
Navigator. Additional information and products from the authors may
be found on the IGS Planning website.
The publisher also offers a number of reports and tutorials for the Retirement
Income Navigator, detailing the program's features and
functionality, with helpful graphical representations.
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stocks & mutual funds, and much more.
For more information, visit http://www.appraisenj.com/esi/trustsandestates.html
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(continuation of article)
How Does It
Work?
The program operates by dividing the retiree's portfolio into two types
of investments. The first is invested in an income ladder that provides
guaranteed income for a pre-determined number of years. The rest of the
portfolio is invested in blue chip or growth equities. The program
computes the necessary sale of stocks to further extend the income
ladder. Stocks can be held for the long term. The program determines
the optimal balance between fixed-rate investments and various
categories of stock based on the client's income objective.
The interface for the Retirement Income
Navigator consists of a single screen from which you open
subscreens and enter information. The operation of the program is
relatively straightforward once you learn the financial concepts
involved.
You first enter an initial investment allocation among fixed rate,
high-yield stocks, blue chip stocks and growth stocks, including
dividend rates and holding periods. For fixed rate investments, you may
enter a series of maturity years and related rates of return. You may
change the names of the investment categories, as desired.
You may either enter a target income, and request the beginning capital
value needed for it, or enter a beginning capital amount and ask the
program to calculate the income it will produce.
Typically, the program results are obtained through these steps:
1. gather basic information on the client's capital, income need,
projected number of retirement years and anticipated inflation;
2. enter the initial allocation of investments in the client's
portfolio, including the estimated average annual total return, amount
of dividends, stock minimum holding periods and fixed rate return;
3. ask the program to optimize the investments allocation, to determine
whether the investments can support the annual income need;
4. break down the potential income streams from investments, including
the potential use of annuities;
5. reallocate income to adjust for the end of annuity payouts; and
6. ask the program to optimize the investments allocation.
The program facilitates these steps through available choices and data
entries at subscreens related to these classifications:
Calculate "Beginning Capital" -- You may select "Preserve Capital" to
assure that the initial capital is not depleted as the program responds
to the stated needs or select "Consume Capital" to allow the overall
value of the portfolio to decrease.
Calculate "Annual Income Need" -- You may again select "Preserve
Capital" or "Consume Capital."
"Payment Period" -- You may identify the frequency with which income
payments will be made.
Calculate "Years in Scenario" -- The program calculates and displays how
long the investment portfolio will support the indicated income need.
You may also select "Preserve Capital" or "Consume Capital" here.
"Anticipated Inflation" -- You may enter whatever inflation projection
you desire.
"Custom Income Needs" -- Instead of having the program calculate the
income you may enter income target amounts for up to five different sets
of years, with percentage increases for each set.
"Other Sources of Income" -- You may enter up to 10 different sets of
investment contributions to be made for stated periods of time and
invested in identified categories.
"Multiple Allocations" -- You may allocate investments among fixed rate,
high-yield stocks, blue chip stocks and growth stocks and direct
reallocation of the portfolio at specified time horizons.
"Inflate Dividends?" -- Directs whether dividend amounts are to be
increased by the inflation rate.
After all data is entered and choices are selected, you click on
"Optimize Investment Allocation" to direct the program to reallocate the
investments to achieve the goals you have defined. You may direct the
program to reallocate for the maximum ending capital, find the highest
available income or find the lowest capital that will support the needed
income.
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Results
Displayed
The opening screen displays the starting balance and the balance after
the number of years in the scenario for each asset category. This
display may be set to either actual dollars or deflated dollars
reflecting buying power at the end of the scenario.
Retirement Income
Navigator displays and prints out a year-by-year tabular list that
includes the investment allocations, total capital and effective growth
rate, and an annual tabulation of the source of income flows. You may
display and print a screen reflecting your initial data entries and a
list of the transactions (such as stock sales) required to maintain the
targeted income distributions.
The program also generates a line graph of year-by-year investment
balances distributed among fixed rate, blue chip stocks and growth
stocks and a pie chart reflecting the initial investment allocation
among these categories.
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Rainmaker, the new book from Matt
Oechsli of the Oechsli Institute
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(continuation of article)
Tech Support
The context based help file includes operating instructions and
explanations of the function of each screen of the program. Technical
support is available by telephone, fax, email or postal mail.
How to Get It
Retirement Income
Navigator may be licensed for $299 per single user. It has a
60-day return period and includes six months of maintenance coverage.
Additional maintenance coverage is available for $59 annually. You may
contact the publisher at:
Brentmark Software, Inc.
3505 Lake Lynda Drive
Suite 212
Orlando, FL 32817
Phone: 407-306-6160
Website: www.brentmark.com
Trusts & Estates magazine is pleased to present the monthly
Technology Review by Donald H. Kelley -- a respected connoisseur of
the software and Internet resources wealth management advisors use to
further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo. and is of counsel
to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte,
Neb. He is the co-author of the Intuitive Estate Planner
Software, (Thomson - West 2004). He has served on the governing
boards of the American Bar Association Real Property, Probate and Trust
Section and the American College of Tax Counsel. He is a past regent
and past chair of the Committee on Technology in the Practice of the
American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions
on the tech resources available in the practice today. His columns are
edited for readability only. Send feedback and suggestions for articles
directly to him at dhkelley@qwest.net
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