| Trusts & Estates Technology Review | A Penton
Media Publication |
June 12, 2008 |
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ISSUE |
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FEATURE STORY
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Review of NaviPlan Standard
It's a software and Web-based program
for financial planning calculations and graphics
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 ****
NaviPlan Standard (currently v. 11.02.03) is a financial planning
program that addresses retirement planning, education cost projections,
insurance analysis, income tax analysis, basic estate planning and
generation-skipping transfer (GST) tax calculations. It includes both
goal-based and cash flow planning. It is available as a software
standalone desktop program or as a Web-based facility (NaviPlan
Central). If users want, they may later upgrade their standalone
program to a Web-based facility, and may upgrade to NaviPlan
Extended—all without losing data.
The basic program allows you to quickly explore variations of client
worth and planning strategies as you construct client plans. NaviPlan
products are for both U.S.-based and Canadian users. But I’ll discuss
only the U.S. products here.
NaviPlan Extended adds additional features including income tax
calculation, employee stock options, business planning, advanced estate
planning and advanced cash flow planning. A comparison of the features
NaviPlan Standard and NaviPlan Extended is available from the
company.
Competitive Products
Programs that offer many of the features of NaviPlan include:
•
American Dream personal finance software for professional
advisors.
• Cygnus IncomeMax financial
planning software for financial planners and life insurance agents.
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What’s It All About?
NaviPlan does needs assessments, asset
allocations (user-defined or Ibbotson),
retirement distribution planning, goal planning for retirement and
education, insurance analysis, net worth and cash flow management, basic
estate planning, Monte Carlo analysis and planning for non-traditional
couples. An asset allocation feature may be purchased as an addition to
either NaviPlan Standard or NaviPlan Extended.
NaviPlan shares data with various sources and back-office systems.
Currently, it imports data from Albridge Solutions, Streetscape, Advisor
Channel and other sources.
The program displays a separate screen for each component of program
data entry, planning choices and computation of results. For example,
there’s a screen displaying individual assets. Users can drill down
from each asset to sub-screens to see and enter details related to that
asset. There is a significant learning curve with this method of data
entry, because of the vast array of choices and the complexity of the
subject matter.
The program includes a number of free-standing calculators such as,
Retirement Required Savings, Retirement Available Savings, Retirement
IRA vs. Roth IRA, Education Savings, Major Purchase Savings, Loan
Comparison and Life Insurance. Each calculator generates tabular and
graphic reports.
The program’s intelligent Planning Assistant analyzes problems,
questions (emphasizing issues with the rates of return on assets) and
opportunities (including quantification of pre-retirement years cash
flow surpluses) to be considered in implementing a plan based on the
asset and liabilities entries and choices you make.
How Does It Work?
When you open NaviPlan, you are presented with a client list from which
you may choose an existing client or open a new client file. After you
choose a client, a screen appears listing the types of planning
undertakings you do for that client; these are referred to as
“engagements.”
At User Preference/Plan Settings you may select the retirement age and
life expectancy for the client and co-client. You also select one of
three levels of plan complexity.
Navigation through the program then takes place by means of a pane on
the left side of the screen that lets you select from Assumptions, Asset
Allocation, the Financial Picture (Net Worth, Cash Flow, Strategies,
Insurance Coverage), Goals (Retirement, Major Purchase, Survivor Income,
Long-term Care, Estate Planning, Goal Funding) and Results (Client
Reports).
The basic asset and liability entries are at Net Worth, which is
navigated by a series of tabs at the top of the screen. The Net Worth
area of the program permits you to enter asset classes as part of the
asset allocation area and define the investment characteristics of
assets. Net Worth details are entered in these categories:
• Lifestyle Assets: At this tab, you can enter assets used in the
clients’ life, such as residences, vehicles and other property for
personal use as well as the liabilities related to these assets. Detail
may be added to each asset to identify the owner, purchase date, cost,
market value and valuation date. The program permits the entry of
descriptive detail for individual assets, but the text of that detail
appearing on the Assets/Liabilities Report is limited in length. You
may schedule sales of assets and direct the application of the sales
proceeds to investments or the purchase of other assets. Return rates
and standard deviations for each asset may be entered for both
pre-retirement and retirement periods. Liabilities are individually
entered along with the balance, interest rate and periodic payments.
Individual liabilities may be associated with individual assets and
reports may be generated displaying the entire payment schedule for each
installment obligation.
• Accounts: Here, you can enter individual investment assets
identified as either qualified plan assets or non-qualified assets. You
may choose to identify an asset as an IRA, Roth or other 401(k), Roth or
other 403(b), 457, SAR-SEP, Keogh, Roth IRA, generic employer plan,
generic self-employment plan or 529 plan. A details screen lets you
designate the owner as well as the market value and basis of the asset.
You may identify a savings strategy (including the amount, source and
frequency of contributions to a qualified plan) for each asset, its
return rate and its valuation date. You also can identify the primary
and contingent beneficiary of qualified plans.
• Annuities: Annuities are entered in this area along with details for
the plan type, owner, beneficiary, type of annuitization (amount
certain, term certain, life income), market value, cost basis, return
rates and valuation date. A savings strategy for each annuity also can
be designed.
By clicking a button you may then instruct the program to generate an
Assets/Liabilities Report that tabulates all the data you entered for
all types of assets and liabilities by category. This report may be
saved in PDF or Word formats.
In the Cash Flow area of the program you may enter types of income for
each person including earned income, investment income, social security
(including survivor benefits), retirement plans and defined benefit
pensions and expenses identified by type. You may enter and select
salary and bonus details, including amount and frequency as well as
start and end dates.
At Strategies you may specify savings, debt modification and application
of surplus strategies.
Insurance Coverage permits you to enter in detail all life insurance,
disability insurance and long-term care insurance policies including
premium costs, dates of coverage and identification of beneficiaries.
Under Goals you can specify goals for retirement, major purchase,
survivor income, long-term care, estate planning and goal funding. At
Major Purchase, for example, you may specify the purchase being planned
for, the amount needed, the owner, the target date for accumulation and
an inflation rate. The results are reported under Goal Funding.
The Estate Planning area allows a basic look at assets, liabilities and
taxes at a projected date of death or a sequence of dates of spousal
deaths. It computes federal and state estate taxes (with entry allowed
for the total of state inheritance taxes) and permits the entry of
detailed estate expenses and percentage estate administration expenses.
You can enter details for “funded” trusts that include trusts funded
during the clients’ lifetimes by the clients (irrevocable life
insurance trust (ILITs) as well as other irrevocable trusts) and trusts
funded by others from previous estates (qualified terminable interest
property (QTIP), marital trust, credit trust, including identification
of the trust as including a generation-skipping transfer).
Such trusts can be identified as including qualified plan assets, or
not; the entries include rates of return on trust assets. The gift
history of the clients can be entered with the donees identified and
with growth rates. You then can compare scenarios for the existing
estate plan, simple will and marital deduction/credit trust, including a
display the taxes, net to charity and net to the heirs. At the
Scenarios screen you can identify the basic marital and credit shelter
trusts to be funded from the estate and identify the beneficiaries of
such trusts. You can identify specific assets that are to be applied to
the funding of irrevocable trusts. Estate Planning focuses on the
financial aspects of the estate and does not address the more technical
estate tax issues, such as adjusted taxable gifts, qualified domestic
trusts (QDOTs), previously taxed property, the foreign death tax credit,
source of marital deduction funding, etc.
NaviPlan Standard includes only the categories of ILITs and other
irrevocable trusts. NaviPlan Extended additionally includes charitable
trusts such as charitable remainder annuity trusts (CRATs), charitable
remainder unitrusts (CRUTs), charitable lead annuity trusts (CLATs) and
charitable lead unitrusts (CLUTs). It also includes , grantor retained
annuity trusts (GRATs), grantor retained unitrusts (GRUTs), qualified
personal residence trusts (QPRTs), and family limited partnerships.
The Estate Planning reports include gross estate and liabilities, tax
details distribution summary, gifts to heirs, liquidity needs, the basis
increase, income in respect of a decedent and estate cash flow.
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What Reports Are Furnished?
From the database of information you enter and the selection of choices
you make, NaviPlan creates reports that may be saved in either PDF or
Word format. Graphics are included in the reports, rather than
displayed as data is entered. A sample Comprehensive
Analysis report and other sample reports are available.
The Goal Funding area reports the account names dedicated to goal
funding and the percentage of retirement and other goals achieved for
each account based on accounts and goals that have been previously set
up at Major Purchases. Retirement assets are automatically allocated to
retirement goals.
The bottom line for NaviPlan is the generation of tabular and graphic
reports including Summary (with an action plan for which you may select
either current or recommended), Net Worth, Cash Flow (with a variety of
detailed reports such as current and projected cash flow, income tax,
life insurance, long term care), goals (including savings and goal
funding), asset allocation (current and recommended), insurance, estate
planning, needs v. abilities (for retirement, major purchase, insurance,
etc.), capital accumulation and redemption and Monte Carlo sensitivity
analysis with retirement and other goal success rates..
What About Help and Support?
NaviPlan uses a Web-based help system that walks you through the detail
of operating the program. Many screens have context help or tailored
instructions. The help system does not include legal references or other
substantive information, nor does it discuss the derivation of
calculations in any detail. In directing the use of various components
of the program, the help system seems to take for granted a certain
familiarity with navigating the program. NaviPlan includes a training
and support site and furnishes an online
training program covering data entry, retirement goal analysis, asset
allocation, life insurance analysis and client reports. Technical
support is available by telephone or email (including a secure
web-hosted application).
Where Do You Get This Software?
This product is described on the NaviPlan
website. You may register for a free demo or download a free trial of
the software. A one-year single unit subscription to the NaviPlan
Standard software is priced at $799 (Extended is $1,299) and a similar
subscription to the Web-based NaviPlan Standard is $998 (Extended is
$1,424). Ibbotson asset allocation components are available for an
additional $125.
You may purchase the software by contacting the publisher at:
Emerging Information Systems (USA), Inc.
2177 Salk Avenue, Suite 200
Carlsbad, CA 92008
Toll-free: (800) 237-6335 or (888) 692-3474, option 2
Fax: (760) 431-9497
Email: sales@eisi.com
Web page for products:
www.naviplan.com/products/us/index.htm
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@qwestoffice.net.
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