Comparison with Financial Planning Tools

Firstly, Income Discovery complements your current financial planning tool (FPT) and is not a replacement for it. It focuses only on the retirement distribution phase, whereas conventional tools focus on the accumulation and growth phase of retirement planning. Your tool may provide support for retirement income planning, but the features will not be as robust and rich as Income Discovery’s. You really need a comprehensive retirement income planning tool to answer all of the questions your clients have and to get your clients the income they need with the least amount of  risk. The efficiency-boosting features described below are another reason that you should subscribe to Income Discovery.

Unlike the accumulation phase where the decisions to be made are the level of saving and type of model portfolio to use, the distribution phase of retirement involves substantially more decisions. To effectively work around these variables, a different type of workflow than the one currently adopted by FPTs is needed—a workflow that supports rapid change of assumptions, re-analysis and side-by-side comparison of alternative strategies.

Additionally, the distribution phase also brings in new types of products and strategies to the mix, such as the use of a constant cash flow bond ladder, fixed or variable annuities, a reverse mortgage (different strategies on the use of a reverse mortgage such as standby use documented in the latest research), or withdrawal order across different tax-type accounts. FPTs lack rich support for distribution-focused strategies.

Income Discovery addresses these two gaps by providing a solution exclusively focused on retirement income so that your clients can have peace-of-mind during retirement knowing that all of the bases for their plan are covered.

Type of Analysis and Workflow Supported in the Tool

Category	Financial Planning Tools	Income Discovery (Version 3)
Level of Planning	High-level plan with one portfolio model	Implementation Plan with specific bonds; specific annuity products and their purchase accounts;  specific withdrawal order across accounts; and unique glide path for each account.
Strategy Comparison	Limited feature	Side-by-side comparison of multiple strategies
Optimization	Missing	Optimized allocation to bond ladder, annuities and investments, including asset allocation for investments and the withdrawal order
Cap Market Assumptions	Holds only one capital market assumption at a time	Strategy evaluated under Monte Carlo simulation using multiple capital market assumptions, each stored separately
Ease of Use	Back-and-forth through multiple screens to change assumptions	Single screen app designed to rapidly create and compare multiple strategies under different assumptions

Products and Strategies Supported

Category	Financial Planning Tools	Income Discovery (Version 3)
Annuities	Limited support	Immediate Annuity (SPIA) Deferred Income Annuity Fixed Indexed Annuity with Lifetime Rider Fixed Deferred Annuity Variable Annuity with Lifetime Rider
Bond Ladder	Missing	Ladder of individual TIPS held-to-maturity; nominal bond based ladder available in custom implementation
Social Security	Limited support	Full Social Security analytics - strategy to find maximum lifetime benefits considering spousal benefits, restricted claiming Compare effects of different Social Security claim strategies
Reverse Mortgage	Limited support	Model reverse mortgage or any cash flow like rent / part-time income
Taxes	One system determined withdrawal order; all accounts have same model	Evaluate multiple withdrawal orders across accounts; different purchase accounts for annuities and bond ladder
Time Segmentation	Missing	Time-segmented withdrawal across multiple tax-type accounts with unique glide path for each account and corresponding tax implications