goalgamiPro software designed with independent RIAs in mind.
Current and prospective clients have a lot in common.
Most want to know if their existing savings and investment plan will put them on track to meet their financial goals. For many, their primary goal is a comfortable retirement.
But creating a comprehensive financial plan is labor-intensive and time-consuming. Although it is worthwhile to go through the exercise for existing clients, particularly high-net-worth ones with complicated tax issues and legacy concerns, it may not make sense to go to all that effort for prospective clients who have the bulk of their assets stashed in tax-qualified retirement accounts.
Now, however, there is an affordable software program designed with independent registered investment advisers in mind that can make that effort easier.
The web-based goalgamiPro software, which costs $495 per adviser for an annual subscription, is meant to complement far-more-comprehensive financial planning applications such as MoneyGuidePro or NaviPlan. It takes minutes, rather than hours, to input key financial data into goalgamiPro to produce a household balance sheet report for clients.
The household balance sheet includes assets from retirement plans and bank and brokerage accounts, future savings, and expected cash flows from Social Security and pension benefits. It also includes expected expenses in retirement as well as one-time goals, such remodeling a kitchen, and recurring funding goals, such as college costs, long-term-care-insurance premiums and travel expenses.
Three categories
The goals are segmented into three categories:
• The “necessary amount” represents what a client needs to fund basic expenses.
• The “target amount” represents the plan the client expects to follow.
• And the “aspirational amount” represents what the client would like to fund if enough resources are available.
The difference between adequate and surplus funding for retirement goals can be the result of higher investment returns, demonstrating to clients the rewards of a well-designed investment plan. It also can show that much extra needs to be saved to reach goals.
“We sought to connect financial planning and investment planning,” said Neal Ringquist, president and chief operating officer of Advisor Software Inc., the creator of goalgamiPro.
“The household balance sheet is used as a measuring stick for the health of the household,” he said. “It's a diagnostic tool that can help an adviser develop a quick plan for a client both pre- and post-retirement.”
Mr. Ringquist noted that the balance sheet compares the purchasing power of clients' resources with the net present value of their future goals.
For example, the purchasing power of $1 million in a 401(k), which is subject to ordinary income tax on the entire distribution, is much lower than $1 million sitting in a brokerage account that is subject to lower capital gains taxes only on the appreciated assets.
I am not a software expert, and I normally leave product reviews to my esteemed colleague, technology guru Davis D. Janowski. But I am intrigued by tools that help financial advisers improve retirement income plans and communicate that vital information to clients.
Adviser thoughts
So I asked a couple of advisers what they thought about the goalgamiPro program.
Sergio A. Mariaca, a former LPL Financial LLC adviser, launched his own RIA, Mariaca Wealth Management LLC, about a year ago. He used the opportunity to review the way he conducted his practice, including the technology he uses to create financial plans.
Although he still uses eMoney for more-complex situations, Mr. Mariaca said that goalgamiPro is perfect for his mass-affluent clients, particularly for prospective ones.
As a fee-based adviser, he doesn't charge clients for creating a financial plan, but he noted that generating a full-blown financial plan can be costly.
“In the past, when a perfect prospective client walked in the door, we would not do a full-blown financial plan,” Mr. Mariaca said.
“Now we can do a plan before someone becomes a client,” he said. “It's a great tool.”
Betty Hedrick, a fee-only adviser at The Hedrick Co., has been using a household balance sheet concept throughout her career.
Back in the 1980s, she created her own program using Microsoft Office.
“I was looking for something that was more efficient and faster, so I could do more for clients in a shorter period of time,” Ms. Hedrick said.
After running her own version and goalgamiPro side-by-side several times to confirm that the results were comparable, she decided to abandon her do-it-yourself version and switch to goalgamiPro.
Not only is it quick and easy to use, it helps show clients how different levels of risk and appropriate portfolio design can help them achieve their goals.
“Investing is not about beating the index. It is about whether they are taking enough risk to meet their desired lifestyle,” Ms. Hedrick said.
I think that advisers will hear more about the household balance sheet — not just as the report generated by this software program, but as a concept in retirement income planning. For example, the household balance sheet is a core concept in the educational curriculum of the Retirement Income Industry Association's retirement management analyst designation program.
During a recent webcast, Elvin Turner, the RIIA's research director, noted that people tend to accumulate assets on an individual basis, such as through their company 401(k) plan or their Social Security earnings record. But in retirement, couples draw down those assets as a household. The household balance sheet becomes the scorecard that helps advisers determine if their clients are prepared for retirement and how best to tap those assets.
Mary Beth Franklin is a contributing editor at InvestmentNews.
