Updating to the new RSMR market assumptions

Our 29 March 2017 updates of Voyant Adviser and AdviserGo arrive packaged with an entirely new set of default market assumptions provided by Rayner Spencer Mills Research (RSMR).

RSMR is a highly respected and experienced provider with whom we intend to maintain a long-term relationship, ensuring a robust and relevant set of default assumptions, which will be reviewed and updated on a regular basis.

 

What will this update mean to you?

This preferences update will not affect you if your firm uses its own bespoke set of market assumptions. Read more >>

If your firm has been using the software’s default market assumptions (those formerly provided by Novia), you now have a decision to make when opening client records that were created using the old assumptions – to update or not to update.  Read more >>

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Your firm uses its own bespoke set of market assumptions:

You will not be affected by this update. Voyant Adviser and AdviserGo will continue to use your bespoke set of market assumptions.

 

 

Your firm uses the default market assumptions in Voyant:

Any new client records that you create will be set automatically to use the RSMR market assumptions.

If you open an existing client record – a plan that still uses the older set of assumptions from Novia – a pop-up message will display (as shown below) indicating the assumptions used in the plan have been discontinued.

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This dialogue will give you the option to either:

Update the client case to use the new set of market assumptions from RSMR, or

Don’t Update the client case and continue using the older set of assumptions from Novia, at least for now.

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Whichever option you choose, your selection will only apply to the client case at hand. The software will not automatically update all of your existing client records. This way you can easily update to the new assumptions on your own schedule, updating at any time, and to choose whether to upgrade on a case-by-case basis.

 

 

Don't Update - If you choose not to update to the latest assumptions from RSMR:

The former set of default market assumptions will remain tagged as having been discontinued.

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A message stating the “current market assumptions have been discontinued” will display again whenever you reopen the client record, at least until you choose to update to the latest set of assumptions. This message serves as a reminder that the assumptions used in the plan are out of date and provides an opportunity to upgrade to the new RSMR assumptions when convenient.

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Note: Did you click Update unintentionally? Do you need to revert to the old Novia assumptions, at least for now? Instructions on how to revert to the old assumptions can be found here.

 

 

Update - If you choose to update to the latest set of assumptions:

Please be aware beforehand that you might have a bit of one-off correcting to do in the plan. This is because, apart from “Cash”, the RSMR market assumptions reference an entirely different set of asset classes than the ones used in the former assumptions from Novia.

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The former Novia assumptions were comprised of the following six asset classes, each with its own assumed rate of return and standard deviation.

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The new RSMR assumptions reference a broader range of nine asset classes, all with different names, apart from “Cash”.

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Because of these differences, moving to the new RSMR market assumptions will render invalid any asset allocations that were originally built using asset classes from the former Novia market assumptions. This means you will need to correct them to have a fully functional plan.

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How to correct invalid asset allocation errors after updating to the new RSMR assumptions

Not to fear. Luckily, revising asset allocations is easy and will need to be done only once per client case.

Clicking Update, you may then see one or more errors at the bottom of the screen once the client case opens. These errors are clickable links that will take you to the item that needs to be corrected. We will come back to them in a moment.

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Note: Do not click the X button to the right of the error as this will also delete the investment, or pension related to the invalid asset allocation.

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Step 1 - Start by correcting the default asset allocation in the Plan Preferences

Before correcting any asset allocations for the individual investments and pensions in the plan, we recommend starting with the default asset allocation in Plan Preferences.

This could save you time because quite often advisers set an overall default asset allocation for their client based on the client's attitude toward risk. If most of the investments and pensions in the plan are set to be grown using this default, adjusting the default asset allocation to work with the new market assumptions may be all you need to do.

 

1. Click the cog button (Preferences) top-right.

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Note: On this screen, you can also view the new market assumptions by expanding the Market Assumptions panel.

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2. In the Plan Preferences to the right side of the screen, click Asset Allocation.
 
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3. Click Edit.
 
4. Enter a new default asset allocation using the asset classes from the RSMR assumptions. The various percentages you enter must result in a 100% allocation.

If you would rather you this default remain neutral, consider entering a 100% allocation to Cash. Even if you chose this option, asset allocations can still be set for investments and pensions individually.

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Tip: If you intend to reuse this asset allocation in other client cases, click Save/Create. Give the asset allocation a unique name and click Save. This asset allocation will be saved locally for your user account in the computer’s asset allocation. Later, you can access the portfolio for reuse in other client cases by clicking the Load button on the Asset Allocation panel.

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Another option would be to click Optimise (lower-left) and use the software’s efficient frontier calculation to select an asset allocation based on risk. Use the risk slider to select an allocation along the risk spectrum and then click Apply.

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5. Click OK bottom right.

Note: If you want this asset allocation to also serve as the default for any future client cases you create, make the same change on the mirror Asset Allocation panel on the left side of the screen, under System Preferences. This update will not retroactively affect any of the client cases you have created to date. It will only be used going forward as you create new cases.

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6. Either scroll down to the bottom of the Preferences screen and click Apply (bottom-right on the Preferences screen) or navigate to another screen and click OK when prompted to save this change to your client’s preferences.

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7. Now check the bottom of the screen. Do you still see any errors?
 

If the errors are gone now, job done. This update has followed through from the Plan Preferences to your client’s investments and pensions (at least those set to be grown using an asset allocation).

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Click Save (the disk button, top-left) to save your changes to the client case.

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Step 2 - Correct invalid asset allocations set for individual investments and pensions

If errors are still shown at the bottom of the screen, this indicates someone set asset allocations on the individual investments and pensions in the plan.

8. Click the error message. Again, these messages are active links that will take you to the investment or pension that needs correction.
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Note: Do not click the X button to the right of the error as this will also delete the investment, or pension related to the invalid asset allocation.

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9. Expand Advanced Settings > Asset Allocation. Click Edit and follow the steps/options you used a moment ago, when reviewing and resetting the default asset allocation in the Plan Preferences.
 
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Tip: If using the new RSMR assumptions you have created and saved any asset allocations for reuse, consider clicking the Load button and load a saved asset allocation.
 
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Note: If some of the asset classes or buttons appear to be missing from the panel, try resizing the panel manually by clicking on the circle in the bottom-right corner of the panel. Drag and drop the circle downward and to the right. The panel should resize, bringing the hidden items into view.  

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10. Click OK and then Update. This should clear the error.
 
11. Continue by clicking each error and editing the asset allocation for each item until the errors are cleared from the plan.

 

Tip: You may see errors related to the asset allocations for money purchases and their linked draw down pensions - i.e. “USPs”, we still use the old acronym for the sake of brevity. If so, try editing the money purchases first. The drawdown pensions shown are, in most cases, future drawdowns, which are set by default at least, to use the same asset allocation as their source money purchase. Therefore, resetting the asset allocation for the money purchase will clear he errors for both the money purchase and its linked future drawdown pension.

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12. Once you have the plan re-allocated and the errors have disappeared, click Save (the disk button, top-left) to save your changes to the client case. Job done!
 
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Deleting old model portfolios - A final, optional bit of housekeeping

If after updating to the RSMR assumptions you notice any older asset allocations, which are no longer valid, saved in your portfolio library, consider deleting them. Read more >>

 
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Related Topics

Rolling back the RSMR preferences update

How to remove invalid asset allocations from your portfolio library

 

Update version 4.2.34, 2017-March-29