About the Historic Insight in AdviserGo
The Historic insight is designed for mapping market volatility onto your financial plan. This simulation displays the performance of the S&P 500 index between 1950 and 2022 and allows you to select a timespan between these years. Every year selected represents a level of return for the Standard & Poor's 500 Index relative to the long-term mean, and it is this relative measure – specifically, the percentile value for each of the selected data points – that is then mapped onto your plan.
How to run the Historic insight
The Historic insight takes the Standard & Poor's 500 index's historic percentile averages for the selected set of years and then replaces our normal assumption for asset allocations (model portfolios), which is the 50th percentile return, with a percentile return that the market experienced in those years. This is applied to the entire asset allocation, omitting cash holdings.
1. To use the Historic insight, open your plan in AdviserGo and select Insights.
2. Scroll down and select the Historic insight.
3. Use the slider handles to select a period of past market performance. for the Historic insight to apply to the future returns in your plan.
Tip – Move your cursor over the years in the historical timeline to see how the S&P 500 performed. This will give you some idea of the cycle that the Historic insight will be modelling.
If the period you select is shorter than the timespan in your plan, as will likely be the case, then the market cycle will repeat. For example, if your financial plan is sixty years long and you select a ten-year period of past market performance, the insight will repeat the market cycle six times over the course of the plan.
Tip – Click the space between the two sliders to move the selected time span up or down the historic timeline.
4. With your historical period selected, click Get Started to run the insight.
The results of these variable returns will be shown in the charts above. A once very sound looking future Cash Flow chart – one that previously showed only blue inflows and no red shortfalls – might now display some red after the peaks and valleys of the market are applied to investments in your plan.
Switch to the Assets chart, and you may find that the once smooth line of growth has now become jagged due to the now variable returns.
To view the year-to-year variable growth rates, click the Year View button.
Select either the Investments or the Pensions (Retirement) tab.
Use the slider to view the growth details for your accounts in future years in your plan. You should see variable returns when moving year to year in the plan.
How substantial a loss or gain your investments will experience in these future years will depend on the amount of risk inherent in your investment’s model portfolios, or more specifically, the size of each portfolio’s standard deviation.
Click the Year View button again to toggle off this view of the yearly details and return to the Historic insight screen.
Why aren't my investments showing variable returns when I run the Historic insight?
If the Historic insight is not causing the growth rate of your accounts to fluctuate yearly, first check which accounts are set to grow using asset allocation.
To use this insight, at least some of the investments in your plan must be set to be grown using asset allocations (model portfolios), not fixed growth rates. This is because asset allocations provide the software a range of potential returns, a standard deviation that fixed growth rates do not.
The Historic insight will only apply variable returns to accounts that are set to be grown using asset allocations (model portfolios).
For variable returns to be applied, model portfolios must also be set to an asset allocation of less than 100% Cash. The asset class for Cash is omitted from the simulation in much the same way that the growth of cash accounts is assumed fixed when running other insights, such as the Market Crash and Performance slider.
To view the accounts that will be affected by the Historic insight, click the Account(s) Affected link top right, above the historical timeline.
The accounts highlighted will be subject to variable returns when running the insight, provided they are grown using an asset allocation that is not 100% Cash.
If none of the accounts in your plan are set to grow using asset allocation (i.e., all accounts use fixed growth rates), you’ll see a prompt before running the Historic insight. This message will ask you to select at least one account to be grown using asset allocation.
Within the prompt, you’ll also have the option to update your growth settings globally. You can do this by going to Plan Settings and enabling the option:
“Grow all investment and retirement accounts using asset allocation.”
You’ll also see another option:
“Grow all savings and cash accounts using a 100% cash allocation.”
Note: Enabling this option will not affect the Historic insight, as cash holdings are not adjusted by this simulation.
Keep in mind that changing asset allocation settings from this dialogue will directly update how the accounts are grown in the plan itself.
If you enable asset allocation for an account here, that account will begin using a model portfolio to determine its growth rate—at least until you either:
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Deselect the account in this dialogue, or
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Manually edit the account’s growth settings on the Dashboard screen.
Note: If your default asset allocation is set to 100% Cash (as it is in the standard release of AdviserGo), you’ll still need to assign a model portfolio or adjust the asset allocation for each account individually. Otherwise, the Historic insight will not apply variable returns to those accounts.
Which types of asset classes experience variable returns when running the Historic insight?
The Historic insight uses historical returns from the Standard & Poor's 500 Index. Does this mean variable returns are applied only to US large-cap equities or only to equity holdings in general?
The Historic insight is intended only to be used as a method for introducing some variability into the software’s projected returns. This applies not only to equities but to the entire asset allocation, excluding cash holdings. Variable returns are applied to the entire model portfolio, only omitting cash.
Also, only capital growth is adjusted by the simulation, not dividend and interest yields.
Granted, the percentile derived from historical S&P 500 index data may not be an ideal approximation of the percentile return for all categories of assets. But Historic insight is intended to be used as a simulation tool to bring a level of market fluctuation to what is an otherwise deterministic projection provided by the software. Some items, such as bonds or possibly property, might correlate to move up against a down equities market, but that is out of the scope of this insight.
FAQ's
Historic Insight – Frequently Asked Questions
Q: Does the Historic insight reflect the actual holdings in my client’s portfolio?
A: Not exactly. The Historic insight applies historical S&P 500 percentile returns across the full asset allocation (excluding cash), regardless of specific holdings. It’s intended to simulate market volatility in a general sense—not to recreate the specific performance of an individual portfolio.
<sub>Note: Investment returns in this simulation are assumed to be “normally distributed,” meaning returns are spread along a spectrum from 0 to 100. A percentile value above 50 indicates an above-average return, while a value below 50 represents a below-average return.</sub>
Q: Why doesn’t the Historic insight reflect the behavior of bonds, property, or other asset classes?
A: The simulation uses S&P 500 returns as a proxy for broader market behavior and applies those percentiles to all growth-oriented assets. While this doesn’t perfectly mirror the performance of other asset classes (like bonds or property), it introduces a consistent level of variability into the plan, helping demonstrate how long-term outcomes might shift in response to market swings.
Q: What about inflation—shouldn’t that vary too?
A: Great question. In the Historic insight, inflation remains constant based on your Plan Settings. This is intentional, allowing you to isolate the effects of market volatility on your client’s plan.
If you're looking to explore how rising inflation might affect the plan, we recommend using the new Inflation Adjustment Insight, which simulates variable inflation scenarios. While it isn’t currently possible to combine the Inflation Insight with the Historic Insight, this approach provides a more robust view than manually adjusting inflation with “Steps.”
Q: Why do cash holdings show no change in this simulation?
A: Cash is excluded from the Historic insight simulation. It is assumed to be 100% deposit-based and therefore exempt from short-term market volatility. This is consistent with how cash is treated in other simulations, like Market Crash and the Performance Slider.
If you’d like to model more market-sensitive cash equivalents (e.g., money market accounts), consider assigning them to a different asset class within the plan.
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