The various types of goals and expenses have been decoupled from their prioritization, giving advisers and their clients complete flexibility to prioritize and importantly, to reprioritize goals at any time, without the need to delete and re-enter any information.
Expense prioritization decoupled from the type of expense
Some previous categories of expenses, such as Basics, Leisure, and Luxury, related to their priority, with Basics being the highest priority. The Milestone expense type, on the other hand, related to its timing, with a milestone being a one-off expense or goal. Other special types of expenses, such as Education (university costs) or Legacy (gifting and charitable giving), related to special rules or features.
With expense refactoring, there is much less to parse visually and conceptually when entering expenses.
Menu options have been simplified and narrowed down to four options:
- Recurring Multi Year expenses. Expenses recur starting and ending with a pair of events selected on the Timing tab.
Note – Expenses (and goals) can also be scheduled as recurring lump sum expenditures using the special Expense Frequency setting on the Timing tab – e.g., car purchases can be scheduled to recur ever five years from now until retirement.
- One-off Single Year expenses.
- The special Gifting (formerly Legacy) expense type remains as an option for scheduling future gifts and chartable giving.
- The Education expense type remains available to create, automatically, university start and graduation events for the expense owner.
The types of expenditure (multi-year, single year, education, and gifting) are indicated on the Dashboard.
Once you select the appropriate expense type, you will find for all types a prioritization slider. This slider allows for expenses and goals to be reviewed and reprioritized at any time, at any point in the planning process, unlike previously, where priority was determined based on the type of expense you were entering and could not later be changed.
This slider can be used at any time for any type of expense or goal to review and possibly change its priority.
The priority slider has calibration points beneath each priority level, allowing you to set an expense or goal by broader level, as a basic (high), leisure (medium), or luxury (low) level goal overall.
Within these three broad priority levels, you also have the option to further specify whether a basic expense, for example, is a high, medium, or low-level essential expenditure. The software will then follow prioritization as it fulfills future annual expenditure.
Note, Custom Priority Levels – The prioritization slider has been designed with customization in mind. The names of expense priorities could be customized for enterprises, aligning them with the terminology you use when discussing goals with your clients.
This short video will explain more about Expenses; Entering expenses video - UK.
Goal Prioritization
Goal types, which have always been more succinct than expenses, remain unchanged. Retirement, Pre-Retirement, and Milestone goal types all have an eye to their default timing, whereas Education goals is a special goal type intended for education costs and Gifting goal is intended to model gifts for IHT purposes.
- Pre-Retirement goals are assumed, at least initially on the Timing tab, to be a recurring expenditure from the plan’s Start until the first Retirement event. The selection of this pair of events is merely suggested timing for your convenience. Alternative start and end events can be selected on the Timing tab.
- Retirement goals are assumed, at least initially on the Timing tab, to be a recurring expenditure from the first Retirement event until the last Mortality event. The selection of this pair of events is merely suggested timing for your convenience. Alternative start and end events can be selected on the Timing tab.
Note – Goals (and expenses) can also be scheduled as recurring lump sum expenditures using the special Expense Frequency setting on the Timing tab – e.g., car purchases can be scheduled to recur ever five years from now until retirement.
- A Milestone goal is a one-off, single year expenditure and as such, requires the selection of a single event. One could (hopefully) assume a child’s wedding would be a Milestone goal.
- The Education goal creates, automatically, university start and graduation events for the goal’s owner. This short video will explain more about Education Goals; Entering education goals video - UK.
- The Gifting goal ensures that, if applicable, gifts are taken into account when Inheritance Tax is calculated and tax credits are calculated on gifts to charity. This article will explain more about the Gifting Goal; How to model a gift or charitable donation - UK.
- The Buy Property goal is a one-off goal to purchase a Property. Unlike other goals, using this goal creates an asset for the new property as well as creating the goal. This article will explain more about the Buy Property Goal; Property Goal - UK.
- The Net Worth Goal works differently from other goals in that it tracks progress towards a target Net Worth amount.
It uses Net Worth which includes:- + Property
- + Liquid assets
- - Debts
This article will explain more about the Net Worth Goal; Net Worth Goal - UK.
Like expenses, once you select the appropriate type of goal, you will find for all goal types a prioritization slider. This slider will allow for goals and expenses to be reviewed and reprioritized at any time, at any point in the planning process.
This slider can be used at any time for any type of goal or expense to review and possibly change its priority.
The priority slider has calibration points beneath each priority level, allowing you to set an goal or expenses by broader level, as a basic (high), leisure (medium), or luxury (low) level goal overall.
Within these three broad priority levels, you also have the option to further specify whether a basic expense, for example, is a high, medium, or low-level essential expenditure. The software will then follow prioritization as it fulfills future annual expenditure.
Note, Custom Priority Levels – The prioritization slider has been designed with customization in mind. The names of goal priorities could be customized for enterprises, aligning them with the terminology you use when discussing goals with your clients.
This article will explain more about Goals in the UK software; About Goals - UK