Learn how to present financial advice using Monte Carlo simulations in Voyant. In this step-by-step session, we’ll show you how to illustrate the probability of multiple variations of a client’s plan succeeding by testing it against anywhere from 50 to a thousand potential market scenarios.
Transcript
In today’s session, we explored how to present financial advice in Voyant while demonstrating its impact on a client’s log-Training Summary – Presenting Advice and Measuring Impact with Voyant
In today’s session, we explored how to present financial advice in Voyant while demonstrating its impact on a client’s long-term plan. Using a sample client scenario, we evaluated how changes in retirement age, investment portfolios, and giving strategies affect the plan’s probability of success, net worth, and estate tax outcomes.
The client in this scenario has a total net worth of $4.1 million, including both liquid and illiquid assets such as a non-registered account and a business. Their main questions were whether they could retire at age 63 instead of 65, and which investment portfolio would be most suitable for their non-registered assets.
We began by comparing plans to model retiring at 63 using two different portfolios. Both portfolios showed no projected shortfall, even with the earlier retirement age. Examining the plan's worth revealed that Portfolio 1 offered a higher, more optimistic outcome, while Portfolio 2 produced a more conservative result.
Next, we used Monte Carlo simulations to assess the probability of success for each scenario. Running the simulations for demonstration purposes, Portfolio 1 showed a 94% probability of success, whereas Portfolio 2 achieved a 100% probability. The probability remained at 100% through most of the plan and only began to dip slightly in the later years, around ages 85 to 87.
We then explored the impact of estate planning by adding charitable and family gifting goals. Using the Estate Tax Insight and Estate Tax Comparison tools, we were able to see how these goals influenced the client’s overall estate tax outcome, ultimately showing almost $2 million in estate taxes saved through strategic gifting.
This session highlighted how Voyant can clearly illustrate the impact of advice on a client’s probability of success, long-term net worth, and estate tax outcomes. Monte Carlo simulations require defined asset allocations and goals to run accurately, and layering what-if scenarios, such as adding gifting goals, allows for more comprehensive planning that addresses legacy objectives.
Advisors are encouraged to use the Compare Plans and Monte Carlo tools to show clients the tangible effects of different decisions and to incorporate estate tax insights when discussing long-term planning. All scenario results can be documented and saved for future reference. If assistance is needed in modeling these scenarios, the Request Support feature in Voyant allows clients to share access with our team.erm plan. Using a sample client scenario, we evaluated how changes in retirement age, investment portfolios, and giving strategies affect the