In this video, we walk through different strategies in the Voyant software that advisers can use to mitigate risk in their clients' plans. Sometimes referred to as buffering strategies.
Transcript
In today's training, we will be taking a look at some common buffering strategies and how you can use Voyant to demonstrate them to your clients.
The first strategy we’ll cover is creating an emergency fund. We have clients in a strong financial position—their income is high, and their expenses are under control—but they do not currently have an emergency fund.
To create this in Voyant:
Click the plus button, go to Savings and Investments, and select Savings Account.
Title it Emergency Fund and enter a zero balance, reflecting their current situation.
Set contributions starting this year at $20,000 annually.
Go to Timing and have contributions continue until Brian reaches age 50.
Set a withdrawal limit to treat this as a true emergency fund. Options include:
Scheduled withdrawals only
Minimum balance, e.g., $20,000
Click Done.
In the Year View under the Investments tab, you can see contributions accumulating to approximately $60,000. If using a high-yield savings account, you can set the interest rate (e.g., 3.5%) to demonstrate growth over time.
Next, we’ll discuss diversification. On the Asset Allocation widget in the dashboard, you can review the client’s current investments. You can also adjust allocations via the Grow section on retirement or investment accounts. Portfolios can be created within the plan, and you can use the slider bar to select which portfolio to model.
Now, let’s cover contingency planning and insurance coverage.
Early Mortality Scenario:
Go to the What-If section, select Change Life Expectancy, and model what happens if Brian dies next year.
Save this as a distinct plan, e.g., Brian Early Mortality Life Insurance Scenario.
On the dashboard, you’ll see potential shortfalls when the surviving spouse reaches age 73.
Use the Life Needs Insight to determine the required life insurance; in this example, it’s approximately $77,856.
Add a Term Policy for 20 years, e.g., $800,000, with the spouse as beneficiary.
The shortfall is now eliminated. The same can be done for Molly in a separate scenario.
Disability Scenario:
Create a What-If scenario for disability.
Use the Insights section to see income loss; for example, Molly at age 55 for 3 years would result in an income loss of $48,600.
If maintaining a lifestyle is desired, add a Disability Policy with coverage, premium, and duration.
Major Market Loss Scenario:
Go to Plan Settings and configure Major Loss, e.g., at age 60 over 3 years, with varying growth rates for each year.
Create a What-If scenario and add a Major Loss event at age 60.
Dashboard shows clients would run out of money when Molly reaches age 84.
Use Insights → Annual Savings to determine additional savings required; in this example, $9,982 annually.
Allocate funds to a brokerage account with $10,000 annual contributions to mitigate the risk.
These strategies demonstrate how to use Voyant to model emergency funds, portfolio diversification, and contingency plans for unexpected events like early mortality, disability, or major market losses.
If you have any questions, click the client’s name in the top right, select Request Support, enter your question, and share client access.