The Market Crash insight is a disruptive simulation that allows a period of market flux to be injected into a plan at any point in the timeline with a view of its effect in the Let’s See charts. The duration and the magnitude of the model market deviation are defined by the software’s default preferences. Which can be adjusted in Plan Settings > Major Loss.
The Market Crash insight allows you to select the age (a future age of the primary client) when a period of market decline, or “market flux,” will begin.
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Planned First Shortfall shows when the first shortfall is expected to occur in the plan without the crash, based on the original account growth assumptions.
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Simulated First Shortfall shows when the first shortfall is projected to occur with the market crash included at the specified age.
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Viewing the Chart Details
When you run the Major Loss insight, click the Investments or Retirement tabs in the Year View Chart Details panel.
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The Investments tab shows the adjusted growth rates and end-of-year balances for general savings and investment accounts. If growing via asset allocation, this will show net allocation percentile figures. example below.
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The Retirement tab displays the same for retirement savings accounts, both before and after the simulated market loss.
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Note: You can customize the settings for this simulation by going to Plan Settings > Major Loss.
In this section, you can specify:
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The duration of the loss period (1 to 5 years)
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The magnitude of the loss
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The recovery rate following the loss
This allows you to tailor the simulation to better reflect your client’s risk concerns or specific market scenarios.
Understanding the Terminology
Fixed Growth – What Does This Mean?
In the context of the Major Loss insight, fixed growth refers to applying a flat percentage loss across an account, regardless of the account’s actual investment holdings.
This approach does not consider the underlying asset mix, so a portfolio made up entirely of government bonds would be affected in the same way as one fully invested in emerging market equities. In short, it applies a uniform loss, ignoring investment risk or volatility.
Using fixed growth for a market crash is a simplified way to model impact, but it sets aside the probabilistic nature of real-world investment returns.
Allocation Percentile – What Does This Mean?
Investment returns are inherently variable; they follow a probability distribution based on historical performance. Some outcomes are more likely than others, and returns are typically assumed to follow a normal distribution (i.e., a bell curve):
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The 50th percentile represents the average expected return (mean).
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The 0th percentile represents a worst-case outcome, ~3 standard deviations below the mean.
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The 100th percentile represents a best-case scenario, ~3 standard deviations above the mean.
When returns are based on an asset allocation, market loss is applied using a percentile-based adjustment. This approach reflects a more realistic, risk-adjusted simulation, aligning the loss with the asset class mix and expected market variability.
In this case, you're not assigning a flat loss; you're specifying how extreme the downturn should be by selecting a percentile under the curve.
Learn more about simulating Major Loss scenarios