Historic Insight Transcript
Hello, and welcome to today’s global training.
Today, we’re going to walk through how to use the Historic Insight in AdviserGo.
This insight can be found by clicking into the Insights tab and selecting Historic Insight.
The Historic Insight is a helpful stress-testing tool that allows you to overlay historic market volatility onto a client’s plan. This helps you see how the plan may have reacted during a selected historical market period.
When we open the insight, you’ll see that the Historic Insight uses the S&P 500 Index from 1950 through 2022.
Using the slider tool, you can choose a specific historical period to apply to the plan. For this example, we’re going to select 2008 through the most current available period. This allows us to see how Martha and John’s plan may react to market volatility, including the downturn that occurred in 2008.
Before running the insight, it’s important to note that the accounts included in the simulation need to be modeled using asset allocations. If invested accounts are not set up with asset allocations, the Historic Insight will not be able to apply the simulation properly.
Since I know Martha and John do have a portfolio modeled, I’ll go ahead and click Start.
The first chart I want to review is the Cash Flow chart, which we are currently viewing.
In this example, we can see some red toward the end of the plan. This means there is a shortfall occurring in the later years. If we click into that area, we can see which account is being affected by this insight.
Here, we can see that the Joint Brokerage account is the account being impacted.
Because there is a shortfall in the plan, I want to compare this insight against their original plan. If this historical market period were to occur again, we can see that it would begin affecting Martha and John in their later years, starting around 2063 and continuing forward.
We can also compare this on the Assets chart, which is where the impact becomes even more noticeable.
As we scroll forward, we can see that the market scenario has reduced their projected assets significantly in the later years. In this example, the difference is around $10 million compared to the original plan.
This is an important conversation point with the client. If this type of market event were to happen, what options could we consider? Are there adjustments we could make to help strengthen the plan and reduce the likelihood of a future shortfall?
We can also review this in Year View. If we go into their investment accounts and scroll forward to the years where the shortfall begins, we can see exactly what is happening in the plan.
By 2063, their investments have been depleted as a result of applying this historic market period.
The Historic Insight is helpful because it allows you to show how resilient a client’s plan may be if a period of historic market volatility were to occur again. It can also create a valuable opportunity to review the client’s assets, investment assumptions, and planning strategies for the future.
If you have any questions, you can reach out by selecting the client name in the top-right corner, choosing Request Support, and typing in your question.
Thanks for watching, and I hope you have a great day.