Lump Sum Need Insight Transcript
Hello, and welcome to today’s AdviserGo training.
Today, we’re going to review the Lump Sum Need Insight, which answers a slightly different planning question:
How much would the client need as a one-time lump sum amount to fully resolve the projected shortfall in the plan?
To find this insight, we’ll go to the Insights section and use the search tool to find Lump Sum Need or Lump Sum Savings.
Once we select the insight, we’ll go ahead and click Get Started.
The Lump Sum Need Insight calculates the amount required at a specific point in the timeline to eliminate future shortfalls in the plan.
The lump sum amount is first used to cover expenses in the year it is needed. Any remaining amount is then placed into a Needs Analysis Account, which is used to help cover future shortfall years.
In this example, the plan requires a lump sum amount of just over $2 million to prevent the shortfall that was occurring in the original plan.
Now, let’s compare this insight result to the original plan.
In the comparison view, we can see that the lump sum amount helps prevent a shortfall of approximately $396,000 in the third year of the clients’ retirement.
We can also review this in Year View.
If we go to the Investments section, we can see the Needs Analysis Account that was created by the insight. This account reflects the lump sum amount needed to help prevent the projected shortfalls in the plan.
As we scroll through the plan years, we can see how that account grows over time. Then, once we reach the years where the shortfall was originally occurring, we can see how the Needs Analysis Account is being used to cover those shortfall years.
In this example, the plan stops needing support from the lump sum around age 80, or in the year 2048.
It’s also important to note that the Needs Analysis Account grows based on the plan’s default investment growth rate. In this example, that growth rate is 5.5%.
If you need to adjust that assumption, you can do so within Plan Settings.
The Lump Sum Need Insight is a helpful way to show clients the one-time amount that may be needed to eliminate a future shortfall. It can also support conversations around whether a lump sum contribution, sale of an asset, inheritance, or other funding source may be available to help strengthen the plan.
If you have any questions, please feel free to reach out to Support.
Thanks for watching.