Financial planning software company RightCapital unveiled new dynamic retirement spending strategies on its platform this week. The new offering gives investors the ability to better plan their finances once their working days are done.
“The industry has been using a rather simple retirement expense approach in the financial planning process for many years,” RightCapital CEO Shuang Chen said. “The ability to offer multiple options for retirement spending within our comprehensive planning tool is a significant step forward.”
Traditionally, financial planners have relied on an inflation-adjusted retirement spending model which focuses on a single input – the rising cost of living – to anticipate an increase in retirement spending each year. One criticism of this approach is that it does not account for changes in an individual’s portfolio that might significantly affect how much they are able to spend in retirement. RightCapital’s new offering factors in changes in portfolio value, reducing retirement spending projections when the portfolio loses value and giving investors the option to spend more in retirement should their portfolio significantly increase in value. The two dynamic strategies – referred to as guardrail and floor and ceiling – enable retirement spending to adjust in sync with portfolio performance and investment strategy parameters rather than being limited to tracking the rate of inflation.
Dynamic strategies such as those now available on the RightCapital platform more accurately reflect how individuals respond to changes in their investments in the real world. As Michael Kitces, Chief Financial Planning Nerd for Kitces.com and Head of Planning Strategy for Buckingham Wealth Partners explained, “as advisors, we cannot eliminate the uncertainty of markets themselves, but tools like RightCapital’s dynamic spending can help eliminate the uncertainty for clients of what they’d have to do in response to those market events, facilitating better client conversations about how to keep their retirement on track.”
Other features of RightCapital’s dynamic retirement spending strategies include the ability to customize spending levels by age, anticipating a higher level of spending early in the investor’s retirement life and tapering off as the investor ages. The strategies can also incorporate changes in healthcare expenditures over the course of the investor’s retirement, as well.
Founded in 2015 and headquartered in Shelton, Connecticut, RightCapital demonstrated its technology most recently at FinovateSpring in 2019. At the conference, the RightCapital team demonstrated the company’s API/Enterprise solution, which gives financial advisors the ability to offer their clients access to custom applications ranging from PFM to account aggregation to secure document sharing. In June, RightCapital announced that it would “enhance (its) integration” with partner Riskalyze, a specialist in risk alignment and portfolio analytics. Also that month, RightCapital and a coalition of fintechs including fellow Finovate alum Betterment launched the RIA Tech Suite to provide financial advisors with services and tools to automate back-office operations.
Photo by Mikhail Nilov from Pexels
Monetary planning software program firm RightCapital unveiled new dynamic retirement spending methods on its platform this week. The brand new providing provides buyers the flexibility to higher plan their funds as soon as their working days are finished.
“The trade has been utilizing a somewhat easy retirement expense strategy within the monetary planning course of for a few years,” RightCapital CEO Shuang Chen mentioned. “The power to supply a number of choices for retirement spending inside our complete planning device is a major step ahead.”
Historically, monetary planners have relied on an inflation-adjusted retirement spending mannequin which focuses on a single enter – the rising value of dwelling – to anticipate a rise in retirement spending every year. One criticism of this strategy is that it doesn’t account for adjustments in a person’s portfolio that may considerably have an effect on how a lot they can spend in retirement. RightCapital’s new providing elements in adjustments in portfolio worth, lowering retirement spending projections when the portfolio loses worth and giving buyers the choice to spend extra in retirement ought to their portfolio considerably improve in worth. The 2 dynamic methods – known as guardrail and ground and ceiling – allow retirement spending to regulate in sync with portfolio efficiency and funding technique parameters somewhat than being restricted to monitoring the speed of inflation.
Dynamic methods similar to these now obtainable on the RightCapital platform extra precisely mirror how people reply to adjustments of their investments in the actual world. As Michael Kitces, Chief Monetary Planning Nerd for Kitces.com and Head of Planning Technique for Buckingham Wealth Companions defined, “as advisors, we can’t remove the uncertainty of markets themselves, however instruments like RightCapital’s dynamic spending may also help remove the uncertainty for shoppers of what they’d must do in response to these market occasions, facilitating higher consumer conversations about the best way to preserve their retirement on observe.”
Different options of RightCapital’s dynamic retirement spending methods embody the flexibility to customise spending ranges by age, anticipating the next degree of spending early within the investor’s retirement life and petering out because the investor ages. The methods also can incorporate adjustments in healthcare expenditures over the course of the investor’s retirement, as effectively.
Based in 2015 and headquartered in Shelton, Connecticut, RightCapital demonstrated its know-how most not too long ago at FinovateSpring in 2019. On the convention, the RightCapital workforce demonstrated the corporate’s API/Enterprise resolution, which supplies monetary advisors the flexibility to supply their shoppers entry to customized purposes starting from PFM to account aggregation to safe doc sharing. In June, RightCapital introduced that it might “improve (its) integration” with companion Riskalyze, a specialist in threat alignment and portfolio analytics. Additionally that month, RightCapital and a coalition of fintechs together with fellow Finovate alum Betterment launched the RIA Tech Suite to supply monetary advisors with companies and instruments to automate back-office operations.
Photograph by Mikhail Nilov from Pexels
