SAVVI Financial, a registered SEC Investment Adviser, has developed a unique Internet-based financial planning tool that’s designed to help people make investment decisions and assist them in their investment planning.
I recently had the opportunity to take their financial solutions engine for a spin so I could share my thoughts on this particular technology with you.
SAVVI Financial describes its planning tool as a solutions engine designed to deliver “smart, unbiased financial advice over a client’s lifetime” by generating personalized investment portfolio recommendations, including: target asset allocations; asset allocations for each of your investment accounts; ongoing rebalancing guidance; and money movements between accounts.
After entering select personal and financial information, SAVVI’s planning tool sends you a customized investment strategy generated by the company’s proprietary methodology, based upon your stated financial goals and asset allocation. If applicable, it will also provide financing options, debt payoff, contributions and withdrawals, Roth conversions, Social Security elections, and required minimum distributions.
Taking a Closer Look
Let me start off by saying the tool is extremely easy to use. It asks all the pertinent questions in a simple, yet methodical manner. The tool breaks the process into three separate sections: 1) organize; 2) understand; and 3) plan. At the bottom right is a chat box that you can use to get live help for any questions that you may have during your journey. Here is a screen shot of the initial section:
From here, you are asked to enter your name and birthday, as well as your spouse’s name and birthday. You will also be asked to enter the names of your dependent children, if any. Next, you are asked to enter information about your savings, retirement and other financial accounts; depending on your comfort level, you can enter the data manually or link the tool to them directly.
It is in this section where you also enter detailed information about your income, including how often you get paid, how much you and your employer, if applicable, contribute to your retirement accounts, bonuses and other data. You’ll also be asked about any pension income and other pertinent details such as whether it is taxable or not.The tool uses you and your spouse’s date of birth to determine eligibility for Social Security distributions, Traditional and Roth IRA distributions as well as the start time of required minimum distributions from retirement accounts. It also uses your children’s birth dates to determine eligibility for tax deductions, child credit and health insurance coverage following the federal tax law. The tool also considers your and your spouse’s biological sex for life expectancy and health care calculations.
The tool also uses your income numbers to estimate Social Security benefits as well as federal and state taxes; the assumption is your income will continues all the way to retirement; that income is adjusted by a nominal raise. Estimated Social Security benefits are calculated based on your income and current age inputs; but you can overwrite the estimate if you wish.
In the “Understand” section, you’re asked a series of question about your expenses including housing, healthcare and general expenses. The tool then evaluates your current day-to-day personal finance situation and provides a big picture summary along with recommended actions to help you make improvements. Here was the tool’s summary for me:
The third and final evaluation occurs in the “Plan” section. It is here where your long-term personal finance situation is assessed. As you can see in the following screen shot, the tool asks you for your first goal: an emergency fund or retirement. I chose retirement:
In this section you are asked to estimate your expected healthcare and general expenses in retirement. The financial engine then takes between 5 minutes and 24 hours to develop a detailed plan; I got my email notification less than 10 minutes. I assume that is typical. An overview of my situation can be seen in this screen shot :
To generate this summary, the tool evaluates all possible combinations of account allocations, contributions, and distributions. The resulting actions list includes which new accounts to open based on the client’s unique needs over time, how to fund them, how to distribute appropriately, the specific asset allocations across all accounts. It also determines your Social Security election and the retirement age that maximizes the probability of achieving all goals. In addition, you are presented with specific actions to be taken over the next year.
The Bottom Line
I do have a couple of concerns. From what I can tell, the tool assumes that your nominal pension payout is adjusted annually by an unspecified pension cost of living adjustment (COLA). While COLAs are typically available for some pensions, that isn’t the case for all of them — including mine. That’s not a minor point — especially for folks who intend on retiring before they’re 60.
Another nit is that it wasn’t clear to me the specific return numbers they were assuming when calculating investment performance over time, although they do say this: “Using average long-term expected returns for the asset classes, we calculate the expected average returns for each portfolio and then a spread of likely outcomes either side of that average. These projections are based on the estimated returns for a portfolio of equities and bonds, in different percentages, depending on risk preference. In general, the higher the risk of a portfolio the greater the proportion of equities both in the US and International and so a higher level of expected return.”
Other than that, I think the SAVVI’s financial solution’s engine is an extremely well-executed and easy-to-use product; I recommend it to anyone who is looking for a comprehensive overview of their short- and long-term financial situation. You can click here if you’re interested in trying it out; there is a free version of the tool you can take for a test drive. The standard service price is $120 per year. Just keep in mind that the service must be paid upfront, and users may cancel their subscription at any time after the initial subscription period.
(Note: This post was sponsored by SAVVI Financial, but the opinions expressed herein are solely my own.)
Photo Credit: Envestnet