Clariity Family Gift Cards & Financial Plans

Clariity is a new financial planning company with a gifting option that reminds me of my grandfather giving me Wal-Mart stock as a present when I was a kid.

Clariity doesn’t give you stock but it does let you contribute money to help your friends or family towards their financial goals.  A concept kind of like Upromise, where you’re contributing to their college savings – except Clariity isn’t limited to just college and the money is a gift from you.

I chatted over email with the man with the vision, Scott Amyx, who’s the driving force behind Clariity.  It turns out that his team has built some pretty powerful financial planning tools for Clariity members – financial modeling and “what if” features that allow you to set your goals and then test out various ways you can reach them.

The site has a big focus on family finances so I sent him 6 questions about Clariity in regards to financial questions or challenges we’ve run into in our family.  My questions and his answers are below:

1) If I provide all the investment options in my 401k and my wife’s 403b, can Clariity make a recommendation on what mix of investments to choose?

Yes, our Investing and Retirement Accumulation modules will be available later in the year. As you probably know, there are a number of model portfolios, strategic model portfolio for household assets, model portfolio for retirement, model portfolio for college and so forth.

First, a few disclaimers, since we are more than a comprehensive financial planning platform, we are subject to compliance under SEC, FINRA & USA (Uniform Securities Act).

Here are the compliance issues you should be aware of in regards to your question:

1) You’d need Durable Power of Attorney between spouses to derive at a household accounts for the purpose of dispensing advice.

2) Limitations on issuing advice on only assets managed (unless we are the qualified plan administrator or the client has authorized us to dispense advice for which we are compensated through an asset-based fee).

Getting back to your question, the best way to do it is to setup a model portfolio for a retirement account.  Here are the steps for setting up a Clariity retirement account model.

 
2) We bought a house 6 months ago and were running the numbers on a 15 year mortgage vs a 30 year mortgage and what made the most sense for us. Does Clariity offer any tools for mortgage comparison or analysis?

This is built into the Clariity Home Purchase module. The system automatically calculates affordable mortgage and estimated monthly payments.

3) Fortunately, we don’t have any credit card debt but many families struggle to keep their balances paid off on their credit cards. Can Clariity help families plan their spending to prevent accumulating consumer debt?

Later this year with the rollout of account aggregation, we will have basic budgeting capabilities. They will allow users to set targets by spending categories. When it exceeds the target, an alert will be triggered and messaging sent to the user.

For those in debt, we’re planning on having our Debt Reduction module ready later this year. The capabilities include ability to project debt-free in months using a myriad of strategies, including debt consolidation through HELOC or credit card transfer or if that option is not available then the roll down strategy to pay off highest interest card first.

In addition to tool capability, we will have helpful tips and content that encourages those in debt to negotiate their debt terms. We’re also working on an accountability group feature to get friends and family involved in staying vigilante about spending and following through with their debt reduction goal.

4) Many people were up in the air about how to handle the Roth IRA conversion last year. Does Clariity help people compare the Roth IRA and traditional IRA options?

This is a fairly standard Roth IRA conversion calculator put out by most institutions. It’s not in our short term plans but could become part of our Retirement Accumulation and Distribution modules.

5) If my wife and I don’t agree on a big spending or investment decision, are there features in Clariity that will let us do “what-if” analysis to look at the implications of both decisions?

The latest version of Clariity has a catch-all Major Purchase module. It very simply shows you based on your goal amount and what you an afford to save, how many months or years it will take to reach your goal. In other words, it helps rationalize the decision-making process through the notion of immediate vs. deferred consumption.

As for investments and other goal decisions, what if is inherently built into the major goal modules. In the case of Retirement Accumulation, what if and modeling can show the affect of inflation, market volatility, disability, and premature death on your retirement plan.

For the Retirement Distribution/ Income module that’s in development we model the affect of longevity risk, inflation risk, LTC, death of spouse, and market volatility on their retirement income needs.

6) Almost four years ago I wrote an apology letter to our few month old son.  Basically I told him college tuition costs have gone wild and that we probably wouldn’t be able to pay for all his schooling.  We want to help him and his siblings as much as we can, can Clariity help in that college planning process?

At Clariity we believe that there is an inherent difference between head knowledge vs. actionable advice. Most people are not in a position to save some $10,000 a year towards a $300,000 college tuition goal, especially if they have more than one child. Rather, it’s about doing something vs. nothing.

In our College Savings module, we ask users what is a realistic & achievable amount that they can commit to on a monthly basis? Even $100/ month can accumulate to some $15-20K in the future which helps offset a portion of the tuition cost.

How To Setup a College Savings Module in Clariity

1) College savings video primer and transcription are available for those needing an introduction.

2) Assess what the user can realistically save each month. Immediate feedback on projection of those dollars on the same page.

3) Based on their zip code, we then immediately display 529 plans for their state.

4) Using sort, filter & selection features, users can quickly search our database of Savings Plans & PrePaid Plans.

5) Users can also compare side-by-side plans to evaluate performance, tax benefits, costs and read user reviews.

6) After they selected a 529 plan, the user is directed to complete an online application. By completing our application, you in effect can apply to any of the 100 plus 529 plans in the country.

7) If you opt to allow us to help you with your application, we mail you the completed application with stamped & self-addressed envelope with instructions to the user. The user completes any other necessary documentation such as payroll deduction, attachment of voided check and include a check or ACH order and sends the package in to the 529 plan institution.

8 ) Using account aggregation, the user can then track the performance of the 529 plan on our dashboard.

9) Additionally, with the group gifting feature available soon, users can invite friends and family to gift towards their child’s education fund. The next time they have a birthday party for Johnny, in eVite, email invitation or Facebook, the user can request gifting towards Johnny’s college fund in lieu of novel, short-term presents.

Thanks to Scott for taking the time to go into detail on some of these questions!  If Clariity sounds like something you or your family could use, be sure to check it out.

Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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