How to Setup a Retirement Portfolio Model in Clariity
March 17, 2011
Think planning for retirement is complicated? Well that’s because planning for something that lasts as long as retirement can (and is decades away for many of us) gives you a lot of unknown factors to take into account. In 30 years form now, what will interest rates be? How will the tax code change? What kind of investment performance will you see in the stock market?
Of course, no tool can tell the future but you can play with the numbers and make best guesses based on a variety of scenarios. When I wrote about the online financial planning tool called Clariity, the CEO gave me a list of how you can go about setting up investing and retirement modules on theirs site. You can go in an tweak the numbers and see what impact it has on your projected rate of return.
Thes steps he sent were somewhat detailed so rather than overwhelm you with steps in my Clariity review I just included them here. Check out this guidance he gives for setting up and tracking your module.
Retirement Portfolio Model Setup
1) Establish account aggregation feeds by setting up your accounts on Clariity (Yodlee/CashEdge service).
2) From the list of accounts, the user can quickly select the accounts to include in the portfolio analysis.
3) The user goes through a risk tolerance questionnaire for suitability, time horizon and risk profile.
4) The score from the RTQ is mapped to various model portfolios.
5) Based on the risk profile, the system will indicate a particular risk profile such as Moderately Aggressive.
6) The system would then provide a side-by-side comparison pie chart view of current asset allocation vs. suggested asset allocation.
7) The allocation is presented in major assets classes and/or sub asset classes with the dollar values to describe how to reallocate.
8 ) If the qualified assets are managed by us, the user will then be taken to fund recommendations. Based on their investable assets , risk profile and goal objectives, the system will recommend a set of investment options.
While we would show a primary fund recommendation, the user can elect to select from other available fund model portfolios. One set may be comprised of ETFs, another index mutual funds, or for others if the asset level falls under Mass Affluent, HNW or UHNW, individual securities, fixed income and other vehicles may be suggested.
9) The user can hold/sell/buy a portion ($ or %) or entirely.
10) They can elect to rebalance to their new asset allocation and funds.
11) After receiving the trade confirmation, the user can on a real-time basis (15 min delay quote) track the performance of their portfolio.
12) Built in drift variance alert warns users when their investments move beyond a tolerance band % of their recommended asset allocation.
13) Performance reports and statements would be available online.
Thanks again to Scott for taking them time to detail the setup.
All posts by Ben Edwards