Financial advisors are not a homogeneous group. There are many avenues to success within the field. But it is difficult to imagine that anyone would pass up the opportunity to advise clients on retirement. Retirement issues are the No. 1 financial concern of clients and prospects, and there is little reason to believe that this will change in the foreseeable future.
Firms that cater to wealthier clients typically provide planning that encompasses retirement matters. These firms tend to use comprehensive software that is capable of dealing with a wide range of planning scenarios. Not all advisors, however, are comprehensive planners. Many may specialize in investment some other subset of the planning world but have a strong desire to provide meaningful retirement advice to clients and prospects.
The challenge then becomes how to build a scalable business providing advice that clients and prospects need. For some, the answer may be a product called Last Advisor. I’m not crazy about the name, but the concept is that through the use of this system you will become the last advisor your clients and prospects ever need.
Last Advisor is the brainchild of Stephen R. Swensen, the author of the book Bucket Bliss. Swensen has been an advisor since his graduation from Utah State University in 1996. He specializes in retirement income planning for retirees, corporate executives and university personnel. He also coaches advisors nationwide on his income planning and practice management strategies.
At its core, the Last Advisor platform is a cloud-based retirement solution that relies upon a “bucket strategy.” It breaks down the investment portfolio into four buckets, one with a zero to five-year time frame, one for the six- to 10-year period, one for years 11 to 15, and one for years 16 to 20. What if your retirement period is more than 20 years? Last Advisor has a solution for that, which we’ll discuss later.
Last Advisor is available in three versions. The Silver version, for $79 per month, provides access to the software and Web-based training.
The Gold package, at $99 per month, will probably prove to be the most popular one. It includes a set of marketing materials along with the software. Gold level subscribers get a listing on the website www.bucketbliss.com. There’s also a personalized whiteboard presentation that advisors can use with clients. A sample is available at www.bucketbliss.com/sample. Subscribers also get four copies of Bucket Bliss; additional copies are available on Amazon for $19.95 each. In addition, Gold subscribers get introduction packets, fact finders, presentation folders, access to an advisor blog and resources, a monthly conference call that discusses planning techniques and best practices, and, finally, an electronic copy of Bucket Bliss for distribution to prospects.
The Platinum level, at $199 per month, adds one hour per month of one-on-one coaching from a Last Advisor expert.
The marketing materials are potentially very appealing for those just getting started in the retirement income marketplace. So, how good is the software? We recently put it through the paces to find out.
When you log on to the site for the first time, there is an interactive introduction to the Last Advisor strategy. This training is broken down into five easy-to-\digest modules. Experienced advisors will find some of the content simplistic, but for novices or those in search of a turnkey program it has appeal. Four of the five modules are marketing oriented. Only one really deals with the software itself. It covers entering data, calculating future values of existing assets, calculating bucket portfolios, interpreting the distribution and growth table, viewing and interpreting the charts, and printing out a retirement income plan.
When you click on the software tab, you are required to digitally sign the software license agreement. If your compliance department requires any documentation before authorizing you to use the software, you can download the documentation you are likely to need. Before you can download the documents, however, you must create a disclosure statement for your account.
You also should edit your profile before you begin using the software, because the profile dictates what information will be contained in the reports (your firm name, address, logo, etc.).
Once the setup is complete, you can start to create your first plan. First, you enter cash accounts. Then, you enter investment accounts: brokerage accounts, 401(k), 403(b), Roth IRA’s and the like, along with account ownership information. Drop-down lists speed the data entry process. For example, if you chose a cash account, there are dropdowns for checking and savings. Next, you enter any income sources in retirement, including Social Security.
This takes you to the scenario tab. Here, you enter the desired retirement income amount, the year the investment plan begins, the year distributions begin, the assumed fixed rate, and the assumed inflation rate. The scenario comes preconfigured with four buckets with assumed rate defaults of 1% for the first bucket, 4% for the second, 6% for the third, and 8% for the fourth.
Based upon the desired income, the application can calculate how much money is needed to fund each bucket, assuming there are sufficient funds available. If not, you can run alternative scenarios that entail saving more or spending less in retirement. In either case, as you enter data, a spreadsheet below updates the dollars allocated to the buckets, the cash flows generated, total portfolio value remaining and the like.
If you want to plan out beyond 20 years, you can create additional buckets. For clients already well into retirement, you can eliminate one or more buckets, as you deem appropriate.
There’s a lot to like about Last Advisor. For starters, with a little practice advisors can create plans in well under an hour. For the mass affluent, the audience best suited for this type of approach, all you need is the account values, retirement income sources, and that’s it. The software makes generating scenarios easy once you become familiar with it.
The marketing materials overall look good to me. The Bucket Bliss brochure is easy for prospects to understand, and the sample letter will be helpful to those without marketing experience.
Some readers are not fans of the bucket strategy. I get that. While it may not be a superior strategy mathematically, it does have appeal from a behavioral finance perspective, and that should not be overlooked. Clearly, if you are dead set against a bucket strategy, this product is not for you.
From a software perspective, the application does have some weaknesses. Thankfully, most should be easy for the developers to address. First, you have to create your own disclosure statement. Most commercial applications supply a preapproved statement that can be modified as needed, or they create ones for the major broker-dealers that they have relationships with. Putting this responsibility on the individual advisor is less than ideal. At the very least, it would be helpful to offer sample text that has been preapproved by FINRA.
There is currently no account aggregation facility. Since all that is required is total balances per account, it is not as great an issue as it would otherwise be, but some clients have their assets spread out over many institutions and accounts. For those clients, a way to automatically bring in all of the balance sheet data would be helpful.
The need to calculate future values with the financial calculator seems antiquated. Virtually all modern products allow you to simply enter the required data in fields, and the application does the math. Furthermore, I found the calculator a bit clunky to use. Even after you entered the data, you had to push a button to get a result. This is one of the application’s more annoying lapses.
Advisors must also estimate Social Security payments manually. Most modern applications can do their own estimates, and they allow for multiple Social Security strategies.
In addition, there is little if any integration with other applications at the moment. In order to remain competitive in the long run, such integrations must be forthcoming.
Finally, there are many other retirement planning situations that Last Advisor would have trouble handling, but the target market for this type of application is not likely to experience those situations. For some prospects, the Bucket Bliss strategy has a lot of appeal, and with some minor tweaks, the software can become much more appealing than it is today.
If you are a financial professional looking to enter the retirement income planning market for the first time, or if you are looking to more effectively market your services to that demographic, Last Advisor is worth a look. You can sign up for a free trial at www.lastadvisor.com.
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