Using NaviPlan to differentiate your business

June 12, 2017 by Brian Sasaki

About the author

Brian Sasaki

Account executive

Brian started his career working for a large insurance and investment company located in Milwaukee, WI, where he was one of the top financial representative interns in the country.

NaviPlan is an unparalleled planning tool, and its power comes from the ability to create multiple plans to compare side by side with different outcomes and events in each plan. Advisors will say there is no such thing as an accurate financial plan because we do not know what can happen and cannot predict the future.

I wanted to talk through today was a few cool scenarios you can run in NaviPlan to illustrate future disasters and talk clients through how they can prepare for them.

I have been using NaviPlan for close to eight years now: three and a half years as advisor doing primarily insurance and investments, and about four and a half years with the NaviPlan sales team talking with advisors who have been using NaviPlan or are looking to implement it in to their practice.

In meeting with advisors who are current NaviPlan users, I am able to learn best practices and talk with them on how they use it. I can then pass this knowledge on to advisors looking to implement it. Here are four different scenarios you can run in just a few clicks that can have significant impact on your clients.

The scalability of NaviPlan

The first three scenarios I will discuss all relate to insurances, and although NaviPlan and many other pieces of software have insurance modules, NaviPlan is one of the only systems I have found that can show the true impact of a major life event on a family.

In most cases, insurance modules in financial planning software will calculate how much insurance is needed if someone passes away, gets disabled, or ends up residing in a nursing home.  This usually involves nothing more than a simple math calculation, specifically how much is needed immediately, how much is needed for ongoing expenses, and how much clients have to offset it. What this misses is showing the financial impact over time.

By utilizing scenario manager, you can build alternative scenarios so that when you sit down to deliver it to a couple, you can show them timeline of when the surviving spouse would run out of money if their partner passes away.

Life insurance scenario

This is an incredibly engaging feature to show clients that only takes a few clicks. When building out a new scenario, you can change “assumptions” pertaining to the life expectancy and retirement date (Though NaviPlan will not let you have retirement date that is later than life expectancy). By doing it this way you can choose at what age a client passes away, all their income will stop and they will no longer get employer contributions.

When modeling death benefit from insurances, NaviPlan assumes that all money not explicitly saved is spent; make sure that you edit the insurance policy to have proceeds move to an account. Once you have created this scenario, you can duplicate it and make another scenario that includes additional life insurance, so now you are solving the issue. You can then run cash flow reports to demonstrate to your clients how all the moving parts fit together.

Disability scenario

Also beneficial to create in scenario manager, this is done by simply stopping someone’s income, and then starting a new income at the same time of 60 percent of their income (assuming they have group disability of 60 percent).

You can also change the income type to reflect how this new income will be taxed. By changing the income type, the system will no longer make employer contributions and you have the flexibility to choose when this event happens. By using the retirement capital report or another cash flow report, you can illustrate exactly when the family would run out of money in a timeline; you can solve this scenario by duplicating and adding new disability income in to the cash flow.

Long term care scenario

Long term care is built similar to the disability scenario; we are going to be changing the cash flows in the scenario manager. In this instance, we are adding a new expense first. Then, we can choose when the new long term care expense takes place, how long it will last, and how much it costs. The retirement capital report or retirement summary reports are great to show how fast retirement accounts get liquefied in an event like this.

You can solve for needs in this scenario by duplicating the original and adding in a new income to offset the long term care expense. I would title the income something along the lines of “long term care insurance benefits.”

Bear market scenario

This is a neat scenario that I learned recently from an advisor that has been using NaviPlan for years and it works great from a macro perspective. If your clients are in retirement, you can add an expense and call it “bear market loss.” With this, you can control the amount of how much the loss will be, for example 25 percent of all their equities. You can also create the scenario as a one-time event and you can pick when it happens, or you can use the “every X amount of years” expense and make a bear market event happen occur 15 or 20 years. This works great from a macro perspective and you can demonstrate how it affects the plan with summary based-retirement reports or the retirement capital report.

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