Co-founder of the Tax Planning Institute (and Top of the Table producer) Simon Singer shares his thoughts about InsMark’s Wealthy and Wise software program.
Mr. Singer explains that cash flow modeling is really the key to comprehensive financial planning for clients and InsMark’s Wealthy and Wise software is the “best piece of software in the marketplace” for this cash flow modeling approach. Mr. Singer explains that the Wealthy and Wise software platform helps clients analyze whether they will have sufficient assets to maintain their lifestyle during retirement. And, if so, do the clients also have enough assets to comfortably start making gifts to children or a trust (which could then be a very effective funding mechanism for buying life insurance for the purpose of paying for estate taxes after they pass).
Mr. Singer continues by saying that the bottom line with the Wealthy and Wise software is that it will allow you to play an amazing amount of “what if” games with different planning scenarios for your clients and then show the impact of those financial decisions on future assets, retirement income and wealth transferred to heirs.
Mr. Singer then explains that Wealthy and Wise also does something very unique. Specifically, the program has algorithms that will analyze how different asset liquidation strategies can dramatically improve results thereby giving clients more financial freedom and choices. For instance, by optimizing asset liquidation, the client could spend more during retirement or give more money away while they are alive, or they could pass more money to children or give more money to charity. And, the Wealthy and Wise software has great potential for fee based financial planning consulting which is what most clients want. And, if you can provide this type of comprehensive cash flow analysis for clients, then your ability to make recommendations on new financial products and asset repositioning is greatly enhanced.
We then examine a sample client case for Mathew and Catherine Fox. Mathew and Catherine Fox are 60 and 65 with life expectancy of 93 and 88. They want $200K per year net after taxes for retirement and a net worth of $6.4 million. Mr. Singer then walks through 5 different scenarios using Wealthy and Wise software.
First, he shows that the client’s current plan. This shows that the client will have $12 million of net worth at life expectancy, causing $616 thousand in estate taxes leaving net wealth to heirs of $11.6 million. The client will also receive $8.5 million in cumulative net income during their lifetimes.
The second plan is identical to the first except for the fact that the Wealthy and Wise software analyzes the client’s assets and distributions and then optimizes the asset liquidation strategy in the future. By making these changes, the client’s estate growing to almost $19 million ($7 million more), but because there’s been no planning, there’s a proportional increase in estate taxes to $4.2 million, and therefore net to heirs is $14 million ($3 million more) with cumulative retirement income generate the same as with the current plan. With this second plan, all that was done is that there was more intelligent approach to which assets to take, when and in what amounts to fund the client’s need for income during retirement. As you can see, the impact of this one change is staggering.
The third plan was to increase the client’s retirement income (again using the optimal asset liquidation strategy during retirement as recommended by the Wealthy and Wise software). Now, we can increase the retirement income to $10.5 million (2 million more than the current plan), the estate still has gone up from $12 million to $13.5 million, and the heirs still get about the same amount of $11 million.
The fourth plan uses some of the client’s increase retirement income to make gifts to a trust that purchase life insurance. Now, the wealth transferred to heirs goes up substantially to $18 million and the cumulative retirement income to the clients was virtually unchanged.
The fifth example shows the client’s also making gifts to charity. In this case, the estate grows to $15 million, the estate taxes go down, and the net to heirs is $15 million, with $10 million of retirement income to the client and now $4.4 million is going to charity. Clearly, all parties are substantially better off.
Mr. Singer then takes us through the various printouts of the Wealthy and Wise software for the example case described above including how the different investment and tax assumptions are shown along with how the client’s asset increase or decrease over time.
For more information on the Tax Planning Institute, go to http://thetaxplanninginstitute.org/.
To purchase the InsMark Wealthy and Wise software, go to https://www.insmark.com/products/wealthy-and-wise-system
Or, if preferred, call Julie Nayeri at InsMark at (925) 543-0514.