Fidelity Introduces New Adviser-Driven Retirement Income Planning Tool

Retirement income planning represents a huge growth opportunity for financial advisers, David L. Liebrock, executive vice president, Fidelity Investments, told PLANADVISER.com. For retirement plan advisers trying to offer planning services to plan participants, this new tool allows them to address capacity and efficiency issues, as well as an opportunity to capture additional assets, Liebrock said. Fidelity’s own survey of investors at retirement shows that three out of four investors who complete an income plan with an adviser say they are willing to move all of their assets to one adviser.

Although offered by an investment firm, Fidelity Retirement Income Evaluator does not include investment product recommendations, something quite different from many of the other tools, which offer a planning package including the investment recommendation, Liebrock said. Therefore, the product offers a chance for advisers to complement their own existing processes and investment styles show their value in providing an investment recommendation to clients.

The Tool
Fidelity Retirement Income Evaluator allows financial advisers to create a detailed financial plan for an individual in as little as 15 minutes, using pre-set guidelines for things such as replacement rate. However, if advisers spend more time with a particular client, they are able to create a more detailed plan by entering detailed expense and asset information.

The tool begins by gathering information about the individual and, if applicable, spouse, for which the planning is taking place. Using the birth date, the tool calculates the Social Security benefits that will be collected

The tool will be available at no cost to advisers working with Fidelity; the tool is offered by Fidelity’s three advisor businesses: Fidelity Investments Institutional Services Co., Fidelity Registered Investment Advisor Group, and National Financial, which collectively serve more than 135,000 advisors with assets under administration in excess of $1.2 trillion.

For those advisers National Financial or Fidelity Registered Investment Advisor Group’s brokerage workstations, Fidelity Retirement Income Evaluator can pre-populate with existing client asset and account information. Once the information is entered for any client, even a prospect, it is stored, meaning less work for the adviser when he revisits the income plan.

After the personal information about a client is entered, Fidelity Retirement Income Evaluator allows the adviser to enter client-specific data related to their income, expenses and assets, including:

• Salary information;
• Pensions, 401(k)s, and IRAs;
• Rental property;
• Anticipated income, including that from the sale of a house or a business; and
• Detailed expense information, including designating expenses essential versus discretionary and also when expenses might end (i.e. a mortgage is paid off)

After the information is entered, the tool runs at least 250 hypothetical Monte Carlo simulations to generate a printable retirement income plan report that estimates the likelihood the client will successfully cover his or her retirement expenses. The tool calculates the total goal at retirement and the monthly income goal and compares this to what the individual is on track to have and the additional savings needed. At this analysis point, the adviser is able to see how certain decisions, such as a more aggressive asset allocation, a delayed retirement, or a less expensive lifestyle might affect the retirement plan.

Advisers are then able to download a report to give to clients that can be customized with their name and firm name, as well as include key topics for discussion with their clients that advisers select from a list of suggested topics provided by Fidelity.