Life Planner Use

Model Creation

You may create as many models as you wish. Variations of models enable sensitivity analysis and comparative outcome evaluation.

There 2 types of Life Planner models: Life Models and Goal Models.

Aspect	Life Models	Goal Models
Purpose	Predominant model type	Used to examine the effects of re-allocations across dimensions other than Asset Class; examples are Geography, Sector, and Risk
Scope	Financial planning including investments	Investment Planning
Rollup	Portfolio	Portfolio, Account Group, Asset Group
Type	Algorithmic and transactional planning	Algorithmic planning
Re-Allocation Dimensions	Asset Class	Asset Class, Geography, Sector, Risk, etc.
Re-Allocation Frequency	Multiple over time	One-time
Rates of return per asset class	Multiple over time	One-time
Support Dated Life Events (e.g. retiring, buying a second home)	Yes	No
Support Goals (e.g. net worth threshold)	Yes	Yes

Aspect	Definition
End Date	End Date (i.e. a horizon) for the model
Asset Class Detail	Model detail; the Level 1 of Asset Classes (e.g. Fixed Income, Private Equity) or Level 2 of Asset Classes (Fixed Income Treasuries, Fixed Income CDs, Private Equity Funds, Private Equity Private Placements)
Cash on Hand	Default range of the amount of cash that you are comfortable having on hand
Cash Harvest	Asset classes (and in what weightings) to be sold to close cash shortages given allocation and spending requirements
Cash Invest	Asset classes (and in what weightings) to be bought with excess cash given allocation and spending requirements
Incoming Operations	Incoming operational funds such as wages and pensions
Outgoing Operations	Outgoing operational such as living expenses and charity
Effective Annual Rate	Default Effective Annual Rate across all asset classes or for each asset class

Example: Effective Annual Rate per Asset Class

Aspect	Definition
Event Types	Either one-time or ongoing (starting as of a certain date and repeating for each period in the model thereafter)
Periods	For each event you will set a target date; the impact of any event occurs as of the next period in the model
Impact	Events can affect any of the variables in the model (e.g. a change in wages, allocations) or can stand-alone (e.g. buying a second home, giving to a charitable trust)

Example

Life Planner enables you create a model that targets a specific $ goal and/or a goal date. You may set your goal based on a:

The scope of the goal may be the entire portfolio, a specific account group, or a specific asset group.

You may define an annual growth rate (i.e. return %) for each element with a group.

You may choose to re-allocate funds within the grouping at the starting period of the model.

Overview

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