Most planning tools have adopted the goals based planning process that we helped pioneer 20 years ago. This process allows clients to express their individual hopes and dreams as customized financial goals.  Unfortunately, customization in existing planning systems tends to end with client goals. Instead of designing a custom investment strategy optimized for achieving each client’s specific goals, most planning tools simply cycle through a series of generic asset allocations and recommend a single allocation strategy (typically 60/40). 

We do not believe that a single allocation strategy can provide the appropriate risk and return characteristics for client goals whose funding dates may range from less than 2 years to more than 30. For a plan to succeed in volatile markets, we believe that the client’s investment strategy must be optimized for the specific time frames of their individual life goals. 

The CMPAS planning process starts with the client’s life goals. Each goal is assigned an appropriate risk level based upon the amount of time remaining before it must be funded. The advisor’s existing investment strategies are similarly classified based upon how long they have historically taken to fully recover after severe market declines. CMPAS then assembles the advisor’s strategies into customized investment solutions for each client goal, matching the time horizon of the goal to the risk of the allocation strategy.

Goals that need to be funded in the next few years are assigned lower risk strategies. As goal time horizons get longer, they are funded with higher risk but higher potential return allocations. The accounts selected to fund particular goals are determined based upon potential tax advantages, automating what is often a tedious manual process for many advisors. Mass customization technology scales this individualized advice across even the largest advisory practices. 

Yes! Our goal is to make financial planning easier and less time consuming for he advisor, and notifications are a great way to make that goal a reality.

We are most excited about automatic de-risking. As goals move forward in time, an alert is sent to the advisor to de-risk their client's portfolio. Our software automatically updates its recommended strategy and provides an exact dollar amount that needs to be moved into a lower risk asset class.

Other notifications include alerts when a portfolio is no longer aligned with its published strategy, if a surplus increases or decreases, when it is time to review client's plans, and when a goal is failing.

If the last few years have taught us anything, it is that inflation is not static!

CMPAS: Planning randomly simulates inflation along with all the other asset classes, incorporating the historical negative correlation between inflation and long term real returns. This negative correlation means that, as inflation rises, the dollar amount of client goals increase just as the real returns available to fund those goals decline (for most asset classes). We think realistic long term financial plans need to task into account this potential risk.

With CMPAS: Planning, we provide you with  various sources of reporting beyond the standard will your client’s goals pass or fail. In the “Stress Test” section, there are several analytical reports that detail your client’s specific plan results under various market environments such as which goals could still be funded in the worst 90% of markets or how their surplus may increase with average market returns.  We also provide graphical reporting to engage your client as you present their financial plan. 

Risk, in the most intuitive sense, means losing money. One of the goals as an advisor is to find that ideal balance between risk and reward that feels right for each of their clients. With CMPAS: Planning, we display which of your client's goals pass, fail, or must be reduced in order to succeed at different portfolio risk levels. It’s the choice between taking more risk in order to seek that dream Ferrari or taking less risk and being happy with a new Ford.

Real estate is often a client's most important assets. As such, CMPAS: Planning models a person's home and rental property price appreciation using the same sophisticated Monte Carlo used for stocks and bonds. Debt, rent, and expense cash flows are all calculated automatically based on client input and simulation of potential. rent and expense inflation.