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Retirement Planning > Saving for Retirement

More Than Just Account Aggregation

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Any advisor who’s worth his salt knows that to adequately assess whether a client is on target to retire comfortably, he must have a handle on all of a client’s assets. As a former advisor to wealthy clients, Edmond Walters knows first-hand what a chore it is to scrape together all of a client’s various account data, so he devised a Web-based system called eMoney Advisor in 2000 to simplify the process. Since then, the system has proven to not only ease advisors’ workload, but has also helped advisors boost their assets under management and solidify their position as their clients’ primary advisor.

The Web-based application pulls client data from a whopping 10,000 locations–everything from checking and savings accounts, IRA holdings, variable life, and variable annuities–and updates the holdings every night, Walters says. Before starting Philadelphia-based eMoney Advisor, which is a unit of Commerce Bancorp, Walters spent 20 years advising the ultra wealthy–those with a net worth in excess of $20 million. During that time he found that many clients were dissatisfied with the semi-annual or annual meetings he would conduct using paper presentations to go over their portfolios. “When a client said they needed an update, it would take me a week or two to get it because I had to get the data from their seven or eight advisors–accountants, attorneys–and pull it all together and update the old plan.” Since no type of system was available to provide such timely updates, Walters devised eMoney Advisor. Monitoring clients’ accounts is a big issue, he says, and most advisors are still stuck “in the age of paper.” Walters boasts that the eMoney system not only provides nightly updates on clients’ accounts, but it also includes diagnostics on asset allocations, account value changes, and even evaluations of the client’s stock option programs.

More than 20,000 advisors use the eMoney platform now, and on any given night, the system has $110 billion in client assets running through it, Walters notes. “Every one of our clients has increased their assets under management by 40%,” he says. Using the system “establishes advisors as the primary financial advisors–they are the first person the client calls because they have all of the data.” Walters typically charges $300 per month to big enterprise firms that use eMoney Advisor, but the cost to independent advisors using the platform is more substantial, at $5,000 per year.

Walters also notes that the eMoney platform includes a “simulation engine with the income tax code built in.” So once the advisor has all of the client’s account information in front of him, the eMoney Advisor platform allows the advisor and client to interactively “make the assumptions of what the next 40 years are going to look like,” he says. The “system will automatically churn out all of the data necessary to give [the client] a snapshot of where they are today.” The platform also includes a “spend-down analysis,” and will simulate expenses and determine in what order clients should spend their assets to make them last longer.

The system encourages advisors to factor in the true cost-of-living rate when assessing a client’s retirement picture. Most calculators ask clients what they will need to live on for the next 40 years, Walters says. If a client says $50,000 per year, they’re told to tack on a 3% inflation rate. When people were projected to live only 15 years after retirement that 3% inflation projection was fine, he says, but now people are living up to 40 years after retirement. “The cost-of-living rate is growing at about 8%,” Walters says. The eMoney system uses Monte Carlo simulation using historic and future data, Walters notes, unlike most simulations that use historic data and traditional models. The system also runs multiple Monte Carlo simulations to show the impact of market down cycles throughout a client’s retirement.

Come January 3, the eMoney Advisor platform will offer single premium immediate annuity ladders so advisors can model out the purchasing of annuities for the clients’ income needs over a 30-year time period. The platform will also offer a product that addresses the SEC’s Section 202(a) rule–known as the Merrill Lynch rule–which prohibits advisors who lack Series 65 and Series 7 licenses from performing multiple planning goals for clients simultaneously. While the Merrill rule exempted brokers from adhering to a fiduciary standard of care when dealing with clients, it also said that to offer a financial plan to clients, Walters explains, “you have to have certain licenses, which only about 5% of the industry had.”


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