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A Wealth Planning Tool That Anticipates Clients’ Next Moves

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Northfield Information Services, Inc. has built a new personal wealth planning tool that will “anticipate” what clients are going to do next.

Through the tool — called WealthBalancer — investment advisors can provide year-by-year projections of how investment allocations should evolve over time to reflect anticipated changes in life circumstances such as college education, long-term care for a parent or a career change.

It’s “different than what any tool has done before,” Northfield President Dan diBartolomeo told ThinkAdvisor.

According to diBartolomeo, the problem with most investment plans is they are not “plans” at all. Rather, he says, they are recommendations for a current investment allocation but there is no detailed plan for the future.

“As far as we can tell, no one that does financial planning actually plans,” diBartolomeo told ThinkAdvisor. 

As diBartolomeo sees it, advisors traditionally determine “what to do now” and then in a year or two review and “buy and sell” to get to where the client needs to go. There’s no actual plan for the future, he said.

Whereas with WealthBalancer, the allocations are planned all the way out through the future.

“Here’s what we think your asset allocation should be next year and the next and the next throughout,” he said. Adding, “The reason that the forward half is so important is if I know what is my likely allocation for next year, I can rebalance the portfolio as I go.” 

As conditions and circumstances change, diBartolomeo said, “you certainly update the process.” 

“But, given what we know today, we have a plan in place for all the investor’s lifetime,” he added.

 WealthBalancer forms a “life balance sheet” that charts the investor’s current and future financial circumstances. Firms can determine the right level of aggressiveness based on the household’s current and future resources and spending plans to help their clients with long-term, comprehensive, personal wealth planning.

Using what it calls “discretionary wealth hypothesis,” the tool makes an objective assessment of an investor’s risk tolerance and determines how much risk someone can afford to take.

WealthBalancer uses another proprietary innovation, called the “analytic hierarchy process,” to determine a broader range of investor preferences. For example, many investors prefer socially responsible investing or one style over another. 

While many systems use multiple-choice questionnaires to evaluate such preferences, according to diBartolomeo the behind-the-scenes analysis of the responses is often inconsistent and arbitrary. 

Both the discretionary wealth hypothesis and the analytic hierarchy process were pioneered by Northfield, and the firm says they have been vetted by the industry.

WealthBalancer became available to purchase on April 19 – although it’s been in beta testing for over a year so diBarolomeo says “we know it works.” WealthBalancer is for retail brokers, insurance agents and financial planners. It’s available in multiple, identical deployments for iOS, Android, web browsers and Windows.

— Check out Getting ’100% of Women’ to Make a Financial Plan: BNY Mellon on ThinkAdvisor.


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