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February 27, 2024 at 11:01 AM
What You Need to Know
- The tool, called IncomePath, is intended to help advisors show clients how choices and risks can affect their retirement income stream.
- It was inspired by a visit with the Nobel Prize-winning economist Bill Sharpe.
- The platform will initially be available to advisors on a subscription basis, and enterprise integrations are also expected.
The retirement experts Michael Finke and Tamiko Toland announced Tuesday the launch of a new income planning platform called IncomePath, designed to give financial advisors and their clients a better way to visualize the choices they can make to build an income stream that fits one’s desired lifestyle in retirement.
By clarifying how investment volatility and an unknown lifespan affect potential spending, IncomePath seeks to allow a client to select “the right combination” of investment risk, portfolio withdrawals and annuity income, the duo told ThinkAdvisor.
To this end, IncomePath uses a goals-based analytical process that considers spending flexibility and other factors to help users visualize how risk affects possible lifestyle paths, according to Finke and Toland. They emphasized that the new tool should be highly complementary to existing planning software — not a replacement for an advisor’s core planning approach.
Starting in the next few months, the platform will initially be offered to individual financial professionals on a subscription basis. Enterprise integrations are also expected.
Finke, who is a professor at the American College of Financial Services, is serving in the role of co-founder and chief strategist for IncomePath, while Toland, who left TIAA in the fall of 2023 to create her own independent consulting practice, will guide the new company as CEO.
The pair explained that IncomePath is built on the latest research and thinking about retirement income, going beyond rules of thumb and applying sophisticated planning concepts within an easy-to-use platform. The nuts and bolts of the planning tool, and the thinking behind it, are detailed in a white paper the pair published alongside their announcement.
“Most planning software focuses on failure,” Finke said, “However, failure isn’t a realistic way to plan since it ignores our ability to adjust spending in response to uncertainty. What people really need is a better way to understand the choices they can make to build an income that fits the way they want to live.”
Toland echoed that perspective, noting that IncomePath’s visualizations can help an individual see how good or bad luck in the markets — and the use of financial products that transfer risk — could shape their retirement.
