Clients face three big risks in retirement from the sequence of returns, volatility and asset shortfalls. Michael Hirthler, the founder and chief investment officer at Pennsylvania-based Jacobi Capital Management, explained to me how he uses the Big Picture app to explain those risks to his clients.
The software is priced accessibly at just $30 a month. Advisors can start a free 30-day trial by clicking here.
The app explains to his clients how different scenarios will affect those risks. He said that in many other software programs, there is an illusion that an advisor can control those risks. But the Big Picture shows clients how market performance can undermine the best-designed financial plans – and how advisors can minimize those risk.
Jacobi manages $1.4 billion in assets and most of its clients are mass affluent and high-net worth individuals.
The Big Picture has been endorsed by Bill Bengen, Bob Veres, Joel Bruckenstein and countless financial advisors.
The ability to print out PDFs of portfolios during different market environments, customized for each client, is a big advantage, says Hirthler. He uses these frequently with clients and finds that it doesn’t make things overwhelmingly complicated for the client.
The app explores many “what if?” scenarios, including downturns. As Howard Marks and many great investors say, “every cycle ends.” Hirthler helps clients avoid scenarios like being retired at 66, but having to go back to work at 76 because of a downturn and poor planning. Hirthler believes in teaching clients about sentiment and cycles, in addition to showing what could happen in different scenarios.
“Most people don’t know what to do if there’s higher inflation and interest rates,” he said. “With the Big Picture App, we can run that scenario easily and talk through it simply.”
Using the “solve” feature with different time periods has been immensely helpful to Hirthler. That feature allows users to set a confidence level for an outcome and “solve-for” a variable. For example, given your inputs, you can solve for length of retirement, the safe withdrawal rate, or the necessary initial capital to achieve a desired outcome.
By illustrating possible portfolio outcomes, Hirthler said the app proves, “that it isn’t just a hypothetical tool, like many others, but real use-case testing.”
One thing that Hirthler has noticed with his own clients is that many do not fear potential failure rates in a traditional portfolio structure and that the advisory profession doesn’t do much to educate clients on this subject. He worries where the economy is in the cycle and what may happen to those who are about to or are recently retired. He said, “Many may be very unpleasantly surprised if they do not take some sort of action to defend against the entire range of outcomes they face at this time.” The Big Picture app helps him enlighten clients to risks that should be managed.
Ultimately, Hirthler uses the app to illustrate possible outcomes to clients. He said that the app helps him paint a picture by using the customized images, charts, and solving features.
In early December, I wrote another use-case article about the Big Picture App. It showed how this inexpensive software program illustrates how different portfolios will perform based on historical data and a variety of inputs.
With the Big Picture software, advisors can test a variety of future income goals with clients while changing the withdrawal rate, legacy capital (i.e., the bequest left to heirs), retirement period, portfolio distributions and expense ratios. It helps advisors explain the relationship between spending levels and success rates.
New features include white labeling, PDF reports, and the “solve for” function.
The software is priced accessibly at just $30 a month. Advisors can start a free 30-day trial by clicking here.
Jill Mislinski is the research director at Advisor Perspectives.
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Clients face three big risks in retirement from the sequence of returns, volatility and asset shortfalls. Michael Hirthler, the founder and chief investment officer at Pennsylvania-based Jacobi Capital Management, explained to me how he uses the Big Picture app to explain those risks to his clients.