(WEBINAR) 📈 Stress-testing and variable rates feature in Snap (June 8, 2022)

We’ve made improvements to better allow you to model variable rates and stress-test your plans in Snap. This webinar shares how you can best take advantage of these features to answer your client's what-if questions and increase confidence in your recommendations. 

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Summary of the Webinar

In this webinar, we reviewed both Historical and Randomized Scenarios. We discussed how to use these features to answer client questions, vary your assumptions, and stress test your plans.

Section 1: Introduction [0:00 - 4:15]
Section 2: Review of the Basic Scenario [4:15 - 7:50]
  • The current example projection setup, a review of the base plan
  • Copying the scenario before stress testing

Section 3: Randomized Scenario Basics [7:50 - 17:00]

  • When to use Run Historical Scenario or Run Randomized Scenario
  • Overview of the Randomized Scenario Modal
  • Updating the returns based on a different asset mix than the default
  • Run the Randomized Scenario and review the Planning page to see the results
  • Randomize again and see if this new randomized scenario results in a shortfall for this client
  • 101 random sequences, how to discuss the probability based on the slider position 

Section 4: Advanced functionality within the Randomized Scenario feature [17:00 - 25:50]

  • Showing the Fine print
  • Details of the assumptions, actual versus expected average rates of return
  • Customizing the Inflation, Cash, Fixed Income, and Equity expected rates, and Standard Deviation
  • Using the check box to "align actual with expected" inflation and rates of return (reviewed again in Section 8)
  • Applying a sequence of returns that is random, but still achieves the target average rates of return and inflation over the length of the projection
  • Your own specific asset allocation is used in your projections, changes to the expected rates in the Randomized modal do not affect your projection's asset mix
  • How could you use this to help decide on when to start CPP and OAS 

Section 5: How to Clear the Randomized returns [25:50 - 27:00]

  • On the Assets page, clearing the randomized rates
  • Or in the Randomized modal, Clear & Run

Section 6:  Historical Scenario [27:00 - 30:15]

  • Choosing a historical period, and how to discuss that choice with your clients
  • Inflation adjustments are now included in historical returns
  • Depending on the period you choose, you can see large variances in the result

Section 7:  The Client Report [30:15 - 31:38]

  • The Assumptions page in the report
  • The Net Worth chart and others will look quite different than those for the base plan
  • You can use this as an educational tool with your clients

Section 8:  Enabling and Deactivating the Stress Testing Add-on [31:38 - 33:35]

  • Additional pricing, pro-rated for the days you use it
  • How to enable the Stress Testing Add-on 

Section 9: "Align Actual with Expected" detailed overview [33:45 - 37:20]

  • The actual rates are based on running a randomized scenario and how these will be different than your projected non-variable rates
  • Choosing to align the actual rates with the expected rates to keep the overall average rates the same throughout the projections for Inflation, Cash, Fixed Income, and Equity
  • This allows us to see the impact of a different sequence of returns throughout the projections while keeping the overall average rates the same

Section 10: Recent updates [37:20 - 41:30]

  • 2022 FP Canada Long-Term Assumption guidelines
  • Corporations: Adjust the Cost Base for the shares of a corporation to help make Estate Tax calculations more accurate
  • Corporations: GRIP Balance entry 
  • Q & A Live session registrations - come to see more frequent product walkthroughs and demos

Section 11: More advanced use cases for Randomized Scenarios [41:30 - 58:30]

  • Discuss the range of potential outcomes with your clients
  • Using the randomized scenario to discuss the sequence of returns risk
  • How to use "Invert expected averages"
  • Implementing a cash wedge strategy in your scenario
  • Changing asset allocations at retirement to de-risk the client's portfolio prior to retirement
  • Preventing variability for Inflation and Cash rates by updating the Expected rates if desired (for example: set the Standard Deviation to 0% for Inflation and Cash)
  • How does this relate to Monte Carlo simulations?
  • Where to find more help?

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