Adjusting Rates of Return and Asset Mix Throughout the Projections

If you are developing long-term projections, you may want to adjust the asset mix and reduce the risk for someone in their retirement. Alternatively, you could quickly illustrate a potential market crash and its impact on your client's portfolio. This article details the steps to make manual edits to the overall rate of return for certain years in the projections. (To learn more about automatically generating a sequence of returns for your plan based on your expected average rates and historical volatility (or your preferred market assumptions), please see this article on Stress-Testing your projections). 

To manually adjust the overall rate of return in a given year and for all the following years, click the value in the Rate column, and in the pop-up window, adjust the rate of return for Cash, Fixed Income, or Equity, or change the percentage allocated to each. You can choose to apply this change to all personal or corporate accounts. In the screenshot below, every rate of return that is highlighted in yellow indicates a year where the overall Rate has been modified. 

Make sure to apply changes to the overall rates of return from the top down since each modification will apply to that year and all the following years.

You can change the rates of return for Cash, Fixed Income, and Equity throughout the projections using the Rate column. (Alternatively, you can use the Stress Testing add-on feature to implement historical or randomized rates of return in your scenario).

Here is an example of how you can run a very meaningful illustration showing the impact of even one bad year on the client's retirement spending target (or on their estate). Go to any year of the projections reduce the rate of return, re-run the projections, and then adjust the rate of return back to the original value in the following year.

On the Planning page, click the blue value in the Rate column for the year you wish to modify.

A pop-up window will allow you to modify the rate of return (we’ve entered -8% for Equity). You can apply the same rates of return across all personal accounts by clicking the checkbox indicated.  Click the blue checkmark to save and apply this new rate. Then re-run the scenario to see the updated projections.

Yellow highlighting on that year's Rate value indicates that you have changed the overall rate of return in that year. 

Re-adjust the equity rate of return (back to 5%) for the next year and the following years. Click the blue value in the Rate column for the following year. Change the Equity rate of return back to the original value and apply it to all accounts if desired. Run the scenario to update the calculations.

NOTE: Snap does not carry forward capital gain losses associated with negative returns in your portfolio. At this point, this feature is implemented for illustration / educational purposes only.

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You can adjust the asset mix starting a certain year and even apply this change across all assets.

On the Planning page, click the blue value in the Rate column for the year you wish to modify.

A pop-up window will allow you to modify the asset mix (we’ve changed the asset mix to 10% Cash, 50% Fixed Income, and 40% Equity at age 65). You can apply the same asset mix across all personal accounts by clicking the checkbox indicated.  Click the blue checkmark to apply the changes.  Make sure to re-run the scenario to recalculate the projections.

You will see yellow highlighting over the edited values in the Rate column for all assets affected by the update.

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You can clear the overrides for the selected year and all the following years by clicking the X in the yellow cell. For example, if we clear the -4.85% rate, the 4.25% overridden rate in the following year will also be cleared after running the scenario.  You will need to clear the overrides for all accounts individually.  

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