Creating Your First Projection
We want to make sure everything is in place for you to feel welcome and at home so we created this step-by-step article on creating your first projection with Snap Projections.
While Snap was designed to be really intuitive, the instructions below will additionally help you stay on track. Let's get started!
In this article:
To create a new client scenario, click the New Client button on the Clients page.
Enter Client Data
On the Client Details page, fill out the basic personal information of your client. Click Add Spouse to add any relevant spousal information.
Once you click away from the text entry field, or use the Tab or Enter keys, the data will be saved automatically. This is indicated by the green Saved indicator at the bottom of the page. You do not need to click this button to save your information, it will be saved automatically.
When the data has not been saved yet, you will see an Edited indication.
Click Next to continue to the next data entry page or select your desired next page by clicking the name of the page under the left navigation menu. We will follow the default order of data entry pages in this article.
Enter General Information
On the General page, you can review & modify the assumptions for this scenario. The settings include the age of retirement, rate of inflation, and default rates of return on different asset classes. If you click the Defaults button, you can save the current page settings and have them be used for NEW scenarios that you create. You can also reset the page to original defaults or to your own default settings. The Use Guidelines button at the top of the page will import the Projection Assumption Guidelines from FP Canada. Make sure to adjust the imported rates of return to account for specific product and portfolio management-related fees.
Note that you can start the projections as of January 1 of the current year or as of January 1 of the following year. Click Next to continue.
On the Income page, you can enter your client's annual income, add other income streams, eligible and non-eligible dividends, and defined benefit pension plans. The Employment Income row will be pre-populated for you and all you need to do is enter the annual Amount. If the client has additional income, click Add Income to add another row to the Income table. Once you complete the information for that row, the information will be automatically saved.
Click Next (at the bottom of the page) to continue to the Assets page.
You can now click Add Capital Asset or Add Real Asset to enter details about the client's capital and real assets.
For the Capital Assets, make sure to complete the data entry for each row, including the Description, Value, Cost (for non-registered accounts), Type, and percentage allocation to Cash, Fixed Income, and Equity. The Total RoR will be calculated for you and once complete, the row will be saved automatically. If desired, you can update the individual RoR percentages.
As a Best Practice, it is advisable to enter a Non-Registered Account (or RRSP and TFSA) even if the client does not have this account type currently. This allows the software to make automatic contributions to these accounts on the Planning page rather than to a Cash Balance when there is surplus cash available or when you are applying recommended savings options to reach a retirement goal. Snap will create a default non-registered account with an initial value of $0 which is allocated to 100% Cash for this reason. You can adjust these settings.
Asset balances are considered to be the beginning-of-the-year values for the start year of projections. For Group Assets and Defined Contribution Pension Plans (DCPP), make sure to click the Employer Matching tab to set up employer and employee annual contributions as a percentage of Employment Income.
Click the TFSA tab and/or RRSP/RRIF tab to enter the client's current Contribution Room.
Note: By default, Snap will make the following assumptions for the contribution room for the first year of the projections.
- RRSP contribution room for the first year of your projections is will be calculated as 18% of any RRSP-eligible income that was entered on the Income page during the initial data entry. (For example, $18,000 when the employment income entered was $100,000.)
- TFSA contribution room for the first year of your projections is set to the maximum TFSA contribution room for that year only. (For example, $6,000 in 2022.)
Detailed steps to update these values are outlined in this article: Unused RRSP and TFSA Contribution Room.
Click the RRSP/RRIF tab to set the Conversion Ages, base the minimum withdrawals on the age of the younger spouse or add Pension Adjustment.
Click the DCPP/LIRA/LIF tab to set the Conversion Ages, base the minimum withdrawals on the age of the younger spouse, set the Jurisdiction, or indicate Unlocking preferences.
On the Debts page, you can add various debts. Indicate the Balance owing as of the start of the year, the Interest Rate, Repayment Options, the Monthly amount, whether the interest is tax-deductible or not, and whether this debt is linked to a Real Asset in your projections. If linked, and the Real Asset is sold during the projections, any remaining debt at that time will be automatically paid off in the projections.
Enter Government Benefits
On the Scenario Setup page for Gov't Benefits, you can adjust the default CPP/QPP and OAS information. Items to adjust include the starting age for the benefit, the annual amount and inflation rate as well as the percent of the maximum available for this individual. Snap assumes your clients will receive the national average for CPP/QPP benefits (currently 56.06%) as of the current year and 100% of OAS, both indexed with inflation; however, this may not be the case for your particular scenario.
You can read more about the defaults used by Snap and how to make changes in these articles:
Enter Additional Scenario Setup information as desired
The next few Scenario Setup pages include Insurance, Education, Corporations, and Settings. If these pages are applicable to your clients you can input data now, or come back to add the information later.
To learn more about these pages, please refer to these pages:
To go directly to the Planning page at any time, just click Planning Pages in the 2nd level menu at the top left of the page.
Enter Savings Contributions
There are various Planning pages that you can access. Use the 3rd level menu to select the appropriate Planning page to view and edit. If your projections are for a couple, you will see 3 personal Planning pages: the Combined page, the Client's page, and the Spouse's page. There is also a Planning page for each corporation in your projections. You will do most of your editing on the individual Planning pages. Any values that are coloured blue or purple indicate that you can click them to perform an action such as editing the value, indexing the value over time, and viewing details about that value.
To learn how to enter specific contributions or withdrawals, please review this article: Editing Values on the Planning page.
Enter After-Tax Spending
The next important step is to enter your client's After-tax Spending. This step is very important because Snap will assume that the client or couple is spending $0 in retirement until you fill in the desired spending amount. Enter this value on the Combined Planning page for a couple's projections.
Before the Cash flow management (CFM) Start Age (the client's retirement age by default), the software will assume that all surplus cash is spent. The After-Tax Spending column displays the remaining cash that is available after any savings contributions are made, taxes are paid, and any other expenses that have been entered into the projections are paid (such as insurance premiums and mortgage payments). You are only able to enter a desired After-Tax Spending amount once the CFM Start Age has been reached in the projections.
In the year where you wish to start entering the client's desired lifestyle spending (after-taxes), ensure that the radio button under the CFM Start Age column is selected. The radio button indicates the year that automatic cash flow management (CFM) starts.
To enter the After-tax Spending values, click the first blue value in the After-Tax Spending column (in real dollars) and a pop-up window will appear, as shown above. Enter the desired spending in the text box and copy this down to the correct age. Click the blue checkmark to save this entry. Do not include any expenses in the After-Tax Spending value that have already been entered into the projections such as contributions to various accounts, mortgage payments, insurance premiums, etc. You may wish to review how the cash flow is calculated in Snap and the default logic used for automatic cash flow management.
For a couple's projections, enter the joint After-Tax Spending on the Combined Planning page and Snap will automatically allocate a portion of this spending to each spouse.
Run the Scenario or try the Recommendations
Click Run Scenario to view the results of this data input. The Run Scenario button is highlighted in red when the scenario inputs have been changed and the scenario needs to be re-run for accurate results.
At this point, you can also choose to explore our Recommendations feature. The Recommendations modal provides information about the client's Retirement Goal, whether it's over or underfunded, and ways that you can make it fully funded through adjusting their retirement age, spending, or savings.
To see what changes would allow you to make the plan fully funded, you can select Calculate in any of the 4 adjustment tiles. You can Calculate and see the adjustment that would be required (i.e., the new retirement age, spending level, savings required), or you can decide if you'd like to Apply & Run to apply that change to the current plan.
Review the Scenario
Scroll down on the scenario to review. Does the client run into a shortfall based on their desired level of after-tax spending? A shortfall will be highlighted in pink in the scenario. Snap will automatically provide the client with a loan that is tracked under the Cash Balance column to allow the client to keep up with their level of spending.
Alternatively, does the client reach the end of their projections with a positive estate? Review the Estate Summary by clicking the blue icon at the top of the Estate Before Tax column. This opens the Estate Summary table with values displayed as of Dec. 31 of the final year of the projections. You can also click any value under the Estate Before Tax column to open the Estate Summary table for that year specifically. (For example, I could click $2,443,644 in the below example to see the Estate Summary at age 80/79 in 2043).
Final year Estate Summary:
From here, you can begin to further customize and modify your scenario. We have created a handy checklist for you to refer to once you have created a projection with reminders of areas you might wish to review. Here are a few more resources you may find helpful for your next steps.