Best Practices: Answer these 5 Client Questions Using eMoney Reports

Every client who has ever come into your office for financial advice did so because they have questions. Questions they feel ill prepared for and that your expertise makes you uniquely qualified to answer. Even though every client is different, over time you begin to see trends.

Below we discuss five common questions your clients want answers to, and how to tackle them, once you’ve created the base case for your clients in eMoney.

1. Are we on track for retirement?

The famous retirement question. It’s often the first question clients ask. And fortunately, it’s a simple question to answer with a suite of Retirement Planning reports.

Start by walking your clients through the Retirement Income and Retirement Expenses reports.

  • The Retirement Expenses Report helps clients understand how their living expenses, taxes, and other expenses add up each year and over the lifetime of their retirement. This report can help kick-start important conversations about reducing retirement expenses, taxes, and downsizing.
  • The Retirement Income Report breaks down income sources like Social Security, pension plans, and annuities that will help to offset clients’ retirement expenses. It also includes any investment income and planned distributions that will be taken from their retirement accounts and other assets.

Then touch on building retirement assets to show them how the actions they take today impact their retirement savings.

    • The Building Retirement Assets Report shows a detailed breakdown of existing portfolio assets, including planned savings and employer contributions for the current year. It also projects your clients savings and contributions from now until retirement and shows estimated growth and total projected portfolio assets at retirement.
      • Pro tip: A quick Advanced Plan showing the impact of increased savings or retirement plan contributions can show clients how saving a little more each month has a profound impact on their assets at retirement age.

Finally, pull everything together with a complete summary of all the information you’ve reviewed so far while providing options for how to proceed.

  • The Looking at Everything Report allows you to review everything you discussed so far in one full picture, detailing how income and expenses break down over the entirety of their retirement.
  • Options for Meeting Needs provides options for clients who haven’t reached that level of security on how to proceed. This report explains key steps your clients can take to bring their retirement under control, including saving more now, delaying retirement age, or reducing expenses to a manageable level.

There are many other methods and reports available in eMoney for answering that common client question, “Am I on track for retirement?” but the above reports are a great start. If you have a full financial picture in the client’s base case and can demonstrate a plan of action to present these key reports, you should be able to provide your client with some clarity around this complex topic.

2. Will my family be okay if I pass away?

This is really a question about costs versus resources and can be addressed with a premature death What-If scenario and the Life Insurance set of eMoney reports.

Start by looking at how the client’s death would impact their family’s expenses and how those expenses compare to their assets.

  • The Survivor Costs Report helps your clients understand the burden of everyday living expenses, ongoing liabilities, and other recurring costs that become the family’s responsibility. It provides a summary and detailed breakdown of these costs over the spouse’s remaining lifetime.
  • The Costs vs. Resources Report expands on Survivor Costs by providing additional insight into how your clients projected assets can be used to cover the projected costs. Income sources can include anything from Social Security to existing insurance benefits.

Now that clients have a general understanding of the costs that could be incurred by the family in the event of a death, and resources available to offset those costs, it’s a good time to move on to the Gap Analysis report.

  • The Life Insurance Gap Analysis Report analyzes the costs incurred by the surviving spouse and the resources available and calculates the additional life insurance need required. When using the Gap Analysis report there are a number of intra-report settings that must be taken into account to determine an accurate additional life insurance need. This report allows you to specify within the report itself whether you are solving for Asset Replacement or Remaining Assets.
    • Asset Replacement solves for additional life insurance required to replace all assets the decedent would have earned in his or her lifetime. You can also choose to solve for a defined level of Remaining Assets.
    • Remaining Assets solves for additional life insurance required to hit a desired asset level minimum at end of life for the surviving spouse.
    • With this report you can also specify the Realization Model and Reinvestment Growth rate of the insurance assets once they have been collected. Be sure to fine tune these settings in order to solve for the appropriate amount of required insurance.

Finish up by showing clients how the additional insurance impacts their Costs vs. Resources.

  • The Cost vs. Resources with Insurance Report revisits the analysis of Costs vs. Resources but adds in the solved for additional insurance showing them how it has a profound impact on their family’s ability to survive and thrive in the client’s absence. While there are numerous other reports available for Life Insurance, these four will provide a solid basis on which to build.

3. What happens if I become disabled?

The Disability Insurance reports do not work without simulating a disability event with a Disability Occurs What-If scenario. Speak with your client about their primary injury concerns. Do they work in a dangerous environment? Are they an adrenaline junkie on the weekend? Gather as much information as you can to fine tune the additional expenses, duration, and other variables within the What-Ifs health event.

You can then apply that What-If to their base case scenario in the Disability Insurance reports using the Cost of Disability and the Disability Wealth Effect reports.

  • The Cost of Disability Report breaks down exactly how much this disability health event will cost—not just in income lost in the current year, but over the client’s entire lifetime.
  • The Disability Wealth Effect Report allows you to show the overall wealth lost. It demonstrates that the true costs of disability—beyond the lost income and extra medical costs—is the opportunity cost resulting from not having been able to invest and grow any of the money spent. This report will drive home the real costs an injury can accrue over your client’s entire lifetime.

Once they understand the totals costs, your next step is to fine tune their desired level of coverage.

  • The Disability Gap Analysis Report reflects the cash flow gap created by a disability event, as well as any potential insurance required to cover the solution. Be sure to set your desired level of assets remaining because the Disability Gap analysis report can easily show that a client needs no additional coverage when it’s only solving for them having greater than $0 in assets remaining at death.

Set this based on you and your client’s preference you can solve the same number of assets remaining as exists in their base case, essentially solving for asset replacement or aim for a specific asset level.

Pro tip: One best practice is to solve for the same number of assets remaining as exists in their base case, essentially solving for asset replacement.

4. Will I be a  burden to my kids in old age? 

Any Long-Term Care (LTC) planning should start by creating an LTC is Needed What-If scenario. Similar to disability , the LTC is Needed What-If creates a health event that takes place over a specific time period, and creates a number of variables including an additional expense.

Be sure to complete the Report Parameters in the What-If to use the Cost-Benefit of Long-Term Care Insurance report. The Long-Term Care Insurance reports look for this What-If scenario to be applied to solve for any LTC insurance need. If you have questions about LTC costs, the Cost and Payment Options report discusses costs based on the Genworth Financial Cost of Care Survey 2016. Once you’re comfortable with your projected What-If scenario begin by discussing the Cost of Long-Term Care.

  • The Cost of Long-Term Care Report looks at the scenario you’ve created and shows the total cost over the entire LTC duration. The report provides estimates on how costs will break down between LTC Costs and Total Expenses.
  • The Long-Term Care Wealth Effect Report shows the true costs of LTC, taking into account, not just lost income and additional expenses, but the loss of possible investment on that money.
  • The Long-Term Care Gap Analysis Report looks at the cash flow gap created by an LTC event. Often clients will be able to afford the LTC event and still have assets remaining. Some clients won’t have the necessary funds to cover an LTC event. With this report that you can show them how a small investment in LTC insurance coverage can spare their family thousands in expenses.

Finally, it’s possible that the same dollar invested in coverage could be better invested today. That’s where the Cost-Benefit of Long-Term Care Insurance report comes in.

  • The Cost Benefit of Long-Term Care Report looks at the what-if scenario including the Report Parameters tab to demonstrate the cost-benefit value of a long-term care insurance policy. Are they better off investing in an LTC insurance policy or investing that money today? This report shows them—based on the annual premium of the insurance—just how much they would need to save and the annual rate of return required to provide the same total benefit.

5. Can I afford to put my kids through college?

It’s important to have your education expenses clearly defined and funded in your client’s Fact Finder before attempting the use the Education Planning suite of reports to answer this question.

There are a few key settings within the education expenses to be aware of, including:

  • The Dedicated Funding Sources Report, which is where you should attach 529s or accounts specifically dedicated to funding the child’s education. An If Dedicated Funding Is Exhausted setting exists on the Funding tab of the Education Expense and has two settings Fund the Expense Through Normal Cash Flow and Stop Funding the Expense. Typically when solving for savings needs, it’s best to select Stop Funding the Expense.
  • Savings Rate for Solution Reports allows you to define the projected growth of additional savings used in the Education Planning reports.

Review these expense settings carefully, and once you have a strong base case for your education plan, move onto reports that will answer questions about education funding.

  • The Cost of Education Report breaks down each child’s expenses individually, showing how each year of their education is fully or partially funded, as well as annual and total costs.
  • The Funding Your Education Report continues to break out the education goals for each child individually, but focuses on the current status of funding, respective to each of the education funding needs. This report details the dedicated funds available, current funding, and visualizes the funds versus withdrawals. When a shortfall occurs, the amount of the shortfall and percentage underfunded are displayed. In addition, if you’ve allowed the expense to fund through normal cash flow, Non-Dedicated Withdrawals are also visualized.

Now that you’ve had the opportunity to review costs and funding if a shortfall has been identified, it’s the perfect time to explore potential solutions to any funding shortfalls in the Options for Meeting Needs report.

  • The Options for Meeting Needs Report looks at the funding shortfall of the client’s education goal and provides solutions to close the funding gap. This report details how much more they need save each month, put aside in bulk now, or if necessary, what kind of reduction in costs would be required to meet their goal.

There are many additional reports that can break down the funding and spending details or analyze the cost of waiting to fund but these provide the foundation of any education planning report in eMoney.

Joseph Pearson

Written By

Joseph Pearson is a Client Communications Strategist with eMoney Advisor, LLC. A three-time eMoney Wingbowl Champion, one-time Chili Cook-off Runner-up and Gold Stevie® Award-winning Front-Line Customer Service Professional of the year for 2016 - Joe is a proud father, devoted husband, and he always tries turning it off and back on again before calling IT.