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©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004 -2008 All rights reserved
P r o v i d i n g W E A L T H C A R E
W E A L T H C A R E W E A L T H C A R E
Do You Perceive A Do You Perceive A Contradiction?Contradiction?
Presenting the Wealthcare Value Proposition
Presented by:
David B. Loeper, CIMA®, CIMC®
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E
“Everything that can be invented has been invented…”Charles H. Duell
Commissioner, U.S. patent office, 1899
“If you perceive a contradiction, check your premises…”
Ayn RandAtlas Shrugged
PAGE 2
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 3
“Everything that can be invented has been invented…”Charles H. Duell
Commissioner, U.S. patent office, 1899
We know the best practices…-Have they all been invented already?-Should we just execute the steps of the best practices?-How has the market responded to our best practices?-MPT is more than 50 Years Old…Modern or Antique?-Do we perceive any contradictions?
“If you perceive a contradiction, check your premises…”
Ayn RandAtlas Shrugged
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 4
What does it take for ANY product or service to be successful?
1- Meet Target Market NEED or DESIRE»We do not VOLUNTARILY spend money for something we don’t need or want
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 5
What does it take for ANY product or service to be successful?
1- Meet Target Market NEED or DESIRE»We do not VOLUNTARILY spend money for something we don’t need or want
2- Easy to Use & Understand – CONVENIENT
We do not seek to complicate our lives for things we do not understand
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 6
What does it take for ANY product or service to be successful?
1- Meet Target Market NEED or DESIRE
We do not VOLUNTARILY spend money for something we don’t need or want
2- Easy to Use & Understand – CONVENIENT
We do not seek to complicate our lives for things we do not understand
3- Reasonably Reliable…A “Good” Product
Too unreliable = Doesn’t deliver as promised = ultimate failure
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 7
What does it take for ANY product or service to be successful?
1- Meet Target Market NEED or DESIRE
We do not VOLUNTARILY spend money for something we don’t need or want
2- Easy to Use & Understand – CONVENIENT
We do not seek to complicate our lives for things we do not understand
3- Reasonably Reliable…A “Good” Product
Too unreliable = Doesn’t deliver as promised = ultimate failure
Have we ever examined financial services “best practices” from the criteria that ANY product or service MUST HAVE to make it?
Do our best practices MEET A TARGET MARKET NEED/DESIRE?Are they EASY & CONVENIENT?Are they RELIABLE?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 8
Examine the “best practices” of:Financial Planning & Investment Consulting
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 9
Examine the “best practices” of:Financial Planning & Investment Consulting
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
-Meet Need/Desire?
-Easy to Understand… Convenient?
-Good/Reliable?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 10
Do You Perceive a Contradiction to:Meeting a Target Market Need or Desire?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
How Much Pain Can You Bear?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 11
Do You Perceive a Contradiction to:Meeting a Target Market Need or Desire?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
How Much Pain Can You Bear?Position You To Experience It
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 12
Do You Perceive a Contradiction to:Meeting a Target Market Need or Desire?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
How Much Pain Can You Bear?Position You To Experience It
Sacrifice Your Lifestyle…SAVE MORE
& RARELY Less
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 13
Do You Perceive a Contradiction to:Meeting a Target Market Need or Desire?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
How Much Pain Can You Bear?Position You To Experience It
Sacrifice Your Lifestyle…SAVE MORE
& RARELY LessTell You What Happened…Evade What it Means to You…
Go to Doctor AFTER YOUARE DEAD!
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 14
Do You Perceive a Contradiction to:Meeting a Target Market Need or Desire?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
CONTRADICTION?
How Much Pain Can You Bear?Position You To Experience It
Sacrifice Your Lifestyle
Tell You What Happened…Evade What it Means to You
CONTRADICTION?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 15
Do You Perceive a Contradiction to:Easy To Use? Understand? Convenient?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Insurance, Budgets, Benefits…
CONTRADICTION?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 16
Do You Perceive a Contradiction to:Easy To Use? Understand? Convenient?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Insurance, Budgets, Benefits…What do Millionaires Spend
on Cable Bills?
CONTRADICTION?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 17
Do You Perceive a Contradiction to:Easy To Use? Understand? Convenient?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Insurance, Budgets, Benefits…What do Millionaires Spend
on Cable Bills?
Retirement, Education, Estate=R1000 Growth/Mid Cap Value
CONTRADICTION?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 18
Do You Perceive a Contradiction to:Easy To Use? Understand? Convenient?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Insurance, Budgets, Benefits…What do Millionaires Spend
on Cable Bills?
Retirement, Education, Estate=R1000 Growth/Mid Cap Value
Loaded With Jargon…Greek Literally Greek…Alpha/BetaCLIENT MUST SPEAK OUR
LANGUAGE (INSTEAD OF US SPEAKING THEIRS) & WASTE
TIME ON MEANINGLESS DETAILS
CONTRADICTION?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 19
Do You Perceive a Contradiction to:Easy To Use? Understand? Convenient?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
CONTRADICTION?
CONTRADICTION?
Insurance, Budgets, Benefits…What do Millionaires Spend
on Cable Bills?
Retirement, Education, Estate=R1000 Growth/Mid Cap Value
Loaded With Jargon…Greek Literally Greek…Alpha/BetaCLIENT MUST SPEAK OUR LANGUAGE (INSTEAD OF US SPEAKING THEIRS) & WASTE
TIME ON MEANINGLESS DETAILS
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 20
Surely Our “Conservative” Projections Are Reasonably Reliable In Meeting Clients’ Goals…
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
CONTRADICTION?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 21
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 22
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 23
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 24
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 25
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%? $23 Million Estate….CRATS, CRUTS, and ILITs !!
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 26
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%? $23 Million Estate….CRATS, CRUTS, and ILITs !!
Market Reality:
Actual Market at 12.23% (’60-’99):
Actual Results:
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 27
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%? $23 Million Estate….CRATS, CRUTS, and ILITs !!
Market Reality:
Actual Market at 12.23% (’60-’99):
Actual Results:
Broke @ Age 85
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 28
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%? $23 Million Estate….CRATS, CRUTS, and ILITs !!
Market Reality:
Actual Market at 12.23% (’60-’99):
Actual Results:
Broke @ Age 85Actual Market at 12.09% (’61-’00):
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 29
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%? $23 Million Estate….CRATS, CRUTS, and ILITs !!
Market Reality:
Actual Market at 12.23% (’60-’99):
Actual Results:
Broke @ Age 85Actual Market at 12.09% (’61-’00): $1.5 Million + 9 Years
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 30
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%? $23 Million Estate….CRATS, CRUTS, and ILITs !!
Market Reality:
Actual Market at 12.23% (’60-’99):
Actual Results:
Broke @ Age 85Actual Market at 12.09% (’61-’00):Actual Market at 9.79% (’35-’74):
$1.5 Million
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 31
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%? $23 Million Estate….CRATS, CRUTS, and ILITs !!
Market Reality:
Actual Market at 12.23% (’60-’99):
Actual Results:
Broke @ Age 85Actual Market at 12.09% (’61-’00):Actual Market at 9.79% (’35-’74):
$1.5 Million$5.7 Million
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 32
Current “Best Practices”Identify risk tolerance, optimize asset allocation, & do a financial plan...
For Example, Harry Abernathy...54 Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 -
Projected Portfolio Values at age 94 based on???
10 Yr Return of 15.2%? 20 Yr Return of 15.8%?
40 Year 12.23%? $23 Million Estate….CRATS, CRUTS, and ILITs !!
Market Reality:
Actual Market at 12.23% (’60-’99):
Actual Results:
Broke @ Age 85Actual Market at 12.09% (’61-’00):Actual Market at 9.79% (’35-’74):
“BEST” Practice OR MALPRACTICE?
$1.5 Million$5.7 Million
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 33
Of Course, This Is Due To Assuming ZERO RISK...
Even Though We Identified
This Risk
Standard Deviation
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 34
Of Course, This Is Due To Assuming ZERO RISK...
Even Though We Identified This Risk
Standard Deviation
We Will Assume ZERO
Standard Deviation in
His Plan
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 35
Of Course, This Is Due To Assuming ZERO RISK...
Even Though We Identified This Risk
Which Looks Like This As Downside
Risk:
Standard Deviation
We Will Assume ZERO
Standard Deviation in
His Plan
Of Course…Monte Carlo Simulation Solves This Problem…
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 36
Because with Monte Carlo we include risk and show the
important information that he will end up:
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 37
Because with Monte Carlo we include risk and show the
important information that he will end up:
Somewhere between:$242 million
BROKE @ Age 67
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 38
But we can get Harry to the
HIGHEST Probability of
“Success”(So he won’t have to
worry about eating cat food in retirement)
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 39
But we can get Harry to the
HIGHEST Probability of
“Success”(So he won’t have to
worry about eating cat food in retirement)
By getting him used to the taste
NOW! (Requires $250k A YEAR in SAVINGS)
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 40
And Leave Him With A
75-90% Chance
By getting them used to the taste
NOW! (Requires $250k A YEAR in SAVINGS)
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 41
And Leave Him With A
75-90% Chance
By getting them used to the taste NOW! (Requires $250k A
YEAR in SAVINGS)
Of Dying On A Death Bed
Stuffed With Money He Wished
He Had Spent!
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 42
Do You Perceive a Contradiction to:Reliable?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Retirement Age?“Financial Independence”?Sacrifice Goals You Want, for
those you DO NOT VALUEFinancial Independence?3-6X Estate Goal?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 43
Do You Perceive a Contradiction to:Reliable?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Retirement Age?“Financial Independence”?Sacrifice Goals You Want, for
those you DO NOT VALUEFinancial Independence?3-6X Estate Goal?
Either:Ignore Risk…UNRELIABLEInclude Risk…Nearly Certain
Sacrifice to One’s Only Life
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 44
Do You Perceive a Contradiction to:Reliable?
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Retirement Age?“Financial Independence”?Sacrifice Goals You Want, for
those you DO NOT VALUEFinancial Independence?3-6X Estate Goal?
Either:Ignore Risk…UNRELIABLEInclude Risk…Nearly Certain
Sacrifice to One’s Only Life
CONTRADICTION?
CONTRADICTION?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 45
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
What We “Say” What it REALLY MEANS!
CONTRADICTION!!!
Do You Perceive a Contradiction to our Best Practices?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 46
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Inconvenience All ClientsData Points, Not PrioritiesHow Much Pain Can You Bear?Position You To Experience It!
Measure Markets Not GoalsIgnore Risk – UnreliableInclude Risk – Certain SacrificeSave More, NOT Less!In Greek and Ignore Uncertainty
of UnderperformingShow What Happened, NOT
what it means to you…Repeat Initial Inconvenience…
“Regularly”
What We “Say” What it REALLY MEANS!
CONTRADICTION!!!
Do You Perceive a Contradiction to our Best Practices?
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 47
1- Obtain Complete Financial Profile
2- Determine Financial Goals
3- Identify Risk Tolerance
4- Optimize Asset Allocation(highest return for risk tolerance)
5- Establish Performance Benchmarks
6- Project Future Resources Based on Conservative Assumptions
7- Determine Savings Shortfall-“Gap”
8- Search for Best Funds/Managers Based on Policy
9- Monitor Performance and Update Plan “Regularly”
Inconvenience All ClientsData Points, Not PrioritiesHow Much Pain Can You Bear?Position You To Experience It!
Measure Markets Not GoalsIgnore Risk – UnreliableInclude Risk – Certain SacrificeSave More, NOT Less!In Greek and Ignore Uncertainty
of UnderperformingShow What Happened, NOT
what it means to you…Repeat Initial Inconvenience…
“Regularly”
What We “Say” What it REALLY MEANS!
CONTRADICTION!!!
WOULD YOU BUY THIS???!
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 48
We Need To Start From Scratch!
NEW PREMISES OF WHAT FINANCIAL ADVICE IS:
How about this for a value proposition?
I help clients make the most of the one life they have…
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 49
We Need To Start From Scratch!
NEW PREMISES OF WHAT FINANCIAL ADVICE IS:
How about this for a value proposition?
I help clients make the most of the one life they have…
How do you do that?
By CONFIDENTLY achieving the goals each client uniquely values
-Without needlessly sacrificing their lifestyle-And avoiding unnecessary investment risks
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 50
Resolution to Contradictions of FORMER Best Practices…
Inconvenience All ClientsData Points, Not PrioritiesHow Much Pain Can You Bear?Position You To Experience It!
Measure Markets Not GoalsIgnore Risk – UnreliableInclude Risk – Certain SacrificeSave More, Never Less!In Greek and Ignore Uncertainty
of UnderperformingShow What Happened, NOT
what it means to you…Repeat Initial Inconvenience…
“Regularly”
RESOLUTIONS based on NEW PREMISES OLD Contradictions:
RESOLUTIONS!!!
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 51
Resolution to Contradictions of FORMER Best Practices…
1- Obtain Only What is Needed/Material
2- Identify Ideal Dreams and Acceptable Compromises…AND PRIORITIES
3- Avoid Unnecessary Risk
4- “Benchmark the beach house”Measure progress toward goals
5- Provide Comfort…rational confidence…Avoid too much: Uncertainty OR Sacrifice
6- Solutions based on acceptable compromises to achieve priorities
7- Speak clients’ language and avoid implementation uncertainty
8- Progress toward goals, and changing goals or priorities…on demand & proactive
Inconvenience All ClientsData Points, Not PrioritiesHow Much Pain Can You Bear?Position You To Experience It!
Measure Markets Not GoalsIgnore Risk – UnreliableInclude Risk – Certain SacrificeSave More, Never Less!In Greek and Ignore Uncertainty
of UnderperformingShow What Happened, NOT
what it means to you…Repeat Initial Inconvenience…
“Regularly”
RESOLUTIONS based on NEW PREMISES OLD Contradictions:
RESOLUTIONS!!!
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 52
The resolutions enable us to have a completely different and meaningful process, but also require us to change…
OUR VALUE PROPOSITION
HOW WE PROFILE
HOW WE DESIGN RECOMMENDATIONS
HOW WE IMPLEMENT
HOW WE MONITOR & SERVICE
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 53
The resolutions enable us to have a completely different and meaningful process, but also require us to change…
OUR VALUE PROPOSITION
HOW WE PROFILE
HOW WE DESIGN RECOMMENDATIONS
HOW WE IMPLEMENT
HOW WE MONITOR & SERVICE
Other than changing these things about our business…Everything else IS THE SAME?!
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004 -2008 All rights reserved
P r o v i d i n g W E A L T H C A R E
Personal Wealthcarefor: Sample Client
A. Good AdvisorGood Advisor Consulting
ProvidingProvidingW E A L T H C A R EW E A L T H C A R E
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 55
A completely new advice process designed to:
Help you live the one life you have, the best way you can
The Premises of Wealthcare Advising:
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 56
A completely new advice process designed to:
Help you live the one life you have, the best way you can
The Premises of Wealthcare Advising:
»Confidence in achieving goals YOU value»Without UNDUE sacrifice to your lifestyle
»Avoid UNNECESSARY investment risk
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 57
Wealthcare is an easy process that puts everything together:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 58
This new process has many benefits compared to traditional services:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
Traditional Financial Services
Wealthcare Benefit
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 59
This new process has many benefits compared to traditional services:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
Traditional Financial Services
Wealthcare Benefit
Complicated questionnaires asking for meaningless details
Focus on what is important
Easier
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 60
This new process has many benefits compared to traditional services:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
Traditional Financial Services
Wealthcare Benefit
Complicated questionnaires asking for meaningless details
Focus on what is important
Easier
Goals compromised to maximize investment amount
Identify aspirations Achieve goals otherwise ignored
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 61
This new process has many benefits compared to traditional services:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
Traditional Financial Services
Wealthcare Benefit
Complicated questionnaires asking for meaningless details
Focus on what is important
Easier
Goals compromised to maximize investment amount
Identify aspirations Achieve goals otherwise ignored
Identify maximum risk tolerance…Position you to experience it!
Evaluate whether risk is necessary
Avoid unnecessary risk
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 62
This new process has many benefits compared to traditional services:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
Traditional Financial Services
Wealthcare Benefit
Complicated questionnaires asking for meaningless details
Focus on what is important
Easier
Goals compromised to maximize investment amount
Identify aspirations Achieve goals otherwise ignored
Identify maximum risk tolerance…Position you to experience it!
Evaluate whether risk is necessary
Avoid unnecessary risk
Solutions based on sacrifice (additional savings)
Solutions based on YOUR priorities
Avoid unnecessary lifestyle sacrifice
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 63
This new process has many benefits compared to traditional services:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
Traditional Financial Services
Wealthcare Benefit
Complicated questionnaires asking for meaningless details
Focus on what is important
Easier
Goals compromised to maximize investment amount
Identify aspirations Achieve goals otherwise ignored
Identify maximum risk tolerance…Position you to experience it!
Evaluate whether risk is necessary
Avoid unnecessary risk
Solutions based on sacrifice (additional savings)
Solutions based on YOUR priorities
Avoid unnecessary lifestyle sacrifice
Monitor performance(what happened?)
Monitor PROGRESS (will I meet my goals?)
Identify problems & opportunities in
advance
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 64
This new process has many benefits compared to traditional services:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
Traditional Financial Services
Wealthcare Benefit
Complicated questionnaires asking for meaningless details
Focus on what is important
Easier
Goals compromised to maximize investment amount
Identify aspirations Achieve goals otherwise ignored
Identify maximum risk tolerance…Position you to experience it!
Evaluate whether risk is necessary
Avoid unnecessary risk
Solutions based on sacrifice (additional savings)
Solutions based on YOUR priorities
Avoid unnecessary lifestyle sacrifice
Monitor performance(what happened?)
Monitor PROGRESS (will I meet my goals?)
Identify problems & opportunities in
advance
Update annually at best
Update on demand More choices and better decisions
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 65
This new process has many benefits compared to traditional services:
“Stress Test” Goals
Acceptable & Ideal Goals
Define Major Life Goals
Prioritize Goals
Recommendation “In Balance”
Comfort & Confidence
Implement Allocation
MonitorProgress
New Goals or Priorities
Traditional Financial Services
Wealthcare Benefit
Complicated questionnaires asking for meaningless details
Focus on what is important
Easier
Goals compromised to maximize investment amount
Identify aspirations Achieve goals otherwise ignored
Identify maximum risk tolerance…Position you to experience it!
Evaluate whether risk is necessary
Avoid unnecessary risk
Solutions based on sacrifice (additional savings)
Solutions based on YOUR priorities
Avoid unnecessary lifestyle sacrifice
Monitor performance(what happened?)
Monitor PROGRESS (will I meet my goals?)
Identify problems & opportunities in
advance
Update annually at best
Update on demand More choices and better decisions
Confidence completely unknown
Confidence (comfort) calculated, monitored and kept in “balance”
Comfort that goals can be achieved
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 66
Sample:Aspirations (Ideal) and Traditional Goals (Acceptable)
Traditional advisory services focus on maximizing the size of your investment portfolio by minimizing your spending, maximizing your savings and positioning you in a portfolio with the highest risk you can tolerate. Achieving goals otherwise ignored and minimizing investment risk is what the Wealthcare process is all about. For most people, some goals are more important than others. Your primary financial goals as determined in our goal assessment are outlined above.
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 67
“Stress Testing”
Uncertain <75%(under funded)A confidence level below 75% means that there is too high of a chance you
may not achieve your goals. Adjustments need to be made to your goals,
your allocation or your investments
Sacrifice >90%(over funded)
A confidence level above 90% indicates that you
are needlessly sacrificing your financial goals. You
could take less investment risk, achieve larger or more goals and still maintain confidence in your financial future.
Confidence & Comfort (in “balance”)A confidence level between 75% and 90% should give you confidence that your goals can be met. This reading indicates a set of goals that is manageable and avoids unnecessary investment risk. You may find at some future
date minor changes may be suggested, but they are likely to be small, easily manageable and exposed well in advance through ongoing monitoring.
How does “Stress Testing” Work?Central to the Wealthcare process is the Confidence calculation. This analysis simultaneously evaluates your goals, your investment allocation and your assets to determine how confident you can be that your goals will be met. The Wealthcare process subjects your goals and investment strategy to this sophisticated ‘stress testing’ process which simulates 1000 market environments, both good and bad. Your Confidence or Comfort is the percentage of the 1000 simulations that achieve your goals. For example, if you exceeded all of your goals in 830 of 1000 tests your confidence is 83%.
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Comfort Assessment
Uncertain Comfort Sacrifice
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E
“Stress Test” Results For Your Goals
Your Comfort Level…
Indicates the overall confidence in exceeding your most important life goals.
Remember, below 75% means you may be disappointed and above 90% means you are making needless sacrifices to your lifestyle.
Comfort Zone Too Much Compromise
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 69
Recommendation
Your Recommended Goals are custom designed based on your priorities.
This recommendation is designed to avoid undue sacrifices to your financial lifestyle and if possible avoid unnecessary investment risk.
With these objectives in mind, our recommended goals and investment strategy falls within balance so that you can be confident that any future modifications to your goals will be moderate and manageable through ongoing monitoring.
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 70
Achieving Your Goals
Monitoring Your Progress…As financial markets, financial goals and priorities change, we monitor your progress on an ongoing basis. The Wealthcare process identifies in advance the future portfolio values needed to maintain balance between confidence and undue sacrifice. This monitoring process enables us to track where your current portfolio falls so we can alert you of potential problems, or help you achieve additional goals you may have. Additionally, this dynamic process recognizes that throughout your life, goals and priorities change. In such cases we will design new recommendations for you.
Sacrifice- Over Funded
Uncertain
Your Portfolio
Too Uncertain- Under Funded
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 71
Updating Changing Goals
Please tell us about any new goals you may have:
________________________________________________________________________________________________________________
Please tell us about any changes to your goals you would like us to review by entering them in the amendments section to the right:
Current Status Updates*
Retirement Age
Client 65
Spouse 61
Retirement Need
Client $120,000
Target End Value $500,000
Avg. Annual Savings
Pre-Retirement $32,411
Default Inflation Rate 3%
Education Yes
Median Return 8.33%
Risk
Std. Deviation 12.12%
Downside (95%-tile) -9.73%
Other Goals
Gifting to Son No
Jamaica Trips $25,000As your goals and priorities change…So will your lifetime plan. Please use this form to update us on any changes you would like to make to your goals or inform us of new goals you may have. We will work with you to redesign your recommended goals for changes you may desire.
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 72
Wealthcare Benefits for Sample Client
Retire THREE YEARS EARLIER
$10,000 MORE in Retirement Income
$20,000 MORE for Travel
$21,000 LESS in Annual Savings
1/3 LESS Investment Risk
Wealthcare Benefit:Life With Wealthcare
Life With Traditional Services
Retirement Age 65 68
Retirement Income $120,000 $110,000
College Funding Yes Some
Retirement Travel $25,000 $5,000
Savings $32,411 $53,404
Estate Goal $500,000 $100,000
Asset Allocation Balanced Growth
Average Return 8.33% 9.93%
Downside Risk -9.73% -15.07%
Confidence & Comfort 83 Unknown Comfort that goals can be met
Fully Fund Education
$400,000 MORE as a Legacy
©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved
P r o v i d i n g W E A L T H C A R E PAGE 73
Summary – Wealthcare Benefits:
Easier
Achieve goals otherwise ignored
Avoid unnecessary risk
Avoid unnecessary lifestyle sacrifice
Identify problems & opportunities in advance
More choices and better decisions
Comfort that goals can be achieved