If you’re like us, clients frequently seek answers to questions about their personal financial situation. Here are a few questions the Cashflow Fingerprint® helps answer. They’ll probably sound familiar…

Financial Planning

• How do I attain financial security?
• Should I pay off my mortgage early?
• How much do I need to accumulate to pay for my child’s education?

Retirement Planning

• How much should I be saving for retirement?
• How much do I need to comfortably retire?
• How much can I safely spend each year during retirement?
• At what age can I retire at the standard of living I desire?
• Are my expectations for retirement reasonable given my lifestyle and savings?

Investment Planning

• How do I estimate what my portfolio might grow to?
• When I think about my investments, how do I define and measure risk?

Miscellaneous

• Can I afford to transfer assets to my children now?
• How much life insurance do I need?

Contains 2013 Fed. Income Tax Rates including Affordable Care Act

• Understandable & actionable case results
• Easy data entry for analyzing the cashflow impact of a whole host of financial issues like private school & college tuition, 2nd home purchase, mortgage payoff, revolving debt retirement, how much life insurance do you need, etc.
• User defined portfolio turnover rate
• Portfolio turnover adjusts the basis for cap gains tax calculations
• Loss carry forwards properly applied automatically
• User defined percentage between annual short-term & long-term gains
• Automatic annual portfolio rebalancing and taxation of same
• Each year portfolio taxed based on gains or losses from turnover
• Toggle indexed tax tables on/off (off being more conservative)
• Deferred Comp/NQ retirement accounts
• Co. Savings Plans, 401(k) including co. match, Roth, 403(b), profit sharing; IRA
• User defined total portfolio costs (ex., mutual fund internal exp. + mgmt fee=1.15%)
• Multiple case results, each case with over a 100 periods
• Case results based on decades of actual, empirical historical data, NOT subjective, hypothetical assumptions
• Actual number of successes vs failures for all periods in case results
  • The Cashflow Fingerprint® is NOT a Monte Carlo simulation model
  • No confidence intervals
  • No use of standard deviations or average returns
• Minimum, average, median, & best portfolio Future Portfolio Values for each case result
• Employee stock options and stock grants
• Educational expense module
• Automatic mandatory 401(k), IRA withdrawals & commensurate taxation
• Constant, variable, or historical annual spending increases

The Cashflow Fingerprint® is different than other financial planning models, tools, or software in a number of ways. While most financial planning software assigns various probabilities to a range of assumptions to generate various outcomes, the Cashflow Fingerprint® uses asset class investing strategies and back tests those strategies against actual, empirical, historical data from the past 8 decades. Our clients tell us they believe results from historical data better reflect what might happen in the future than subjective assumptions and probabilities. Why? Because since the 1930s, the markets have experienced economic depression and recessions, a World War, the Korean War, the Vietnam War, multiple regional conflicts, the detonation of nuclear bombs, the assassination of a president, the resignation of a president, massive terrorist attacks, periods of double digit inflation, civil unrest, profound technological changes, multiple Wall Street scandals, shockingly high debt to GDP ratios, U.S. sovereign debt downgrade, real estate booms and busts, banking crises including the collapse of savings and loans, and much, much more. Although past performance is not indicative of future results, we believe the extremes of the past 8 decades fully represent an adequate range of market stressors for use in the Cashflow Fingerprint®. If you can use the Cashflow Fingerprint® to design portfolios for your clients that withstand the extreme historic market stressors, we believe those portfolios might also withstand future market trauma. Obviously, there is absolutely no guarantee future market stressors will not be more severe than past ones.

Because the Cashflow Fingerprint® uses objective historical data, it does not share the shortcomings of other alternative models which use subjective inputs. With many financial planning tools, the absence of any standard approach can produce unreliable results and recommendations. With other models, one professional might input a range of assumptions on interest rates, growth, or standard deviation that is dramatically different from another professional. The results might produce a rosier picture for one client than another despite similar assets and income. In fact, one popular financial planning methodology, the Monte Carlo simulation model (named after the Mediterranean gambling resort), generates results based on non-standard, subjective assumptions, probabilities, and standard deviation. The Cashflow Fingerprint® has no such deficiencies. Interest rates have been what they have been since the 1930s, and when the Cashflow Fingerprint® calculates results for 200 different 30 years periods, it is using actual empirical, historical data, not pie-in-the-sky assumptions. (NOTE: The Cashflow Fingerprint® uses rolling, long-term periods by quarter. In the 30 year periods referenced above, period 1 = Mar 1933 to Mar 1962; period 2 = Jun 1933 to Jun 1962; period 3 = Sep 1933 to Sep 1962; etc.). Click HERE to see our video describing rolling periods. Consequently, the Cashflow Fingerprint® produces virtually identical results for clients with the same assets and income. Of course, the Cashflow Fingerprint® offers the flexibility to change your client’s income, spending, non-recurring expenses, and many other inputs. However, the Cashflow Fingerprint® results will be virtually the same for clients with the same assets and income because historical market performance simply does not change; it is not subjective. Monte Carlo simulation model results might be very different depending on the inputs and assumptions used.

The Cashflow Fingerprint® consistency is very valuable as you work with your clients to generate recommendations and to implement their financial plan. Furthermore, as you continue to work with clients to manage their assets based on their financial plan, the Cashflow Fingerprint® can easily be updated to reflect life changes or other financial events.

The Cashflow Fingerprint® results are created using historical returns, net of fees, and various client-specific inputs related to their existing and future cash flows. Please realize that the results are not a forecast of the future. They are simply a quantification of how clients’ cash flows would have turned out in different periods of history using historical returns based on various cash flow and portfolio allocations. The future will probably be different from any of the periods calculated, plus the Cashflow Fingerprint® results could be worse than the worst historical period. The Cashflow Fingerprint® model uses asset class investing. Utilizing this investment management style is critical if you and/or your clients are going to rely on the results of the Cashflow Fingerprint®. If you do not use asset class investing for all or part of your investment recommendations, then the Cashflow Fingerprint® will not provide optimal results without modifications. (Please contact us to discuss customizing the Cashflow Fingerprint® for your specific wealth management needs.) Asset class investing gives your client portfolios broad global diversification, and it captures the market return over time. It also reduces the risk in portfolios when compared to owning a limited number of individual stocks. That’s why this method is used for the investment portfolios in the Cashflow Fingerprint®.

Note: The portfolios used in the Cashflow Fingerprint® were developed by National FSG’s sister firm, FSG Investment Management, LLC (FSGIM), now Telarray. Telarray is a Registered Investment Advisor that uses asset class investing in all its client portfolios. The Cashflow Fingerprint® offers multiple asset class investing alternatives. These alternatives are not, nor should you consider them to be, a comprehensive set of asset allocations. The appropriate allocation for your clients may not be included in the alternatives offered in the Cashflow Fingerprint®. That is why The Cashflow Fingerprint® permits you to manually create a custom asset allocation. Obviously, each of your clients needs are different and each of their needs should be carefully considered prior to making investment recommendations.

The Cashflow Fingerprint® is designed to assist you in minimizing your clients’ overall financial risk. While there are many risks involved in investing, in our opinion one of the largest risks clients face is running out of money in retirement. This is a silent risk that is rarely discussed. By using the Cashflow Fingerprint®, you can help your clients recognize and manage financial risk. Your clients do not have to “beat the market” in order to be successful. The Cashflow Fingerprint® model simply captures the return of the market. It does not outperform the market. Understanding the relationship between risk and return, and how this relationship affects your clients’ risk of running out of money, is extremely important.

The Cashflow Fingerprint® is available online. Contact us today at 206-259-0575 to get login credentials for online access. We offer a 30 day FREE trail, so begin yours today!

National FSG is responsible for the sales, marketing, technology, and support of the Cashflow Fingerprint® and for other tools and systems designed to assist registered investment advisors and wealth managers recruit and retail clients. CLICK HERE to link to National FSG.