What advisors look for in retirement planning software

Selecting the right financial planning and analysis software can feel a bit overwhelming, even for seasoned professionals. Advisor.ca reached out to experienced users and provider representatives to learn how to make the right choice. Their guidance — look for recommendation engines, pension and estate planning features and an easy-to-read layout.

There are four leading providers in the Canadian market: Conquest Planning, Naviplan, RazorPlan and Snap Projections. While the software are functionally similar, they provide advisors different degrees of control over the retirement withdrawal strategy, so the choice could come down to an advisor’s personal preference.

Advisors who haven’t used financial planning and analysis software can take advantage of free trials to figure out which one fits best. Those who have can reach out to the software companies to make suggestions.

Recommendation engines

Some advisors like to test how tweaking one variable can affect a client’s financial plan. For example, an advisor can see how a client taking their Canada Pension Plan (CPP) pension at age 70 instead of 65 could increase their total retirement income in the long run, but cause an income gap in the short term. Conquest’s artificial intelligence–powered strategic advice manager (SAM) starts with a default retirement age of 65 and suggests how much money the client will need in retirement based on their desired lifestyle. If the client is at 120% of their goal, they could retire earlier or leave a larger legacy behind.

Similarly, Snap Projections shows how far behind or ahead a client is from their retirement goal. Its recommendation engine can calculate how this impacts what the client will be able to afford to spend in retirement .

RazorPlan took a different approach; it shows four retirement options: lifestyle, retirement age, risk and asset allocation. For example, if a client is ahead of their retirement goals, they could afford to spend more per year, retire earlier, take less risk with their investments or revise their portfolio. The options help guide an advisor’s conversation about how realistic a client’s retirement goals are .

Pension formulae

Clients in the civil service have access to pension plans that operate with a variety of rules to determine retirement benefits. A software’s pension formulae feature can help an advisor work out a client’s pension income based on their target retirement date. For example, the Public Service Pension Plan in Canada uses the 85 factor where an employee’s age and years of pensionable service must add up to 85 to qualify for a full pension.

While Naviplan, Snap and Conquest all support automated pension calculation, the feature isn’t available in RazorPlan. RazorPlan said there are many different pension formulae and advisors haven’t demanded this feature.

Estate planning

After figuring out a client’s desired retirement lifestyle, the advisor works with them to set estate goals and find strategies to minimize the tax burden at death, such as with end-of-life giving.

Both Snap and Conquest can test for multiple estate and decumulation strategies. Snap’s compare-scenario feature and Conquest’s SAM can show multiple strategies side-by-side.

Meanwhile, RazorPlan calculates the estate’s net asset value for every year of the analysis, so an advisor can set an end-of-life estate objective to find out how much more a client needs to save to reach that goal under the existing retirement spending plan. The software can also recommend insurance products to help meet that objective.

Naviplan has an insurance module to determine the amount of insurance required to meet legacy goals. This is in addition to its estate planning module that can estimate probate expense, estate taxes and plan for estate bequests, among other features.

Tables and charts

Retirement income streams such as registered retirement savings plans, CPP and Old Age Security benefits are tied to a person’s age, so clients usually find it easier to read plans presenting projections based on their age rather than by calendar years. For example, showing a client that they could maximize CPP by beginning payments at age 70 is more relatable than 2047.

Advisors can toggle between the client’s age and calendar year on Snap and Conquest. RazorPlan only displays age in its charts but shows both age and calendar year in its tables. Naviplan doesn’t let advisors toggle between the two options. While tables like the cash-flow analysis show both the calendar year and the client’s age in Naviplan, the calendar year is the default setting for some charts.

Methodology

This article is part of a series. Advisor.ca asked advisors to create financial plans for two sample clients with four of the most used financial planning and analysis software programs in 2024. One client family is a mid-career couple with a corporation hoping to save for a house and the other client family is a retired couple with a defined-benefit pension plan. The advisors shared what software features they looked for and the tech firms explained their design choices. Naviplan did not respond to requests for comment.

This series was created with the input of the following advisors: Aravind Sithamparapillai, associate at Ironwood Wealth Management Group in Hamilton, Ont.; Ayana Forward, independent fee-only retirement planner at Retirement in View in Ottawa; Ben Wilson, financial planner and advisor services lead at PWL Capital in Ottawa; Mark McGrath, financial planner and associate portfolio manager at PWL Capital in Squamish, B.C.; and Scott Sather, president and financial planner at Awaken Wealth Management in Regina.

This article has been updated to correct information on RazorPlan’s chart and table settings.