Quick Answers to Complex Questions - Six Useful Links

There is so much information on the Internet that it’s often difficult to find the information you need from an authoritative source. Because we are always researching on the Internet to stay on top of the industry, we often come across great sources of information which may not be obvious.

FINRA Tools and Calculators

As Financial Advisors, we often need to calculate different scenarios for clients. While we rarely think of FINRA beyond its regulatory function, FINRA has an outstanding set of free and easy to use calculators. Here is the main site: http://www.finra.org/investors/tools.

Retirement Savings Calculator

This calculator requires detailed information and isn’t a “one size fits all.” Once you enter the required figures, it will calculate how much you need to save to get x amount of income after taxes from your portfolio after you retire. (finra.org/retirement_calculator/)

Required Minimum Distribution Calculator

The dreaded Required Minimum Distribution (RMD). It’s often difficult to estimate what a client’s RMD will actually be. Yet in the years as they approach retirement, clients really want some idea of what this amount will be. They don’t want to make a “guestimate.” They want to know.

Use this calculator to determine your Required Minimum Distribution (RMD) from a traditional 401(k) or IRA and other QRPs. (finra.org/rmd/)

The Mutual Fund Analyzer

The following might be the most useful link of all. It’s also free to use. Understanding the thousands of different mutual funds on the market, their styles, and their costs can become a massive time-sink. You want to give your clients the best information, but that can be hard to find. One of the most useful things this tool does is show how the costs of the fund you are looking at will affect return over time. Costs affect returns far more than clients realize.

FINRA’s fund analyzer tool does the following:

• you can sort through approximately 30,000 mutual funds including money market funds and exchange-traded notes.
• automatically applies a fund’s applicable fees.
• After applying the fees, the “Fund Analyzer does the math for you and shows how fees and expenses impact the value of your fund over time.”

finra.org/fund_analyzer/

College Savings Calculator

Because High-Net-Worth and Ultra-High-Net-Worth (HNW/UHNW) clients are concerned about having the funds to pay for their children or grandchildren to receive a top-notch college education, this calculator will tell you how much you need to invest per year to achieve this goal.

What dollar figure should you assume for college costs? According to the U.S. Government, one year at a private nonprofit institution for an undergraduate costs approximately $43,065. Hence, four years would cost $172,260. Elite colleges often cost substantially more than $43,065 a year.[1]

Remember, this is the cost of a college education now. The calculator includes an inflation multiplier which assumes inflation of 3.8% based on historical data. You can change this figure to match your assumptions about inflation.

For your HNW/UHNW clients, investing for both retirement and college for multiple children requires serious money to be invested on a regular basis for these two alone. This link calculates the amount which you need to put into a 529 plan: finra.org/college_savings/

Financial Education for the Children of HNW/UHNW Clients

Parents and grandparents often despair over the minimal knowledge about finances possessed by their younger family members. Gamification of topics such as basics of finance is a growing segment of the training industry. FINRA has created an outstanding, detailed, and free game known as Moneytopia. This is a multi-media program. While there are other sources of educating young people about money, this game is excellent. According to FINRA, "Moneytopia is an immersive game that helps you learn more about managing your money while having fun. The loftier and more costly your big dream, the longer the game will last." (finra.org/investors/moneytopia-game-and-tutorials)

I believe you will find these links useful in your practice.

Resource(s):

[1] https://tinyurl.com/USGovtFastFacts

To learn more about this topic, register for our Retirement Planning Service courses.

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Contributing Writer: Subject Matter Expert Charles McCain