For the mathematician financial planner out there, I have found the software for you.
RRIFmetic, produced by Fimetrics Systems of Vancouver, is about much more than RRIFs. It is best described as a cash flow management tool, suitable for planning for retirement and other short-term or long-term financial goals a client may have.
RRIFmetic (sounds like 'arithmetic') is the only product offering of Fimetrics, a company solely owned by Steve Salter, the brains behind RRIFmetic. Steve is admittedly a one-man show, yet has a loyal financial planner and accountant following of 900 clients who passionately embrace his software tool for their clients. Fimetrics only has two employees, but Steve says that his work ethic means any planner can easily "talk to the boss" any day of the week to provide input on changes or to ask a question. RRIFmetic is a self-taught stand alone software tool, costing $379. Annual updates are $100. This gets you a single program that does it all, a major annual update and several mini updates each year for tax changes and program enhancements.
This tool may not be good for large corporate users seeking a deep pockets software company behind the tool. The software comes in English only, it is not password protected nor are compliance checks built into the system. It can't handle foreign currency, nor can it integrate with contact management databases or mutual fund databases. Steve checks all of his own calculations within the software, and he himself is not a financial planner.
Others may not like this software because of the extremely limited focus on investment planning: there is no risk questionnaire or assessment, no asset mix determination and no product talk. The program does however allow itemization of the elements in the portfolio and reports on asset allocation. As well, there are no stand alone calculators like many other software programs offer, report templates are basic at best and there are no wizards to walk you through data entry of a new client.
But wait, the simplicity of this tool is the beauty of it!
By keeping it simple, RRIFmetic offers a powerful "spreadsheet" approach to cash flow management for a client. The planning approach is goal driven - you input revenues and expenses over the life of the goal into a single spreadsheet that is the main page of RRIFmetic. And it's all done on one screen - no need to drill down into a myriad of pages or get lost in levels of data entry. Once the data is in, RRIFmetic offers a cash flow optimization approach that avoids the surplus/deficit technique of its competitors. Instead of approximating, RRIFmetic simply solves the math directly, showing what is possible with the client's resources. Multiple goals can be integrated to compete for resources, forcing a client to prioritize. The tax calculations within RRIFmetic are among the most detailed and accurate of any financial planning software in Canada. Steve's "substance over style" approach to building RRIFmetic has resulted in a simple tool that can provide an accurate and sophisticated plan to a smaller client where many of the more elaborate financial planning software tools cannot justify the time spent to build the plan.
Some other strengths of RRIFmetic are:
Speed. The program's ability to recalculate scenarios is among the fastest I have seen;
Generally, the program is easy to use and you can learn the basics in a few hours. However, to learn the advanced features (eg. how to input stock options to get the right answer) will take you a lot longer;
Calculates tax based on marginal tax where a lot of software programs are still using average tax calculations. This is far more accurate;
You can create a base case financial plan for a client and then develop scenarios to demonstrate the effect of different approaches. This comparative feature is a great educational tool for clients and a strong marketing mechanism;
Here's something I haven't seen before: you can actually cut and paste numbers from an insurance company's insurance quote in a PDF and insert it right into the program. So for example, you can get a UL quote from Manulife on a PDF and put the numbers into the program to show the client the impact on their financial plan right there! This is a great feature; and
RRIFmetic offers a different approach to Monte Carlo simulation. RRIFmetic does MC simulation by randomly varying rates of return over the years approaching the client goals to provide a range of retirement incomes based on the end goal. Arguably, this is a more effective measure than the traditional Monte Carlo data.
If you don't like to roll up your sleeves and get into the math of a financial plan, stick with the glitzy wizard-driven programs out there. But if you are the analytic type, prefer accuracy and simplicity from a tool you can use on all of your clients, then consider RRIFmetic. It is quite an effective program to help you manage your client's financial goals.
Kurt Rosentreter, CA, CFP, CIMA, TEP is a Senior Financial Advisor with Berkshire Securities Inc. in Toronto. Kurt is a best selling author on wealth management in Canada, a noted public speaker and the past co-founder of the national wealth management practice at one of Canada's Big 4 accounting firms. The opinions expressed are those of Kurt Rosentreter and may not necessarily be those of Berkshire Securities Inc.
The views and content expressed here have been provided by the author and not FPSC. This article is meant for informational purposes only and readers are encouraged to check with a qualified financial professional before making any financial decisions.
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