Investment Strategies in Decision Lab

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Welcome. This video will walk you
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through the investment strategy feature
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inside Decision Lab. From main
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households page, select a household.
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Then select the decision lab icon on
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left side navigation.
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From there, click the new investment
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strategy module. The investment strategy
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feature is a great way to explore
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different investment strategy and asset
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allocation outcomes.
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Compare results across your different
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accounts and explore how each approach
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performs even under historical stress
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test scenarios. This is a great way to
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help your clients understand how their
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asset allocation might impact their
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experience during retirement. If you've
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already built your household and your
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allocations, you can always click skip
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to results to get right to the
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investment strategy outputs. But if this
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is your first time and for the purpose
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of this tutorial video, click get
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started to go through the steps. In this
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first step, select which accounts you'd
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like to explore.
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You can quickly click an account to
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include it in the calculations.
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Unclick it to remove it from the
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selection. In this example, we'll model
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these clients having a million in their
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taxable account and a $2 million IRA.
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Then click continue.
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On this page, select the investment
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strategies you'd like to analyze.
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By default, you can always use the
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riskbased defaults that come in the
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software. If you have any model
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allocations pre-built, you will be able
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to select those here as well. Then click
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continue when you're ready. This last
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page will give you a great overview of
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what you should expect when you get into
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the investment strategy feature. Click
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explore options to get started. Here
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you'll see three sections. You'll have a
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bar chart, a bubble chart, and a stress
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test. First, looking at the bar chart,
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you'll be able to select any of the
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strategies to remove them from the page
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or select them to include them in the
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analysis.
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With the bar chart, you can click any of
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your strategies here and then on the
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right side, you'll get a detailed
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overview of the overall asset
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allocation, the average return, and the
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standard deviation. You can also click
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view detailed allocation to get a deeper
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breakdown of how it's allocated at the
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asset class level.
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You'll also be able to see the monthly
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retirement paycheck that you'll get from
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each strategy you've selected. Next, on
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the bubble chart, you'll be able to
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analyze each strategy and see the
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overall standard deviation on the bottom
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as well as the average return vertically
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on the top and where each strategy
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aligns. You can click the bubble chart
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here to quickly see the monthly
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retirement paycheck as well as the
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average return and standard deviation.
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Now, let's go to the stress test. Here's
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where the conversation will really be
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driven between you and your clients. In
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the stress test here, you'll be able to
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stress test each of these strategies
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through the different historical
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periods. You can select each historical
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period just by clicking on the section
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on the graph.
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In this example, we'll use the global
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financial crisis.
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For best practice, you may find it
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easier to unselect a few of these
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strategies, so that way you're only
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looking at two or three strategies at
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once. In this example, we'll go through
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the extremes of looking at a
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conservative allocation versus an
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aggressive allocation.
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So, first on the income chart here,
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you're looking at the overall income
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experience that the clients will have
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based on the specific strategy we're
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looking at and how it performed in the
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global financial crisis. So, here we see
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that starting in 2007, our aggressive
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allocation here spent about $12,500 in a
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retirement paycheck, whereas our
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conservative strategy had about $9,710
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in their retirement paycheck. However,
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if you focus on the aggressive one
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first, you can see how the income
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experience did have to make some
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decreases when it experienced that
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global financial crisis and then later
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on as things improved, it was able to
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increase the income back up. Whereas in
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the green scenario, our most
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conservative scenario, our income
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started lower but stayed flat through
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the global financial crisis and then we
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started to see those increases later as
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the plan went along. In the chart below,
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you can analyze the overall portfolio
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balance and how it moved during this
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period. So looking at our conservative
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strategy, we can see that the balance
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didn't have that much of a decline in
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this period. it mainly stayed steady and
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then we see a slow increase later as
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things recovered. Whereas in our
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aggressive scenario, we see that we have
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a sharp decline in the balance, but as
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things recover, we also see a quicker
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increase in that overall balance as we
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go on in the plan.
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Next, you can also look at this strictly
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just from the dollars coming out of the
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portfolio. when you click the withdrawal
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dollar icon tab. So, as we hover again,
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we can see how much income was
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specifically coming out from the
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portfolio in each of these strategies.
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When you click the withdrawal percentage
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tab, you'll be able to analyze this
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data, but looking at the withdrawal rate
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driven by each of these strategies. So
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looking at our aggressive scenario, we
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can see how we started with a about a
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4.9%
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withdrawal rate, but then how that
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steadily increased. So about a 8%
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withdrawal rate as our balance was
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taking that hit during the global
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financial crisis and then things kind of
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leveled off as things recovered. where
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in our conservative scenario, we started
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off with about a 3.7% withdrawal rate
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and we saw that steadily increase as we
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got through the global financial crisis
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and things went on later into the plan.
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So overall, this gives you a great way
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to really drive this conversation with
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clients. There's no real right answer
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here. It really allows you to paint this
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picture and help clients decide on what
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type of experience would be the most
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favorable or most desirable for them
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throughout their retirement. That's it.
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Thank you for viewing this video. Please
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reach out to our team if you have any
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questions and we look forward to hearing
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feedback.