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Do-it-yourself plans have been discussed in the financial industry for years, but have not materialized due to factors including development costs and uncertainty about the potential for generating revenue and profits.
Elisabeth Tillier’s MoneyReady app is not bound by these limitations. The retired computational biologist developed the app using his programming expertise and accumulated knowledge of financial planning.
“I’ve always been a DIY investor,” Tillier said in an interview. “Then my father got sick and I needed to help my mother financially. I thought, “An Excel spreadsheet is not enough for this,” so I programmed it myself. ”
Her next idea was to share the app. To that end, she took a course in financial planning and sought feedback from her brother-in-law, who is a financial advisor. “One of his biggest opinions was that advisors aren’t going to like it because we’re making this available to everyone,” Tillier said.
Tillier spent about two years developing the MoneyReady app and still spends hours a day making improvements. This explains why the app is incredibly detailed. There are 49 pages of sample reports available for download. The app has gained about 6,000 users over the past five years, with 10 to 15 percent of subscribers paying $160 for the first year and $100 for renewals. The app is available for free with limitations.
Tillier describes MoneyReady as an app that helps people plan their finances to achieve goals such as retirement or buying a home. The core of the software is a feature called Time Machine, which takes the data you provide and predicts future cash flows. “When you run it, you’ll see lots of tables, graphs, and very detailed reports,” she said. “We see what happens every year.”
Additional tools assess how much you can spend and how much of an inheritance you can leave after your death. There’s also a Withdrawal Optimizer, which determines the best approach to drawing down your savings in retirement. Users can track their stocks and other investments on the MoneyReady app through a link to an online service called Wealthica. This service aggregates and displays all investment holdings of various companies.
Other DIY financial or retirement planning options include MyOwnFP, Advice, Retirementize, Planswell, and the federal government’s Canadian Retirement Income Calculator. This is worth using if you want to estimate how much income your retirement savings will generate. As for why the financial industry itself hasn’t produced anything of note in DIY planning, Tilia says: “Too much work for too little pay.”
An obvious reason to try DIY planning is that you can save the $1,500 to $5,000 and upfront fees you would pay for an advice-only planner, or the 1 to 2 percent commission you would pay for a planner that also handles investments. This equates to an annual percentage rate of 1-2% on your account and is typically billed monthly.
Keeping costs low is fundamental to smart money management, but value for your dollar should be considered as well. Planners have their own professional software and have the experience and training to get the most out of it.
Financial planners with the esteemed designation of Certified Financial Planner must meet work experience and educational requirements, complete a rigorous educational program, and pass an exam. Presumably, a practicing CFA works with many clients and can balance raw data with life experience built on interactions with actual retirees.
Even if you have great DIY financial planning tools, can you really plan for your own retirement?The answer is, if you have an A-level understanding of the variables involved in financial planning. Yes. Examples include inflation, reasonable expectations of investment returns, tax rates, life expectancy, and the nuances of when Canada Pension Plan benefits begin.
MoneyReady is a work in progress, with ongoing adjustments often initiated by user comments and questions. Tilia’s unique metric for measuring the app’s success is the renewal rate of paid subscriptions, which is currently at 75%.
“Just this week, someone whose subscription was expiring thanked me for helping them decide when to retire,” she wrote in an email following up our conversation. said. “Now they’ve retired and moved all their investments to an advisor who can oversee the plan. Great! It was an informed decision.”
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