NaviPlan Standard Reference Guide: Asset Allocation Assessment USA version 11.2

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3 NaviPlan Standard Reference Guide: Asset Allocation Assessment USA version 11.2 EISI, Winnipeg

4 Disclaimer This software is designed to allow a financial planner to demonstrate and evaluate various strategies in order to achieve a client s financial goals. It is licensed on the understanding that EISI is not engaged in rendering legal, accounting, or other professional advice and, if any such advice is required, the services of a competent professional person should be obtained. EISI has engaged Ibbotson Associated, Inc., a wholly owned subsidiary of Morningstar, Inc. to develop proprietary asset allocation tools for educational purposes. Ibbotson has granted to EISI a license for use thereof. Some assets in NaviPlan Standard may have been classified based on returns based style analysis and others may have been manually classified. Copyright This documentation and accompanying software may not be copied, photocopied, reproduced, translated, or reduced to any electronic medium or machine readable form, in whole or in part, except in the manner described in the license agreement. NaviPlan is a registered trademark of EISI. Intel, Pentium, and Celeron are trademarks of Intel Corporation. AMD K6, Athlon, and Duron are trademarks of Advanced Micro Devices, Inc. Microsoft Word, Windows, Windows Vista, and Internet Explorer are trademarks of Microsoft Corporation. Adobe and Acrobat are trademarks of Adobe Systems Inc. All other product names are the sole properties of their respective owners. Copyright 2008 Emerging Information Systems Incorporated St. Mary Avenue Winnipeg, Manitoba R3C 3Z5 Canada All rights reserved

5 License agreement EISI LICENSE AGREEMENT NO NOTICE TO USER: PLEASE READ CAREFULLY. THIS LICENSE AGREEMENT REPRESENTS A BINDING CONTRACT. BY ACCEPTING, ACCESSING, INSTALLING, OR OTHERWISE USING THE LICENSED SOFTWARE REFERRED TO HEREIN, YOU AGREE TO BE BOUND BY ALL THE TERMS AND CONDITIONS OF THIS LICENSE AGREEMENT, INCLUDING IN PARTICULAR THE LIMITATIONS ON USE, WARRANTY, AND LIABILITY. YOU SPECIFICALLY AGREE AND ACKNOWLEDGE THAT THIS LICENSE AGREEMENT IS ENFORCEABLE LIKE ANY WRITTEN CONTRACT SIGNED BY YOU. If the individual who accepts the terms of this License Agreement is doing so on behalf of another person, partnership, corporation, or other recognized legal entity, then the individual will be representing and warranting to EISI that he or she has all necessary power and authority to bind the said person or entity, in which case both the individual and the person or entity will be jointly and severally bound by this License Agreement. IF YOU DO NOT ACCEPT, YOU MAY NOT ACCESS, USE, OR INSTALL THE LICENSED SOFTWARE. WHEREAS: A. Emerging Information Systems Incorporated is the owner of or has the necessary rights to license to others certain computer programs which are marketed in the aggregate under the NaviPlan trademark (the "NaviPlan Software") and Emerging Information Systems (USA), Inc. is the owner of or has the necessary rights to license to others certain computer programs which are marketed in the aggregate under the Profiles trademark (the "Profiles Software"). To the extent that you are licensing the NaviPlan Software, the term "EISI" herein shall mean Emerging Information Systems Incorporated and to the extent that your are licensing the Profiles Software, the term "EISI" herein shall mean Emerging Information Systems (USA), Inc. Emerging Information Systems Incorporated shall be severally responsible for the obligations of EISI with respect to the NaviPlan Software and Emerging Information Systems (USA), Inc. shall be severally responsible for EISI's obligations with respect to the Profiles Software. In addition, EISI has entered into one or more agreements with third parties (each a "Third Party Provider") pursuant to which EISI is entitled to provide data hosting or other services or integrate software, data, services, or other products owned by the Third Party Providers (the "Third Party Software") into the Licensed Software and to license same for use by clients of EISI on the terms and conditions of this License Agreement. B. EISI, or the duly authorized licensee or sublicensee of EISI with whom you are dealing (sometimes herein called a "Licensor other than EISI") is willing to grant you (sometimes herein called the "User") a personal, non-exclusive, nontransferable license which would enable you to use, in accordance with and subject to the provisions of this License Agreement, either for evaluation during a trial period to be determined by EISI or for such longer term during which you pay EISI its required license fees, such of the NaviPlan Software or Profiles Software, and any enhancements, supplements, optional components and updates to such Software that are made available to the User by EISI from time to time, and Third Party Software, which is made available to the User from time to time, together with the related documentation (collectively, the "Licensed Software"). TERMS AND CONDITIONS 1. GRANT OF LIMITED LICENSE. Subject to the terms and conditions of this License Agreement, including payment of all applicable license fees, EISI hereby grants to you a limited, non-transferable, non-exclusive license: (i) to use the Licensed Software; and (ii) to the extent applicable to your license and upon payment of all applicable additional fees, (A) to access and use the Licensed Software via EISI's Web site (the "Web site"), and (B) to store and retrieve information and data pertaining to such use through the Web site in the normal course of your business ((A) and (B) are herein collectively called the "ASP Services"); all in accordance with the terms and conditions herein. 2. AFTER-SALES SERVICE. During the Term of this License Agreement and any renewal periods thereafter, you shall have online access to certain training materials at no extra charge. After-sales service, on-site training, and technical support may be provided by EISI to you from time to time during the Term and any renewal period at EISI's standard rates then in effect. Full details and descriptions of the services, training, and technical support that are available shall

6 NaviPlan Standard Reference Guide: Asset Allocation Assessment be provided by EISI to you upon reasonable request. All such training shall be conducted by specialized trainers of EISI at such locations as determined by EISI from time to time. 3. COMMUNICATIONS. You agree that communications between EISI and you, including information respecting enhancements and updates to the Licensed Software, may be by way of to any address provided by you. 4. RESTRICTIONS ON USE. (a) Other than the limited license granted above, EISI (or any Third Party Provider) retains all right, title, and interest in and to the Licensed Software; no other rights or licenses of any kind are granted to you, and the Licensed Software is and remains the sole and exclusive property of EISI or any Third Party Provider. The Licensed Software may only be used on one computer at a time. You shall be responsible, at your own cost, for acquiring all computer hardware and software to enable you to use the Licensed Software. (b) If your license entitles you to install a copy of the Licensed Software on your computer, you shall be entitled to make a single copy of the Licensed Software for backup purposes. No other copies of the Licensed Software shall be made. Both copies of the Licensed Software must be kept in your possession. (c) You may use the Licensed Software for the sole purpose of preparing financial plans or providing financial planning services for your existing and prospective customers. This license does not entitle anyone other than you to use the Licensed Software unless those other persons are also licensed to use the Licensed Software. Without limiting the foregoing, you shall not use the Licensed Software if you are a competitor of EISI or for the purposes of evaluating the Licensed Software for competitive purposes or for any other purposes whatsoever. (d) You shall not (and shall not permit anyone to): (i) (ii) (iii) (iv) (v) modify, adapt, or translate the Licensed Software or documentation, including any disclaimers or notices, or change the Licensed Software's data structures. send or store any unlawful, threatening, libelous, defamatory, obscene, pornographic, or other material that would violate any law. copy, use, analyze, reverse engineer, decompile, disassemble, translate, convert, or apply any procedure or process to the Licensed Software or data stored through the Licensed Software in order to: (A) ascertain, derive, or appropriate for any purpose whatsoever the source code or source listings or data structures for the Licensed Software; (B) transfer, copy, or convert any such data into other software or for any other purpose other than to prepare financial plans or provide financial planning services for your existing and prospective customers through the use of the Licensed Software as permitted herein; or (C) otherwise attempt to discover the source code or source listings of the Licensed Software or any trade secret information. rent, lend, lease, donate, sublicense, pledge, sell, assign, transfer, or otherwise convey to a third party the Licensed Software or your rights in the Licensed Software. permit any third party to use or access the Licensed Software at any time, or use the Licensed Software in a service bureau or any other manner whereby a beneficial use of or access to the Licensed Software is gained by a representative, colleague, agent, or employee of the User who is not similarly licensed to use the Licensed Software and has not paid a license fee to EISI for the Licensed Software.

7 License agreement 5. EISI ASP SERVICES. This paragraph is only applicable to those Users whose license entitles them to use the ASP Services. (a) Your use of the ASP Services is subject to EISI's Acceptable Use Policy ("AUP"), which may be viewed at and is incorporated by reference herein. EISI may modify the AUP, at any time as we deem appropriate in our sole discretion, effective upon posting of the modified AUP. (b) If, for any reason whatsoever, the arrangement between EISI and its hosting Third Party Provider is or is about to be terminated and EISI has been unable to enter into a corresponding arrangement with another hosting provider for provision of the ASP Services that is satisfactory to EISI in its sole discretion, EISI shall be entitled to terminate this Agreement on fifteen (15) days' notice. Neither party shall be deemed to be in breach of this Agreement as a result of termination pursuant to this paragraph. (c) You shall be required to use a unique alphanumeric user name and password in order for you to access and use the Licensed Software (the "User ID"). It is a condition of this License Agreement that you keep the User ID confidential, do not share the User ID with anyone else, and will not permit anyone other than you to have access to the Licensed Software by using the User ID. You hereby release EISI from any liability that may arise from disclosure of the User ID. In addition, you are solely responsible for the integrity and security of your Internet connection, as well as the integrity and security of your computer hardware, and you hereby release EISI from any liability that may arise from vulnerability of such connections or hardware, or breach of security. (d) You have the sole responsibility for (i) obtaining, installing, and maintaining all network servers and other equipment, together with all required software and(or) related components which is necessary for interconnection to our network facilities, or otherwise required for use in connection with the ASP Services (the "User Provided Equipment"); and (ii) ensuring that such User Provided Equipment and related services are compatible with our requirements (including any modifications of the ASP Services made by us from time to time). (e) You acknowledge that delivery of the ASP Services is dependent on the continuous availability and proper functioning of the User Provided Equipment and that EISI has no liability for failure to deliver the ASP Services arising from your failure to comply with paragraph (d) above. (f) You acknowledge that delivery of the ASP Services is dependent on the Internet and that the quality or availability of the ASP Services may from time to time be adversely affected due to delays, limitations, or other problems inherent in the use of the Internet. EISI has no liability for delays or failure to deliver the ASP Services arising from delays, limitations, or problems inherent in the use of the Internet. (g) You acknowledge that all IP addresses and/or network connections assigned by EISI or its hosting service providers to you in connection with the ASP Services remain the property of EISI or its hosting service provider and all use thereof shall be surrendered by the User on termination of this Agreement. (h) You acknowledge that routine maintenance and periodic system repairs, upgrades, and reconfigurations may result in temporary impairment or interruption in the ASP Services. As a result, we reserve the right, from time to time, to temporarily reduce or suspend the ASP Services. (i) During the Term of this Agreement, it is your sole responsibility to retain archived copies of data or reports created by the Licensed Software. 6. AUDIT RIGHTS. EISI shall have the right to review and audit your records upon request and reasonable notice to ensure your compliance with this Agreement. 7. TERM AND TERMINATION. The term ("Term") of this Agreement is twelve (12) months (or other term agreed upon by you and EISI), provided that EISI reserves the right to terminate any sublicense of Third Party Software at

8 NaviPlan Standard Reference Guide: Asset Allocation Assessment any time if EISI's right to sublicense such Third Party Software is terminated. The last day of the Term is called the Expiry Date. Shortly before the Expiry Date, EISI will send you an invoice for renewal fees for use of the Licensed Software (subject also to any changes that may be required to this Agreement, including with respect to EISI's continuing right to sublicense the Third Party Software) during the proposed renewal period. Upon payment being made, the Term will be extended for the renewal period. If you do not make payment, your license to use the Licensed Software will expire on the Expiry Date and all of your rights to use the Licensed Software shall come to an end. Upon termination of this License Agreement as a result of breach of any of its terms and conditions by you or expiry of the Term, you shall make no further use of the Licensed Software, shall purge same from any computer into which it has been installed, and shall destroy any copies thereof in your possession. In that event, EISI shall be entitled, but not obliged, to delete all information related to you that has been provided to it, including data and financial plans pertaining to your customers, to bar you from having access to the Web site and to any Licensed Software in the control of EISI. 8. WARRANTY DISCLAIMERS. (a) YOU ACKNOWLEDGE THAT EISI IS NOT IN THE BUSINESS OF PROVIDING ADVICE WITH RESPECT TO THE PREPARATION OF FINANCIAL PLANS AND THAT THE LICENSED SOFTWARE IS NOT ERROR FREE. THE LICENSED SOFTWARE IS PROVIDED "AS IS," AND YOU ARE USING THE LICENSED SOFTWARE AND THE ASP SERVICES ENTIRELY AT YOUR OWN RISK. NEITHER EISI, NOR ANY LICENSOR OTHER THAN EISI NOR ANY THIRD PARTY PROVIDER (WHICH INCLUDES SUCH PARTY AND ITS STOCKHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS) MAKE ANY REPRESENTATION OR WARRANTY: (A) THAT THE OPERATION OF THE LICENSED SOFTWARE SHALL BE UNINTERRUPTED OR ERROR FREE OR THAT ALL ERRORS IN THE LICENSED SOFTWARE WILL BE CORRECTED; (B) THAT FUNCTIONS CONTAINED IN THE LICENSED SOFTWARE THAT MAY BE SELECTED FOR USE BY YOU SHALL MEET YOUR REQUIREMENTS; (C) AS TO THE OPERATION, CAPACITY, SPEED, FUNCTIONALITY, QUALIFICATIONS, CAPABILITIES, ACCURACY, COMPLETENESS, SEQUENCE, TIMELINESS, RELIABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR MERCHANTABILITY OF THE LICENSED SOFTWARE OR ANY INFORMATION TO WHICH YOU HAVE ACCESS THROUGH THE LICENSED SOFTWARE OR ANY SERVICES, GOODS, PERSONNEL, OR RESOURCES PROVIDED; (D) AS TO THE MATERIALS, WORKMANSHIP, OR PERFORMANCE OF THE LICENSED SOFTWARE OR ASP SERVICES. (b) EISI, ANY LICENSOR OTHER THAN EISI, AND THE THIRD PARTY PROVIDERS HEREBY DISCLAIM ALL WARRANTIES, EXPRESS AND IMPLIED, WITH RESPECT TO THE LICENSED SOFTWARE AND THE ASP SERVICES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS, AND ANY WARRANTIES ARISING OUT OF COURSE OF DEALING OR COURSE OF PERFORMANCE. (c) THE ENTIRE RISK AS TO THE RESULTS AND PERFORMANCE OF THE LICENSED SOFTWARE IS EXPRESSLY ASSUMED BY YOU AND YOU ACCEPT FULL RESPONSIBILITY FOR ANY INVESTMENT DECISIONS OR STOCK TRANSACTIONS MADE BY YOU OR YOUR CUSTOMERS USING LICENSED SOFTWARE OR ASP SERVICES OR ANY INFORMATION AVAILABLE THROUGH THE LICENSED SOFTWARE. (d) In addition, neither EISI nor any Third Party Providers shall be liable, either in contract, tort, warranty, strict liability, negligence or under any statute, regulation, or any other theory for any losses or damages resulting from (i) unauthorized access, alteration, theft, corruption, or destruction of or to the User's Confidential Information or the User's or its customer's computer files, databases, network, transmission facilities, or equipment; or (ii) the content, accuracy, or quality of the data transmitted using the ASP Services. (e) Some states do not allow the exclusion of implied warranties, so the above exclusions may not apply to you. If such disclaimer of implied warranties is not permitted by law, the duration of any such implied warranties is limited to ninety (90) days from the date of your initial subscription. If an error in the Licensed Software is reported by you and is a result of a breach of the foregoing limited warranty, EISI's sole and exclusive obligation

9 License agreement under this paragraph, at EISI's option, shall be to (a) use reasonable commercial efforts to supply a workaround for the error, or (b) use commercially reasonable efforts to correct the error. 9. LIMITATION OF LIABILITY. (a) YOU EXPRESSLY AGREE THAT NONE OF EISI, ANY LICENSOR OTHER THAN EISI, OR ANY THIRD PARTY PROVIDER, SHALL BE LIABLE FOR YOUR USE OF THE LICENSED SOFTWARE. THE LIABILITY OF EISI, ANY LICENSOR OTHER THAN EISI, OR ANY THIRD PARTY PROVIDER UNDER THIS LICENSE AGREEMENT IS LIMITED TO THE CORRECTION OF ANY ERROR OR MALFUNCTION IN THE LICENSED SOFTWARE AND SHALL NOT INCLUDE LIABILITY FOR LOSS OF DATA, LOSS OF COMPUTER TIME, ANY DIRECT OR INDIRECT DAMAGES, OR ANY CONSEQUENTIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR SPECIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, LOST PROFITS OR LOST REVENUE, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT PRODUCT LIABILITY, OR OTHERWISE SUSTAINED BY THE USER OF THE LICENSED SOFTWARE, OR BY ANY THIRD PARTY WHO ADVANCES A CLAIM AGAINST EITHER EISI OR THE USER, HOWEVER CAUSED AND BASED ON ANY THEORY OF LIABILITY ARISING OUT OF OR RELATING TO THIS LICENSE OR THE USE OF THE LICENSED SOFTWARE, AND REGARDLESS OF WHETHER EISI WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES PRIOR TO OR AFTER THIS LICENSE CAME INTO EFFECT. IN NO EVENT SHALL EISI'S AGGREGATE LIABILITY TO YOU OR ANY THIRD PARTY IN CONNECTION WITH THIS LICENSE AGREEMENT EXCEED THE TOTAL FEES PAID TO EISI BY YOU FOR THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE IMPOSITION OF SUCH LIABILITY. (b) THE LIMITATIONS SET FORTH ABOVE SHALL BE DEEMED TO APPLY TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDIES. YOU ACKNOWLEDGE AND AGREE THAT YOU HAVE FULLY CONSIDERED THE FOREGOING ALLOCATION OF RISK AND FIND IT REASONABLE, AND THAT THE FOREGOING LIMITATIONS ARE AN ESSENTIAL BASIS OF THE BARGAIN BETWEEN EISI AND YOU. IF YOU DO NOT WANT TO ACCEPT THESE RISKS, DO NOT ACCESS, USE, OR INSTALL THE LICENSED SOFTWARE. (c) Some states do not allow some of the above limitations, so some of the above limitations may not apply to you. 10. INDEMNITY. The User will indemnify and save each of EISI, any Licensor other than EISI and Third Party, and its and their affiliates, officers and directors, harmless from and against all loss, liability, damage and expense, including reasonable legal fees, caused by the User or the User's officers, employees, agents, vendors, or contractors and arising from claims or demands: (a) for damages to property or for injury or death to persons, including without limitation any disability, death or Worker's Compensation benefits; (b) from data transmitted, received, or stored using the ASP Services by or through the User in violation of any of the provisions of this Agreement or any applicable law; (c) of infringement of a third party's proprietary rights based upon any information, materials, or access to same provided by the User; or (d) out of or relating to the conduct of the User's business, including without limitation, claims by any customer or end user of the User's products or services, and claims relating to the use by the User of the Licensed Software, ASP Services, or any work product therefrom. 11. CONFIDENTIALITY. (a) "User's Confidential Information" means non-public personal, confidential, private, or secret information of the User and the User's customers or clients in all material forms that is transmitted to or from EISI (or to or from a Third Party Provider) for processing or otherwise pursuant to this Agreement. The confidentiality of any communication or material transmitted by way of a Web site or cannot be guaranteed. Use of the Internet when disclosing User's Confidential Information carries the inherent risk of it becoming accessible to the public, and consequently, collected and used by others without the consent of the User. Neither EISI nor its Third Party Providers have any responsibility or liability for the security of User's Confidential Information transmitted by way of the Internet. The User shall not transmit Confidential Information to EISI pursuant to this Agreement unless the User employs encryption to mitigate the risk of disclosure or alteration of information in storage and transit.

10 NaviPlan Standard Reference Guide: Asset Allocation Assessment (b) The parties to this Agreement shall comply with their respective obligations pursuant to the Gramm-Leach-Bliley Act (United States of America) and the Personal Information Protection and Electronic Documents Act (Canada) (the "Privacy Laws"), as applicable. The policies and practices of EISI with respect to the privacy of User's Confidential Information are that no use thereof or disclosure to non-affiliated third parties will be made except: (i) (ii) (iii) to assist in the use of the Licensed Software by the User; to test and upgrade the Licensed Software incidental to the normal assistance to be provided to the User by EISI; to create statistical analyses for use by the User, EISI, and by others to whom the User has authorized EISI to provide such analyses. Subject as hereinafter provided, the only non-affiliated third parties to whom the User's Confidential Information may be provided by EISI are Third Party Providers who are engaged to process the User's Confidential Information, and who will be contractually bound to keep same confidential and to make no other use thereof. EISI shall ensure compliance by both EISI, any other Licensor, and any Third Party Provider with the Safeguards Rule implemented pursuant to the Gramm-Leach-Bliley Act, if applicable. Each of the User and EISI agrees to comply with the Privacy Laws applicable to its business, and represents to the other that it has implemented and will maintain policies, practices, and security measures as may be required pursuant to such Privacy Laws. (c) If the User is an employee, agent, or independent contractor associated with an employer, principal, or other organization that has an agreement with EISI under which EISI is to provide either statistical or other reports respecting the User's use of the Licensed Software or copies of plans prepared using the Licensed Software, the User consents to the provision thereof by EISI to such employer, principal or organization. 12. GENERAL. (a) Neither this License Agreement nor any rights granted herein may be assigned by you. (b) You are responsible for paying all federal, state, provincial, and local taxes that may be payable on account of the Licensed Software and for any service or product provided under this Agreement and all of them shall be paid when due. (c) You agree that you will comply with all applicable export laws with respect to the use of the Licensed Software. (d) If you have been licensed to use the Licensed Software by a Licensor other than EISI, then in consideration of EISI's having consented to your being licensed as such, EISI shall be entitled to enforce this License Agreement as if it had directly licensed the Licensed Software to you on the terms and conditions of this License Agreement. (e) If any one or more of the provisions of this License Agreement shall for any reason be held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the remaining provisions of this License Agreement shall be unimpaired and shall remain in full force and effect, and the invalid, illegal, or unenforceable provision shall be replaced by a valid, legal, and enforceable provision that comes closest to the intent of the parties underlying the invalid, illegal, or unenforceable provision. (f) The waiver by EISI of your breach of any provision of this License Agreement shall be in a signed writing, and shall not operate or be interpreted as a waiver of any other or subsequent breach by you. (g) To the extent that you are licensing the NaviPlan Software, this License Agreement, and any and all claims that may arise in connection with the Licensed Software, shall be governed by the substantive laws of the province of Manitoba and the laws of Canada applicable therein and the Court of Queen's Bench of Manitoba shall have exclusive jurisdiction of disputes arising under this License Agreement. To the extent that you are licensing the

11 License agreement Profiles Software, this License Agreement, and any and all claims that may arise in connection with the Licensed Software, shall be governed by the substantive laws of the State of California without giving effect to its conflict of law principles. The state and federal courts for the County of San Diego, California, shall have exclusive jurisdiction of disputes arising under this Agreement. (h) You hereby consent to and waive any objection to jurisdiction of and venue in such courts. If any action is commenced to enforce the terms or provisions of this License Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and costs incurred thereby. To the fullest extent permitted by law, each party hereby expressly waives (on behalf of itself and on behalf of any person or entity claiming through such party) any right to a trial by jury in any action, suit, proceeding, or counterclaim of any kind arising out of or in any manner connected with this Agreement or the subject matter hereof. (i) This License Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter, and they supersede all prior or contemporaneous oral or written agreements or understandings concerning the Licensed Software.

12 NaviPlan Standard Reference Guide: Asset Allocation Assessment

13 Contents Chapter 1: Using this guide... 1 The NaviPlan Standard Reference Guide Series... 2 Conventions used in the Reference Guide... 3 Essential Windows skills... 3 Finding more information... 4 Providing feedback... 9 Chapter 2: Asset Allocation Assessment Setting assumptions with user-defined asset allocation...12 Entering summary account and annuity information...15 Selecting detailed account entry...19 Entering detailed account information...21 Entering detailed annuity information...26 Overriding return rates for detailed accounts or annuities...31 Determining the clients investor profile...31 Generating reports...39 Glossary Index... 47

14 NaviPlan Standard Reference Guide: Asset Allocation Assessment

15 Chapter 1: Using this guide Chapter 1: Using this guide The NaviPlan Standard Reference Guide Series includes all the reference material you need for using NaviPlan Standard effectively. This chapter will help you use all guides in this series. More guides are available at In this chapter: The NaviPlan Standard Reference Guide Series... 2 Conventions used in the Reference Guide... 3 Essential Windows skills... 3 Finding more information... 4 Providing feedback

16 NaviPlan Standard Reference Guide: Asset Allocation Assessment The NaviPlan Standard Reference Guide Series The NaviPlan Standard Reference Guides are organized based on the tasks you can accomplish in each level. If you are a new NaviPlan Standard user, start with the Introduction guide. Reference guide Introduction Financial Assessment Asset Allocation Assessment Calculators Level 1 Level 2 Level 3 Tasks covered using NaviPlan Standard for the first time learning how to navigate NaviPlan Standard setting up user preferences creating and managing client engagements determining which plan or assessment level to select to enter financial information using the NaviPlan Standard workflow assessing your clients current financial situation entering account and annuity information determining your clients investor profile modeling specific aspects of your clients finances, such as retirement savings and debt management entering financial planning assumptions entering detailed net worth, cash flow, and insurance information analyzing your clients goals using Current Plan and Recommended side by side comparisons generating client reports Level 1 plus, adding holding details to accounts entering real estate assets conducting Monte Carlo simulations generating simple estate planning reports Level 2 plus, entering detailed estate planning information conducting detailed cash flow and net worth analyses 2 The NaviPlan Standard Reference Guide Series

17 Chapter 1: Using this guide Conventions used in the Reference Guide This Reference Guide uses the following conventions: NaviPlan Standard is used to identify content that applies to both NaviPlan Standard Online and NaviPlan Standard Offline. Content that only applies to one application is appropriately labeled. The names of items that are labeled on the NaviPlan Standard window are italicized. For example, The Clients page opens. The names of items you are instructed to select, click, or enter appear in bold. For example, Select Recommended, and then click OK. The names of sections, categories, and pages are separated by dashes ( ). For example, Go to the Client Management section Client List category Clients page. Essential Windows skills Figure 1: Client Management section Client List category Clients page This guide assumes that you know how to do the following tasks: Use the mouse (e.g., click, double click, right click, point, and drag) Move, resize, and close a dialog box Navigate within a dialog box and use scroll bars Choose menu commands and select options from dialog boxes and submenus If you are unsure about any of these Windows essentials, refer to the Microsoft Windows user documentation. Conventions used in the Reference Guide 3

18 NaviPlan Standard Reference Guide: Asset Allocation Assessment Finding more information If you have a question that is not answered in this guide, there are other places to look for additional information. Help The quickest way to get information about any command, dialog box, or item within NaviPlan Standard is to use the Help. Clicking next to the Help button reveals a list of other resources where you can obtain help. To access the Help, click the Help button at the top of the current window. OR Click the Help button at the top of the dialog box. Some dialog boxes do not have Help buttons. However, you can click the Help button on the underlying page to access Help, which discusses both the page and the dialog box. Navigating in Help When you click the Help button at the top of the NaviPlan window, Help appears for the page or report being displayed. You can also use the Search feature to find information. Help sections Help topics in NaviPlan are divided into sections that describe the related page, dialog box, report, or graph in different contexts. Clicking the arrow next to a heading reveals additional information below the heading. Help section Procedures Screen Details Report Details / Graph Details Description Contains a list of procedures. Each procedure contains step by step instructions that explain how to accomplish a task. This section is not available for reports and graphs. Contains a list of window or dialog box components. The Help for each component explains the various fields, buttons, and check boxes that appear on screen. Screen Details are not available for reports or graphs. Describes all the report or graph details that could appear for the given report or graph. These sections only appear in Help describing reports or graphs. 4 Finding more information

19 Chapter 1: Using this guide Help section Related Information Description Provides additional information, or access to additional information (through links), related to the page, dialog box, report, or graph in question. Links to Help Video Clips, functional documents, and other Help topics might be available. This section only appears when related information is available. Visit our Web site ( for information on NaviPlan products and solutions, and to access the latest news regarding NaviPlan development. NaviPlan Standard resources EISI provides several resources to help you use NaviPlan. In addition to online Help and telephone support, you can access resources from within NaviPlan and on the EISI Web site. EISI resource EISI User Services EISI Knowledge Base Description and location EISI s Technical Support department offers EISI User Services, which is an easy to use application that allows you to search for solutions to NaviPlan issues or to submit technical support requests. You can access EISI User Services from within NaviPlan or online at The EISI Knowledge Base is a database comprised of the following resources: support issues functional documents self study guides Training Video Clips frequently asked questions (FAQs) You can access the EISI Knowledge Base from within NaviPlan or online at Finding more information 5

20 NaviPlan Standard Reference Guide: Asset Allocation Assessment EISI resource Functional documents Training Video Clips Self study guides Live Web based training In person training NaviPlan Dialogs newsletter Release Notes Description and location In the Help, you can access links to the functional documents by clicking the Table of Contents tab, and then selecting NaviPlan Standard Functional Documentation. The links are organized by topic area. Functional documents explain NaviPlan functionality, underlying assumptions, and results calculations. You can access functional documents by searching the EISI Knowledge Base at NaviPlan Training Video Clips contain about 20 minutes of audio and visual instruction that you can observe on your computer. These clips are obtained from the Fundamentals, Intermediate, and Advanced NaviPlan Standard courses. You can access the Training Video Clips at You can go through the NaviPlan Standard training courses at your own pace using the self study guides. You can access the self study guides at You can have your questions answered by a NaviPlan Training Specialist in a virtual classroom setting. Register for live Web based training at If you require an interactive training experience, you may request in person training in your area. To arrange a session, please call (888) , option 5. Read NaviPlan Dialogs regularly for tips on using NaviPlan products effectively. This newsletter also provides details on available training options and features of new NaviPlan releases. The latest newsletter and archived editions are available at EISI Release Notes highlight new features and program upgrades in our latest NaviPlan Standard Online/Offline release. You can access the Release Notes at To access resources from within NaviPlan, follow these steps: 1. Click beside the Help button, and then select Support. The Support dialog box opens. 6 Finding more information

21 Chapter 1: Using this guide Figure 2: Support dialog box 2. Click the appropriate link. Your Web browser opens the applicable page. 3. Click Close. The Support dialog box closes. Phone support You can contact us by telephone at: (888) (Monday Friday, 7a.m. 7p.m. Central Time) Updates Using NaviPlan s Check for Updates feature, you can update to the current release within the same version (for example, to update from v11.2 to v11.2.1). If the update is a major change (that is, it involves a change in the version number, such as an upgrade from v11.2 to v11.3 or from v11.2 to v12.0), the upgrade may not available through Check for Updates. You will have to install the new version. To check for updates, follow these steps: 1. Click the Save button at the top of the window to save your work. 2. Click beside the Help button, and then select Updates. The Updates dialog box opens. Finding more information 7

22 NaviPlan Standard Reference Guide: Asset Allocation Assessment Figure 3: Updates dialog box 3. Click the Check for Updates button. NaviPlan Standard checks for current updates available online. After a few seconds, the NaviPlan Update dialog box opens. 4. Follow the instructions in the window that opens. If updates are available, NaviPlan shuts down, installs the updates, and then restarts. The About dialog box From within NaviPlan Standard, click beside the Help button, and then select About. The About dialog box opens. Using the tabs in this dialog box, you can determine what version of NaviPlan Standard you re using, or change the authorization status of your NaviPlan software. Figure 4: About dialog box Introduction tab 8 Finding more information

23 Chapter 1: Using this guide For further information, review the following: Information Disclaimer and copyright NaviPlan version number License agreement NaviPlan Standard Online and Offline license options Location About dialog box Introduction About dialog box Version tab About dialog box Licenses tab About dialog box Options tab Providing feedback If you have comments or suggestions for improving the NaviPlan Standard Reference Guides, you can send us feedback at When sending feedback, please mention the applicable guide, chapter, and section. We collect and review all feedback for future improvements. No direct response will be sent to you. Providing feedback 9

24 NaviPlan Standard Reference Guide: Asset Allocation Assessment 10 Providing feedback

25 Chapter 2: Asset Allocation Assessment Chapter 2: Asset Allocation Assessment Since asset allocation can determine the clients success in reaching financial goals, the Asset Allocation Assessment in NaviPlan Standard allows you to enter the clients accounts and create a suggested asset mix. If you have NaviPlan Standard with Ibbotson Asset Allocation, you can create a suggested asset mix in minutes by having your clients complete the asset allocation questionnaire. Note: This guide assumes that you have already used NaviPlan to create and open a client file and Asset Allocation Assessment. For information about creating and managing client files and Asset Allocation Assessments, see the NaviPlan Standard Reference Guide: Introduction. In this chapter: Setting assumptions with user defined asset allocation Entering summary account and annuity information Selecting detailed account entry Entering detailed account information Entering detailed annuity information Overriding return rates for detailed accounts or annuities Determining the clients investor profile Generating reports

26 NaviPlan Standard Reference Guide: Asset Allocation Assessment Setting assumptions with user-defined asset allocation The asset classes created here are only available to this Asset Allocation Assessment. Asset classes that are available to all plans and assessments are created using the User Preferences menu Asset Allocation Settings option. If you have NaviPlan Standard with user defined asset allocation, you can override any asset allocation defaults set in the User Preferences menu Asset Allocation Settings dialog box by making your changes in an individual Asset Allocation Assessment. To set asset allocation assumptions for an individual Asset Allocation Assessment, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Profile page. A suggested asset mix appears, which is based on the default investor profile that is defined on the User Preferences menu Asset Allocation Settings dialog box Portfolios tab. 2. At the top of the Profile page, click the Settings button. The Asset Allocation Settings dialog box opens to the Asset Classes tab. All asset classes entered in the User Preferences menu appear. 3. Under Asset Classes, enter additional asset classes you want to use in the Asset Allocation Assessment. For each asset class, enter a unique description such as Cash or Bonds, and then define the return rates and standard deviation values that apply. To change existing asset classes, click the asset class you want to change, and then enter the revised description or return rate information. To delete an asset class from the Asset Allocation Assessment, click the button. Figure 5: Asset Allocation Settings dialog box Asset Classes tab 4. Once you have made the required changes, go to the Correlations tab. Correlation measures how much you can expect 12 Setting assumptions with user-defined asset allocation

27 Chapter 2: Asset Allocation Assessment your clients investments to change in price relative to each other. Correlation works in the following manner: Correlation value Historical relationship of the two asset classes 1.0 The two assets move in exactly the same direction. 1.0 The two assets move in exactly the opposite direction. 0.0 The two assets have no relationship. Figure 6: Asset Allocation Settings dialog box Correlations tab 5. To change the correlation between two asset classes, enter the new correlation value at the intersection of a row and column for the two asset classes. The default value is updated. For example, to change the correlation between Large Cap Equity and Small Cap Equity, go to the field that intersects row B and column A, and then enter a new correlation value. 6. Go to the Investor Profiles tab. The investor profiles entered in the User Preferences menu Asset Allocation Settings dialog box appear under Investor Profiles. 7. Investor profiles should be added from lowest to highest risk tolerance. To add a new investor profile to the Asset Allocation Assessment, enter a name such as Conservative, and then click the Details button. The Investor Profile Details dialog box opens. 8. Enter the details of the new profile, and then click OK. The Investor Profiles Details dialog box closes. To edit the existing investor profiles, click the investor profile you want to change, and then make your changes. To delete an investor profile, click the button. Setting assumptions with user-defined asset allocation 13

28 NaviPlan Standard Reference Guide: Asset Allocation Assessment Figure 7: Asset Allocation Settings dialog box Investor Profiles tab 9. Go to the Portfolios tab. On this tab you can edit the composition of all possible investor profiles in the assessment. 10. Under Portfolio Criteria, select the investor profile you want to change, and then under Portfolio, enter the asset class percentages for this profile. 11. To revert to the default asset mix values entered on the User Preferences menu Asset Allocation Settings dialog box Portfolios tab, click Revert to Defaults. This button only appears when the default asset mix is overridden. If no default values exist, clicking this button deletes what you have entered without replacing it. Figure 8: Asset Allocation Settings dialog box Portfolios tab 14 Setting assumptions with user-defined asset allocation

29 Chapter 2: Asset Allocation Assessment Entering summary account and annuity information You can enter account information with holding details (detailed accounts) or without holding details (simple accounts). For simplified account entry, the Detailed Accounts button must not be clicked on the Asset Allocation section Asset Allocation category Accounts page. Only summary accounts (without holdings) can be entered in this analysis with the Detailed Accounts button not clicked. To enter a qualified or non qualified account or annuity into an Asset Allocation Assessment with simplified account entry, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Accounts page. Figure 9: Asset Allocation section Asset Allocation category Accounts page (Detailed Accounts button not clicked) If accounts are available in an XML file in your NaviPlan Standard Offline data directory and you want to include them in the plan, see Importing and updating accounts on page To add a new account entry, click the Add Account button. A new data entry row appears. 3. In the Description field, enter a unique name or account number to identify this account. 4. From the Account Type list, select the tax category of the account (such as Non Qualified or IRA). 5. If you are entering a 529 plan, select the donor and beneficiary. If you are entering an UTMA account, select the donor. By default, the owner changes to the first dependent entered in the client file. You can select another dependent. If you are entering an annuity, follow these steps: a) Select the Annuity check box. Under Additional Settings, the Details button changes to Annuity and additional fields appear for a variable annuity. b) Select an annuitant and a beneficiary, and then select the type of annuitization that applies. Entering summary account and annuity information 15

30 NaviPlan Standard Reference Guide: Asset Allocation Assessment For qualified accounts, you can enter the qualified basis. If you selected the Life Income income option, enter the postannuitization return rate. c) Click outside the dialog box or click the Hide link to return to the Accounts page. 6. From the Owner list, select the owner of the account. 7. In the Market Value field, enter the current market value of the account and, for non qualified accounts and annuities, enter its basis in the Basis field. 8. If the account is fully weighted in one asset class, select the asset class from the Asset Class Weightings list. OR If the account is weighted in multiple asset classes, select Manual Classification from the Asset Class Weightings list. The Asset Class Weightings Details dialog box opens. Assign percentages to various asset classes to equal 100%, and then click OK. 9. To override a selected asset class, under Return Rates, click the return rate link. The Account Return Rates dialog box opens. Select the Override check box, and then enter the applicable return rates for the account. Importing and updating accounts If accounts are available in an XML file in your NaviPlan Standard Offline data directory, you can import them into the plan. If the XML file contains account changes that occurred following the initial import, you can update the plan with these changes. To import and update accounts, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Accounts page. 2. If accounts are available to be imported from an XML file used for the current client file, click the Import Accounts button. OR If you are updating information for accounts that have already been imported, click the Update Accounts button. The Select XML File dialog box opens. 16 Entering summary account and annuity information

31 Chapter 2: Asset Allocation Assessment Figure 10: Select XML File dialog box 3. Select the XML file containing the accounts you want to import or update, and then click OK. The Import Accounts dialog box opens. Figure 11: Import Accounts dialog box (showing accounts ready to be imported) 4. If you are importing accounts, select the applicable Import check boxes OR If you are updating existing accounts that have been imported, select the applicable Update check boxes. 5. Click OK to import or update the accounts. All imported accounts appear under Imported Accounts on the Accounts page. Entering summary account and annuity information 17

32 NaviPlan Standard Reference Guide: Asset Allocation Assessment Figure 12: Asset Allocation section Asset Allocation category Accounts page (showing imported accounts) 18 Entering summary account and annuity information

33 Chapter 2: Asset Allocation Assessment Selecting detailed account entry You can enter account information with holding details (detailed accounts) or without holding details (simple accounts). By default, the Asset Allocation Assessment allows simplified account creation. On the Asset Allocation section Asset Allocation category Accounts page, you can update the Asset Allocation Assessment to use detailed accounts by clicking the Detailed Accounts button. If the Detailed Accounts button is... Clicked Not clicked NaviPlan Standard allows you to... Enter detailed accounts with holdings into the analysis. NaviPlan Standard also displays an Annuities page where you can enter detailed annuity information. Once you click the Detailed Accounts button, you cannot reverse the change. If you decide to promote the Asset Allocation Assessment to a plan, you may promote to either a Level 2 or Level 3 Plan. Enter summary account information without holdings. To select detailed data entry for accounts, follow these steps: 1. Open an Asset Allocation Assessment, and then go to the Asset Allocation section Asset Allocation category Accounts page. Figure 13: Asset Allocation section Asset Allocation category Accounts page 2. Click the Detailed Accounts button. A message appears notifying you that once you switch to detailed account entry, you cannot return to simplified account entry. To proceed with detailed account entry, click OK. The Asset Allocation category now includes the Annuities page. Selecting detailed account entry 19

34 NaviPlan Standard Reference Guide: Asset Allocation Assessment Figure 14: Asset Allocation section Asset Allocation category Accounts page (Detailed Accounts button clicked) 20 Selecting detailed account entry

35 Chapter 2: Asset Allocation Assessment Entering detailed account information The following information is for Asset Allocation Assessments that have the Detailed Accounts button clicked on the Asset Allocation section Asset Allocation category Accounts page. You can enter one account for each of your clients investments, or you can group similar holdings together within one account. You cannot combine qualified and non qualified holdings within the same account. Also, you cannot combine holdings owned by different people within the same account. To enter an investment account in an Asset Allocation Assessment after the Detailed Accounts button is clicked, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Accounts page. Figure 15: Asset Allocation section Asset Allocation category Accounts page 2. Click the Add Account button or click beside Add Account, and then select the type of account you want to create. A new dataentry row appears. 3. In the Description field, enter a unique name or account number to identify this account. 4. From the Account Type list, select the tax category of the account (such as Non Qualified or IRA). 5. From the Owner list, select the owner of the account. 6. In the Market Value field, enter the current market value of the account and, for non qualified accounts and annuities, enter its basis in the Basis field. 7. If the account is fully weighted in one asset class, select the asset class from the Asset Class Weightings list. If the account is weighted in multiple asset classes, select Manual Classification from the Asset Class Weightings list. The Asset Class Entering detailed account information 21

36 NaviPlan Standard Reference Guide: Asset Allocation Assessment Weightings Details dialog box opens. Assign percentages to various asset classes to equal 100%, and then click OK. If you have the Ibbotson Asset Allocation option and you want to search for asset class weightings for this account, you can search the Ibbotson Asset Allocation database as follows: a) From the Asset Class Weightings list, select Search. The Asset Class Weightings Details dialog box opens. b) Under Asset Class Weightings Options, select Use Asset Classifier Search. c) Under Search, enter the search criteria, and then click Search. If you are unsure of all the letters in a symbol or name, insert an asterisk (*) for wildcard searches. For example, to search for assets that begin with br, enter br* in the Ticker Symbol field. d) Under Results, select the appropriate asset, and then click OK. The Asset Class Weightings Details dialog box closes and NaviPlan populates the Description and Asset Class Weightings fields automatically. 8. To enter more details about the account, see the following procedures: Entering holdings on page 22 Setting up a 529 plan on page 24 Entering an UTMA or UGMA account (with detailed accounts) on page 24 If you select the Classified Holding option, the Asset Class Weightings Details dialog box opens. Go to step 4 b. Entering holdings To enter holdings into a detailed account, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Accounts page. If no holdings exists for an account, an Add button appears under Holdings. If holdings already exist for the account, the number of holdings appears as a link instead. 2. Under Holdings, click the Add button (or the numbered link) for the appropriate account. The Account Details dialog box opens to the Holdings tab. If you are creating the account s first holding, the default holding New Holding appears. 3. If user defined holdings already exist and you are adding new holdings to the account, click the Add Holding button for each new holding row you want to add or click beside Add Holding, and then select an option. 22 Entering detailed account information

37 Chapter 2: Asset Allocation Assessment If you are using NaviPlan Standard with user-defined asset allocation, this step does not apply. Figure 16: Account Details dialog box Holdings tab 4. If you know the symbols for the holdings you are adding, enter them in the Symbol field, and then click the Classify button. NaviPlan searches the Ibbotson Asset Allocation database for each symbol. When a match is found, NaviPlan populates the Description and Asset Class Weightings fields automatically. If the holding is fully weighted in one asset class, select the asset class from the Asset Class Weightings list. If the holding is weighted in multiple asset classes, select Manual Classification from the Asset Class Weightings list. The Asset Class Weightings Details dialog box opens. Assign percentages to various asset classes to equal 100%, and then click OK. If want to classify the holding and you don t know the symbol for a holding you are adding, from the Asset Class Weightings list, you can search the Ibbotson Asset Allocation database as follows: a) From the Asset Class Weightings list, select Search. The Asset Class Weightings Details dialog box opens. b) Under Asset Class Weightings Options, select Use Asset Classifier Search. c) Under Search, enter the search criteria, and then click Search. If you are unsure of all the letters in a symbol or name, insert an asterisk (*) for wildcard searches. For example, to search for assets that begin with br, enter br* in the Ticker Symbol field. d) Under Results, select the appropriate asset, and then click OK. The Asset Class Weightings Details dialog box closes and NaviPlan populates the Description and Asset Class Weightings fields automatically. 5. Enter the remaining details for each holding you added. 6. Go the Return Rates tab. The return rates that appear are based on the weighted asset class values for each holding in the account. Entering detailed account information 23

38 NaviPlan Standard Reference Guide: Asset Allocation Assessment 7. To manually set the return rates for the account, select the Override check box, and then enter the appropriate return rates and standard deviations. 8. When you are finished entering details for the account, you can proceed to another account by clicking the Next Entry or Previous Entry button, or click OK to close the dialog box. This procedure assumes you created a detailed account with the 529 Plan account type selected on the Accounts page. Setting up a 529 plan To set up a 529 plan, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Accounts page. 2. For the appropriate account, click the Details button. The Account Details dialog box opens. Additional fields appear which allow you to define the 529 plan. 3. Select the donor and the distributions beneficiary of the plan. The applicable dependent should be selected as the distributions beneficiary. Figure 17: Account Details dialog box (showing details for a 529 plan) This procedure assumes you created a detailed account with UTMA selected as the account type on the Accounts page. Entering an UTMA or UGMA account (with detailed accounts) UTMA (Uniform Transfers to Minors Act) and UGMA (Uniform Gifts to Minors Act) accounts are considered non qualified assets, and they allow your clients to gift money to their dependent(s). These nonqualified accounts can help fund future education costs. You must assign a dependent as the owner of the account, and then you can designate a client as the custodian of the account. To set up an UTMA account, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Accounts page. 24 Entering detailed account information

39 Chapter 2: Asset Allocation Assessment 2. For the appropriate account, click the Details button. The Account Details dialog box opens. 3. Go to the UTMA tab. Additional fields appear. The UTMA tab is available only if the account is a non qualified account and the owner is a dependent. Figure 18: Account Details dialog box UTMA tab 4. Select the UTMA Account check box, and then enter the details of the account. Entering detailed account information 25

40 NaviPlan Standard Reference Guide: Asset Allocation Assessment Entering detailed annuity information This section of the reference guide is for Asset Allocation Assessments that have the Detailed Accounts button clicked on the Asset Allocation section Asset Allocation category Accounts page. You can enter separate variable annuities into the Asset Allocation Assessment, or you can group annuity subaccounts together within one annuity. You cannot combine qualified and non qualified holdings within the same annuity. You cannot combine annuity subaccounts owned by different people within the same annuity. To enter a variable annuity in an Asset Allocation Assessment after the Detailed Accounts button is clicked, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Annuities page. 2. Under Annuities, click the Add Variable Annuity button. The Annuity Details dialog box opens. 3. Enter a unique description to identify this annuity, and then select an account type, plan owner, annuitant, and beneficiary. 4. From the Income Option list, select a type of annuitization (method for receiving annuity payments): Annuitization method Amount Certain Term Certain Life Income Withdrawals as Needed Guaranteed Withdrawal Benefit Calculation NaviPlan calculates the duration of annuity payments based on the payment amount. NaviPlan calculates the payment per $1,000 based on the number of years the annuity is set to pay out. NaviPlan calculates the payment per $1,000 based on the annuitant s life expectancy and the guaranteed number of years. Payments do not start automatically when the plan reaches the annuitization date. Instead, NaviPlan redeems funds from the annuity as needed to cover cash flow deficits occurring after the annuitization date. Payments are annual withdrawals that are guaranteed for the life of the owner. If the owner is Joint, payments are guaranteed until the first owner dies. Payments are guaranteed even if the value of the annuityʹs accounts are depleted. 26 Entering detailed annuity information

41 Chapter 2: Asset Allocation Assessment Figure 19: Annuity Details dialog box Holdings tab 5. Enter the general account market value, cost basis, and valuation date of the variable annuity. 6. On the Holdings tab, enter annuity subaccounts as explained in Entering annuity subaccounts on page 27. The total of the market values entered for the variable subaccounts displays in the Subaccounts Market Value field under Variable Annuity. 7. To enter annuitization details, complete the procedure Entering annuitization details on page To override the default return rates that apply to the annuity, complete the procedure Overriding return rates for detailed accounts or annuities on page 31. If you are using NaviPlan Standard with user-defined asset allocation, this step does not apply. Entering annuity subaccounts Variable annuities are made up of one general account and multiple subaccounts. The total of all subaccounts displays in the Subaccounts Market Value field. To enter annuity subaccounts, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Annuities page. 2. Under Annuities, click the Details button for the appropriate variable annuity. The Annuity Details dialog box opens. 3. Go to the Holdings tab. 4. If you know the symbol for the subaccount, enter it in the Symbol field, and then click the Classify button. NaviPlan searches the Ibbotson Asset Allocation database for the symbol. When a match is found, NaviPlan populates the Description and Asset Class Weightings fields automatically. Entering detailed annuity information 27

42 NaviPlan Standard Reference Guide: Asset Allocation Assessment If you select the Classified Subaccount option, the Asset Class Weightings Details dialog box opens. Go to step 6 b. If the subaccount is fully weighted in one asset class, select the asset class from the Asset Class Weightings list. If the subaccount is weighted in multiple asset classes, select Manual Classification from the Asset Class Weightings list. The Asset Class Weightings Details dialog box opens. Assign percentages to various asset classes to equal 100%, and then click OK. If you want to classify the subaccount and you don t know the symbol for the subaccount you are adding, from the Asset Class Weightings list, you can search the Ibbotson Asset Allocation database as follows: a) From the Asset Class Weightings list, select Search. The Asset Class Weightings Details dialog box opens. b) Under Asset Class Weightings Options, select Use Asset Classifier Search. c) Under Search, enter the search criteria, and then click Search. If you are unsure of all the letters in a symbol or name, insert an asterisk (*) for wildcard searches. For example, to search for assets that begin with br, enter br* in the Ticker Symbol field. d) Under Results, select the appropriate asset, and then click OK. The Asset Class Weightings Details dialog box closes and NaviPlan populates the Description and Asset Class Weightings fields automatically. 5. If you are adding new subaccounts to the variable annuity, click the Add Subaccount button for each new subaccount row you want to add or click beside Add Subaccount, and then select an option. If you are using NaviPlan Standard with user-defined asset allocation, this step does not apply. Figure 20: Annuity Details dialog box Holdings tab 6. If you know the symbols for the listed subaccounts, enter them in the Symbol fields, and then click the Classify button. NaviPlan 28 Entering detailed annuity information

43 Chapter 2: Asset Allocation Assessment searches the Ibbotson Asset Allocation database for each symbol. When a match is found, NaviPlan populates the Description and Asset Class Weightings fields automatically. If the subaccount is fully weighted in one asset class, select the asset class from the Asset Class Weightings list. If the subaccount is weighted in multiple asset classes, select Manual Classification from the Asset Class Weightings list. The Asset Class Weightings Details dialog box opens. Assign percentages to various asset classes to equal 100%, and then click OK. If you want to classify the subaccount and you don t know the symbol for the subaccount you are adding, from the Asset Class Weightings list, you can search the Ibbotson Asset Allocation database as follows: a) From the Asset Class Weightings list, select Search. The Asset Class Weightings Details dialog box opens. b) Under Asset Class Weightings Options, select Use Asset Classifier Search. c) Under Search, enter the search criteria, and then click Search. If you are unsure of all the letters in a symbol or name, insert an asterisk (*) for wildcard searches. For example, to search for assets that begin with br, enter br* in the Ticker Symbol field. d) Under Results, select the appropriate asset, and then click OK. The Asset Class Weightings Details dialog box closes and NaviPlan populates the Description and Asset Class Weightings fields automatically. 7. Enter the remaining details for each subaccount you added. 8. Go the Return Rates tab. 9. Under General Account, enter the pre annuitization return rate for the general account. 10. To override the return rate applied to variable subaccounts, under Variable Subaccounts, select the Override check box, and then revise the return rate and standard deviation. 11. When you are finished entering details for the variable annuity, you can proceed to another variable annuity by clicking the Next Entry or Previous Entry button, or click OK to close the dialog box. Entering detailed annuity information 29

44 NaviPlan Standard Reference Guide: Asset Allocation Assessment Entering annuitization details 1. Go to the Asset Allocation section Asset Allocation category Annuities page. 2. Under Annuities, click the Details button for the appropriate variable annuity. The Annuity Details dialog box opens. 3. Go to the Payout Options tab. The fields displayed will vary depending on the annuitization type. 4. Enter all applicable annuitization details. 30 Entering detailed annuity information

45 Chapter 2: Asset Allocation Assessment Overriding return rates for detailed accounts or annuities When asset class weightings are assigned to an account or holding, NaviPlan populates the return rate fields automatically. If you are entering an account or a variable annuity, you can override the return rates. To override calculated return rates for an account or annuity, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Accounts or Annuities page. 2. Click the Details button for the appropriate account or annuity. A dialog box opens. 3. Go to the Return Rates tab. NaviPlan Standard calculates the return rates and standard deviation values that apply to all annuity subaccounts or to all account holdings. 4. Select the Override check box. 5. If this is an annuity, under Variable Subaccounts, enter new return rate and standard deviation values. Figure 21: Annuity Details dialog box Return Rates tab 6. If this is an account, revise the pre retirement and retirement return rates where applicable. 7. Click OK to save your changes and close the Annuity Details or Account Details dialog box. Determining the clients investor profile The questionnaire in NaviPlan Standard with Ibbotson Asset Allocation determines your clients investor profile or suggested asset mix, and is used as an asset allocation target (a model to achieve) throughout the Asset Allocation Assessment. While completion of the Overriding return rates for detailed accounts or annuities 31

46 NaviPlan Standard Reference Guide: Asset Allocation Assessment The Questionnaire page is only available if you are using NaviPlan Standard with the Ibbotson Asset Allocation option. If you do not have this option, you need to determine the investor profile yourself. questionnaire is required, you can override the results or modify the suggested asset mix. To generate a proposed portfolio, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Questionnaire page. A list of questions appears to help you identify your clients investment profile. 2. Select your clients answers to all of the questions. NaviPlan Standard calculates risk scores based on the answers you provided, and then, based on the scoring results, recommends an investor profile. Figure 22: Asset Allocation section Asset Allocation category Questionnaire page. 3. Go to the Profile page. NaviPlan displays the asset mix suggested for clients with the calculated investor profile. 4. If you want to view the asset allocation risk scores for the investor profile, go to either the Questionnaire page or the Profile page, and then click the Scoring button at the bottom of the page. The Scoring Summary dialog box opens and displays the time horizon and investor profile that NaviPlan has calculated. Click Close to close the Scoring Summary dialog box. 5. If you want to view the asset classes, investor profiles, and portfolios defined by Ibbotson Asset Allocation, click the Settings button. The Asset Allocation Settings dialog box opens. Go to each tab to view the generated values, and then click Close to close the dialog box. 6. To generate an Asset Allocation report, see Generating reports on page 39 for more information. 32 Determining the clients investor profile

47 Chapter 2: Asset Allocation Assessment Overriding the investor profile If you do not feel that the investor profile accurately reflects your clients risk tolerance and you have appropriate permissions, after upgrading to Detailed Asset Allocation, you can override the investor profile in the following ways: by selecting a different investor profile by manually adjusting the weightings for the investor profile using the Weightings feature by using the Optimize feature to determine an optimal suggested asset mix using Ibbotson s mean variance optimization calculation To override the clients investor profile, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Profile page. NaviPlan displays the asset mix suggested for the clients with the calculated investor profile. If the Detailed Accounts button was not clicked on the Asset Allocation section Asset Allocation category Accounts page, the Detailed Asset Allocation button appears. Figure 23: Asset Allocation section Asset Allocation category Profile page (Detailed Asset Allocation button clicked) 2. If the Asset Allocation Assessment is using simple accounts only, click the Detailed Asset Allocation button, and then click OK to Determining the clients investor profile 33

48 NaviPlan Standard Reference Guide: Asset Allocation Assessment If you have NaviPlan Standard with user-defined asset allocation, you can override the investor profile without selecting a check box. If you do not have Ibbotson Asset Allocation, the Customize Asset Mix button will not appear on the Profile page. the message that appears. When using Detailed Asset Allocation, you can override the investor profile and enter accounts with holdings. 3. Select the Override Investor Profile check box, and then select another investor profile. The Profile page updates the asset class breakdown for the suggested asset mix. You can modify the suggested asset mix by clicking the Customize Asset Mix button, and then selecting either the Weightings option or the Optimize option. Select the Weightings option if you want to manually adjust the asset class weightings. Select the Optimize option if you want to use the Ibbotson Mean Variance Optimizer to generate a new portfolio based on an efficient frontier graph. 34 Determining the clients investor profile

49 Chapter 2: Asset Allocation Assessment Using the Weightings calculation To use the Weightings calculation, follow these steps: 1. Scroll down to the bottom of the Profile page, click the Customize Asset Mix button, and then select Weightings. The Asset Class Weightings dialog box opens. Asset classes with a zero percent weighting do not appear. Figure 24: Asset Class Weightings dialog box 2. Select Override default asset class weightings, and then enter the desired weightings. 3. Click OK. The Asset Class Weightings dialog box closes. The Profile page updates to display the new weightings. To revert to the original asset class weightings, on the Profile page, click the Customize Asset Mix button, and then select Revert to Defaults. Using the Optimize calculation To constrain the suggested asset classes, but still generate an optimal suggested asset mix, follow these steps: 1. Scroll down to the bottom of the Profile page, click the Customize Asset Mix button, and then select Optimize. The Optimize dialog box opens and displays the Efficient Frontier graph. For more information about this graph, see the Help. Determining the clients investor profile 35

50 NaviPlan Standard Reference Guide: Asset Allocation Assessment Figure 25: Optimize dialog box 2. To override the standard deviation, follow these steps: a) Select the Override Standard Deviation check box to manually enter a new standard deviation. Under Suggested, the Risk field becomes editable. b) Enter the standard deviation in the Risk field. Once a new standard deviation is entered, the graph updates to show the manually entered standard deviation. Note: Clicking a point on the Efficient Frontier line shows the return rate and standard deviation of that point. Double clicking at a certain point on the line of the Efficient Frontier graph selects that point as the new suggested asset mix. (Alternatively, clicking on the line to bring up a balloon message, and then pressing the ENTER key has the same effect as double clicking that point as the new suggested asset mix.) Use this process as an alternative to overriding the standard deviation manually. 3. Click the Individual Constraints button. The Individual Constraints dialog box opens. 36 Determining the clients investor profile

51 Chapter 2: Asset Allocation Assessment Figure 26: Individual Constraints dialog box 4. If applicable, clear the check boxes for asset classes that you want included in the suggested asset mix, or modify the mimimum and maximum weightings for the included asset classes. 5. In the large text field, if needed, enter the reasons for the exclusion. 6. Click OK to close the Individual Constraints dialog box. 7. Click OK to close the Optimize dialog box. The Profile page updates to display the new weightings. 8. To revert to the original asset class weightings, on the Profile page, click the Customize Asset Mix button, and then select Revert to Defaults. Comparing the current portfolio and suggested asset mix Before you generate Asset Allocation reports, you can compare the breakdown of the clients current asset mix with the suggested asset mix you defined in the Asset Allocation Assessment. Determining the clients investor profile 37

52 NaviPlan Standard Reference Guide: Asset Allocation Assessment Go to the Asset Allocation section Asset Allocation category Summary page. Two graphs appear on the page, as follows: Graph Current Asset Mix Details The current asset mix reflects the weighted asset mix of all accounts in the clients current portfolio. The text includes the expected rate of return and the expected standard deviation. Suggested Asset Mix With Ibbotson Asset Allocation, the suggested asset mix reflects the clients responses to the asset allocation questionnaire. If you don t have this option or you have overridden the suggested asset mix, the asset mix is based on your selection on the Profile page. The graph displays a proportional breakdown of the assets in the suggested asset mix. The text includes the proposed investor profile, time horizon, and the expected rate of return and expected standard deviation. 38 Determining the clients investor profile

53 Chapter 2: Asset Allocation Assessment Generating reports In the Asset Allocation Assessment, you can generate a detailed asset allocation report. The purpose of the Asset Allocation report is to demonstrate the effects of asset allocation on the clients portfolio returns. The clients current asset mix is calculated based on the clients existing accounts and related holdings. To generate an Asset Allocation client report, follow these steps: 1. Go to the Asset Allocation section Asset Allocation category Client Report page. Figure 27: Asset Allocation section Asset Allocation category Client Report page 2. Click the Select Document Sections button. The Select Document Sections dialog box opens. Figure 28: Select Document Sections dialog box 3. Select all sections you want included in the client report. 4. To view the subsections for a section, click the + beside that section. The list expands and subsections appear. Select or clear the check boxes for the appropriate subsections. 5. To reorder a section in the client report, click and drag the applicable section to an appropriate location in the list. Generating reports 39

54 NaviPlan Standard Reference Guide: Asset Allocation Assessment 6. To save your selections as a template for this type of client report, click the Save as Template button. The Save Template dialog box opens. Enter a name for the template, and then click OK. The Save Template dialog box closes. 7. Click OK. NaviPlan Standard saves your selections and the Select Document Sections dialog box closes. 8. To generate the report, click the Generate button. If you generated this report previously, this button appears as Regenerate. If you are using NaviPlan Standard Online, the Status column updates. See the following section for more information on viewing a report or viewing the status of other reports. Using the Client Report Monitor (Online) The Client Report Monitor allows you to continue using NaviPlan when generating time intensive client reports. Each time you click the Generate button for a client report, NaviPlan creates a request in the Client Report Monitor and generates the report. Generating client reports can take between a few seconds to a few minutes. The Client Report Monitor allows you to monitor your recent request and the requests for other client reports. You can only open reports with a Completed status. The Client Report Monitor is available from all the following areas: the Reports menu the Asset Allocation section Asset Allocation category Client Report page the Workflow section Status category Status page Figure 29: Client Report Monitor dialog box To use the Client Report Monitor, follow these steps: 1. Generate a client report, or from the Reports menu, select Client Report Monitor. The Client Report Monitor dialog box opens. 40 Generating reports