FPS Briefcase. User Guide

Transcription

1 FPS Briefcase User Guide

2 CCH Canadian Limited 2001 All rights reserved

3 SOFTWARE LICENSE AGREEMENT The Financial Planning Solutions software (the Software), including FPS 2000, FPS Briefcase, ROI Analyst, and Q-plan, is protected by copyright law. Do not use the Software until you have carefully read the following Agreement setting forth the terms and conditions of the non-exclusive limited license granted. If you use the Software, you agree to be bound by the terms and conditions of this Agreement. If you do not agree, you should promptly return the Software, including all media and documentation, to CCH Canadian Limited for a full refund. In no way is anyone permitted to dismantle, decompile, reverse engineer, or otherwise modify the Software or any part thereof. Unauthorized reproduction for any other purpose, or distribution of the Software or any portion of it is strictly prohibited. You may not give, rent, loan, sublicense, or otherwise distribute the Software or copies of it to any other person or organization. In addition, no part of any documentation may be used or reproduced in any form or by any means, without the written permission of CCH Canadian Limited. CCH Canadian Limited owns the Software, the media, and the accompanying documentation. No title in the Software, the media, logos, or the documentation is transferred to you by this Agreement. You have the right only to use the Software during the one-year subscription period for which the license is granted, subject to the terms and conditions set forth in this Agreement. You have the option of renewing your subscription at the end of the one-year period. If you choose not to renew, you must cease using the Software, and must also delete the Software from all computers to which it has been installed. This licensing agreement extends to the use of the Financial Planning Solutions software only. CCH Canadian Limited makes no representations whatsoever as to the licensing requirements of Microsoft Office. The single individual granted a non-exclusive limited license is the registered licensee. The registered licensee may install not more than three copies of the Software on three different computers. The Software may only be used for the benefit of the registered licensee, by the registered licensee and/or their support staff during the subscription period. Limited Warranty CCH Canadian Limited warrants the physical media and manuals to be free from defect. Should you discover any physical defects in the media or manuals, CCH Canadian Limited will replace them at any time during your subscription period. If you are not 100% satisfied with this Software, CCH Canadian Limited s entire liability and your exclusive remedy shall be either: (1) return of the Software, including all media and documentation to CCH Canadian Limited within 30 days for a full refund; or (2) replacement of the Software, and/or all media and documentation within the subscription period. Disclaimer of Warranties and Limitation of Liability THE SOFTWARE IS DESIGNED TO ENABLE FINANCIAL PLANNERS TO DEVELOP FINANCIAL PROJECTIONS AND TO ANALYZE AND MODEL VARIOUS SCENARIOS. CCH CANADIAN LIMITED HAS NO CONTROL OVER THE USE OF THE SOFTWARE. THE USER MAINTAINS FULL CONTROL OVER THE PROGRAM ASSUMPTIONS AND VARIOUS OTHER PARAMETERS, AND AS SUCH, IS SOLELY RESPONSIBLE FOR THE RESULTS OBTAINED THROUGH THE USE OF THE SOFTWARE. IN NO WAY SHOULD THE RESULTS BE CONSTRUED AS TAX, LEGAL, INVESTMENT, OR OTHER ADVICE FROM CCH CANADIAN LIMITED. THE SOFTWARE IS NOT GUARANTEED TO BE ERROR-FREE, ALTHOUGH EVERY EFFORT WILL BE MADE BY CCH CANADIAN LIMITED TO CORRECT ANY ERRORS DISCOVERED. IT IS AGREED THAT THE USER ASSUMES THE ENTIRE RISK OF USING THE SOFTWARE WITH ANY CLIENTS IN A PROFESSIONAL OR OTHERWISE ADVISORY CAPACITY. CCH CANADIAN LIMITED, ITS OFFICERS, DIRECTORS, AND EMPLOYEES SPECIFICALLY DISCLAIM ALL IMPLIED WARRANTIES, REPRESENTATIONS OR CONDITIONS, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, PERFORMANCE AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL CCH CANADIAN LIMITED BE LIABLE FOR DIRECT OR INDIRECT DAMAGES RESULTING FROM ANY DEFECT IN THE SOFTWARE OR ITS DOCUMENTATION, INCLUDING BUT NOT LIMITED TO, ERROR, OMISSION OR DEFECT, RESULTING IN, BUT NOT LIMITED TO, LOSS OF DATA, LOSS OF GOODWILL, DAMA GE TO OR REPLACEMENT OF EQUIPMENT.

4 Installation To install the software : Select your CD drive in the My Computer window and double-click setup.xls, or Select Run from the Start menu and browse your CD drive for the setup.xls file. Choose the FPS Briefcase Only option to install FPS Briefcase. When you launch FPS Briefcase, the Software Activation dialog box will appear. In the Software Activation dialog box, enter your name exactly as it appears in your Welcome letter. Next, enter the 15 digit Key Code provided and click Validate. To demo FPS 2000: Repeat the above installation procedure. Choose the FPS 2000 option to install all of the programs available on the CD for evaluation purposes. In the Software Activation dialog box that appears when you launch FPS 2000, click Demo Only. Microsoft Office Microsoft Excel 97 or 2000 is required to run the FPS software. The FPS programs were developed in MS Excel 97 to take advantage of the powerful calculation engine, as well as the superior programming features. Spreadsheets were specifically designed for financial analysis. There is no better platform for a financial planning package! As MS Office is the industry standard, most software and even hardware components are designed to be compatible with Microsoft. Our direct interface with MS Office is a major advantage to both us as developers, and to you our end-users. This translates into flexibility and ease-of-use, as well as high quality output. It also enables us to develop rapidly, while capitalizing on Microsoft s leading edge innovations. With the modular design of FPS 2000, we can quickly and easily add new features essentially as plug and play components. Many new components are planned for the coming months!

5 Introducing the FPS Software Each FPS program is made up of a series of fully integrated workbooks within the spreadsheet format of Microsoft Excel. There are three FPS programs; FPS 2000, FPS Briefcase, and Q-plan. These programs are designed to meet your planning needs at all levels, from basic single needs at point-of-sale to fully integrated, comprehensive planning. FPS Briefcase was developed to be your essential day-to-day tool. The program contains a collection of easy-to-use calculators built around a logically organized and comprehensive fact-finder that mirrors the data entry requirements of FPS The Briefcase tools enable you to perform various single needs calculations and analyses. Briefcase is not designed for integrated cash flow-based planning, however the Briefcase file provides the link to progressively more comprehensive planning tools. It can be opened in FPS 2000 or exported to Q-plan to enable you to move seamlessly to more integrated planning as required. Briefcase effectively connects your varied software requirements at the data gathering, single needs pointof-sale, and fully integrated planning levels. Q-plan was developed to facilitate cash flow-based planning at point-of-sale. Q-plan is effective for either total needs or single needs planning. The program is designed to guide you through a simple planning process to enable you to identify needs and develop solutions with an absolute minimum of time and effort. The process helps you to develop fully integrated plans in a logical and methodical manner. Basic plans can be completed with relative ease in less than half an hour. FPS 2000 is a highly sophisticated financial modeling tool, designed to provide you with analytical and illustrative capabilities far beyond those available anywhere else. The program facilitates virtually all areas of financial planning, offering the capabilities to be used with speed and precision for the simplest of needs, while providing the power and flexibility to deal with the most complex planning issues. The full integration of every aspect of every plan is automatic! The FPS software is also designed to facilitate the sharing of files among the three programs. Briefcase files can be opened in FPS 2000 or exported to Q-plan, and FPS 2000 includes an import utility to convert Q-plan files. The FPS software is a continuously evolving package. Our goal is to always be improving and advancing in a changing industry to ensure that our subscribers always have the finest tools at their disposal, while providing the highest level of support possible. We want to help make your job easier, so you have more time to do the things you do best!

6 Table of Contents Getting Started How to use FPS Briefcase...1 Program Operations Navigation...3 Assumptions & Defaults... 4 Managing files...5 Printing documents...5 Entering Data How to enter data...6 Data Notes...7 Using the Briefcase Calculators Investments Adjusting the display...8 Lifestyle Needs Projection...8 Sources of Income Projection... 9 Non-registered Investment Projection...10 Education Funding Projection...12 RRSP / RRIF Projection...14 Money Purchase Pensions...16 Mortgage vs RRSPs...18 Mortgage / Loan Projection...20 Retirement Income Needs...21 Survivor Capital Needs Disability Income Needs...26 Overview of the Investment Model...27 Return Assumptions...27 Investment Profile...31 Personal Risk Tolerance...31 Model Portfolios...33 Creating an Investment Database Developing an Investment Portfolio...36 Creating Custom Investments...39 Investment Variables...40 Category...40

7 Getting Started How to use FPS Briefcase Briefcase can be used as a data gathering tool, to create investment projections, to develop investment portfolios, or to analyze single needs situations such as retirement income or insurance needs, quickly and easily. Before you begin, click the button to verify the settings. Maximum data gathering The most effective way to use the program, is to: Start at the first page, Personal Information, and enter all pertinent information as you cycle through the data entry pages. Note: You can enter data in underlined cells only. All other cells are updated or calculated by Briefcase. When working in the document section, you must click a data entry button to access a page or open a user form that permits you to adjust a value in a cell that is not underlined. When you get to the Non-registered Investments page, click the complete a risk tolerance assessment. button to Continue cycling through the data entry pages, entering all pertinent information. Once the General Information questions on the second KYC page have been answered, click on the button to move to the document section. button to update all the documents, then cycle through the document section. You must click the button on the Retirement Income and Survivor Capital Needs pages to update the fields with red lines. You can use the calculators on the various documents for illustrative purposes or single needs analyses. Thorough data gathering will have provided you with all the information you require for the KYC form, as well as the basic data required by the calculators. Minimum preliminary data gathering You can also use the calculators in Briefcase without completing the data entry section, however there is a minimum of information that is always required. The yellow fields on the first two Personal Information data entry pages must be filled in, so that the clients names appear on all documents with their correct ages. 1

8 The Date of the Financial Plan automatically defaults to the current date, and all Values are assumed to be as of January 1 st of the current year by default. From the menu bar, select the calculator you wish to go to. Enter the data directly on the page and use the Solve tools and the adjustment tools. You can cycle through the section using as many calculators as you like, but you must enter all data for each calculator when you choose not to complete the data entry section. 2

9 Program Operations Navigation Navigating through Briefcase is very easy, as there are only two sections. The first section includes the data entry forms, and the second includes the documents with their related planning tools. In the data entry section, the buttons on the left hand side of your screen enable you to quickly go to any specific data entry page. The buttons on the right hand side of your screen are available in both sections, enabling you to navigate through the different document and data entry pages, as well as access user forms. The icon on each button indicates the action performed by that button: takes you to the related data entry page or opens a user form takes you to the associated graph document takes you to the associated ledger or text document takes you to the named investment allocation document takes you to the Risk Tolerance document 3

10 The easiest way to move from page to page within each section is to use the buttons on the button bar which cycle you through the various pages within each section. (These buttons will not take you from the data entry section to the document section and vice versa.) You can right click on the screen at any time to use the feature. You can also use the menu system to navigate or access data entry pages and forms. Whenever you click the button it automatically changes to a button which you can use to return to the page you were working on. To switch from a document relating to one spouse to the other spouse s document, simply click the button on the button bar with the spouse s name on it. It automatically switches to the other spouse s name to reflect that you are now on that spouse s document. Assumptions & Defaults You may wish to use different Return Assumptions and Earnings Allocation set tings than the Briefcase defaults simply by changing the settings any time you start a new file. You may find it easier however, to create and save your own default files. You can save as many default files as you wish. To create a default file, change the settings, then save the file as a client file with an appropriate name, such as defaults working couple.xls. In addition to the default values in Assumptions, you may also wish to adjust the Defined Benefit Pension and Planning Needs settings. Simply select a default file using File Open before you begin to work on each new client file. 4

11 FPS 2000 users If you are an FPS 2000 user you don t have to create custom default files in Briefcase, as you can choose to use your FPS 2000 custom default files. Select File New and choose your default file before you begin to work on a new client file. Managing files Briefcase files are automatically saved as FPS 2000 files. You can load and work on Briefcase files in FPS 2000 and vice versa, as they are one and the same. This enables you to move seamlessly into comprehensive cash flow based planning. If you don t have FPS 2000, you can export Briefcase files for use in Q-plan, so you can still do integrated cash flow based planning. Select File Export to convert a Briefcase file. The process creates an.xlq file with the same name. Some of the data collected in Briefcase is not used by Q-plan, while other data is adjusted for Q-plan s use: Return assumption indexes are entered net of MERs Joint non-registered accounts are merged into the clients individual accounts according to the percentage ownership Personal and spousal RRSPs are combined Money purchase pension values are merged into the RRSP accounts The converted Q-plan file cannot be opened in Briefcase, however the original Briefcase file is saved for re-use. Printing documents The button in the data entry section opens a user form that enables you to print a hard copy Fact Finder, Client Data, which is a completed fact finder, or the Data Notes that you have entered. 5

12 The button in the document section prints the displayed document. Select File Print Preview to view the document before printing. Select File Print from anywhere in the program, to open a tabbed user form that enables you to choose all of the forms and documents that you wish to print. Entering Data How to enter data The data entry section in FPS Briefcase mirrors the data entry requirements of FPS There are very few user forms*. To enter data, click on any field on a displayed page and type in the required text or value. Use the Tab key to move from one field to the next. You can only enter values in fields that are underlined. All other fields are calculated by the program. After you make an in-cell entry, you must click outside of the cell before you can use any controls. *A Solve user form enables you to enter specific parameters for a Solve calculation. The only other user forms in the program are in the KYC section, for risk tolerance assessment and the modeling of investment portfolios. These facilities are accessed by clicking their corresponding buttons on the button bar. 6

13 When you thoroughly complete the data entry section in Briefcase, you have all of the information necessary for a KYC form, which is created automatically. (See How to use FPS Briefcase) Data Notes The Data Notes page provides you with a place to record explanations or further elaborate on the basic data entered. To access the page, click the button from within the data entry section. You can get there from within the document section by selecting Data Data Notes from the Briefcase menu. Click on a cell on the left hand side, then select the relevant category for the note you are going to record. Note: In addition to selecting from the pre-defined categories in the drop-down menu, you can also create your own category listings. Simply type the desired title in the blank cell. Type the note in the cell to the right. button to return to the page you were on. You can use the form. button to print the page or select Data Notes on the Data tab of the Print user 7

14 Using the Briefcase Calculators Adjusting the display The graphs in FPS Briefcase display 60 years, by default*. The ledgers show the values for each of the first 35 years, then show the next 25 years at 5 year intervals (i.e. 40, 45, 50, 55, and 60). You can change the display by selecting the number of years you wish to show from the control on the button bar, in the document section. When you make a change to one document, all are automatically updated to reflect the change. *Except for the Disability projection, which displays up to 40 years. Your selection on the Disability page also does not affect the number of years displayed on the other documents. Lifestyle Needs Projection The Lifestyle Needs document is a graphical representation of your clients total lifestyle need including debt service. parameters. You might also want to Assets data entry page. button to go to the Real Estate data entry page to adjust mortgage cycle forward from there to further adjust debts on the Other Both Current and Retirement lifestyle needs, in the first year of retirement, are shown. The values are automatically indexed at your assumed rate of inflation. You can adjust the Index by typing in a value to be added to, or subtracted from, the inflation rate (i.e. +/- CPI). The bar graph compares current lifestyle needs with the inflation adjusted lifestyle need in the first year of retirement. As the retirement values are inflation adjusted, they will not be the same as the values on the ledger, which are the actual future dollars. Reduce Lifestyle Needs You can illustrate a reduction in lifestyle need in the future. 1. In the Reduction field, enter the percentage by which the need is to be reduced. 2. Use the spinner controls to adjust to the age at which the need will be reduced. button to go to the Lifestyle Needs data entry page. 8

15 Sources of Income Projection The Sources of Income documents summarize and project your clients income from all sources. A quick review of the documents also enables you to confirm the accuracy of the data entry. There is a document for each spouse. button to switch between spouses. streams. button to go to the Sources of Income data entry page to adjust income button to go to the Defined Benefit Pension data entry page to adjust Current Pension and/or Other Pensions. The bar graph compares current income with the inflation adjusted income projected for the first year of retirement. Employment Income Enter the index rate to be applied on Employment Income. CPP / OAS The inflation adjusted value of government benefits in the first year of eligibility is shown. As the values are inflation adjusted, they will not be the same as the values on the ledger, which are the actual future dollars. Other Income Other Income amounts are indexed at your inflation assumption when Index is checked on the data entry page. Use the spinner controls to adjust the age to which each Other Income source is payable. Assumed Income Tax Rates Enter the assumed tax rates in the Working years and Retirement years. The rates are reflected on both graphs. 9

16 Non-registered Investment Projection The Non-registered Investment document projects the value of a portfolio based on a selected asset allocation. You can choose to use the Current allocation of your client s portfolio or the Recommended allocation based on their risk tolerance assessment. There is a document for each spouse with a non-registered account. switch between spouses. button to Your client s Current allocation appears on the document automatically. Click if it is not displayed. At this point, the projection graph is based on the calculated Weighted Return of the Current portfolio. (The balance is represented by a line graph associated with the values on the right axis for scaling.) button to show the Recommended portfolio. The first Recommended allocation is automatically effective in the first year of the projection. A second series of Recommended allocation values enables you to show an adjustment to the allocation of the portfolio at any point in the future. Simply type in the age at which the realignment should take place. You can also type in changes to both recommended allocations. To base the projection graph on the Recommended allocations, select Recommended from the drop-down menu on the button bar. This control enables you to quickly switch back and forth between the two, for illustrative purposes. The projection graph adjusts itself based on the calculated Weighted Return of the Recommended portfolio. You can illustrate the effect of a change in the return of the portfolio, up or down, using the control to the right. button to reset the adjustment control to 0. Deposits and Withdrawals The controls at the bottom of the page enable you to enter deposit and withdrawal streams, and the Solve tool enables you to solve for specific deposits and withdrawals. Deposits and withdrawals may be entered as Monthly or Annual, and may be assumed to take place on the First day or Last day of the selected period. Make your selections from the in-cell drop-down menus. These parameters have a major impact on the outcome of the projection. 10

17 Type in the planned deposits and/or withdrawals. Select the age to which deposits should continue and/or the age at which withdrawals are to begin, using the spinner controls. Enter the desired Index on the deposits and/or withdrawals. Enter the assumed Marginal tax rates to be applied in the Accumulation years and the Withdrawal years. button to update the document. At this point you can use the controls to show the results using different asset allocation assumptions, or by adjusting the return. The Solve Tool You may wish to enter either the planned deposit stream or the desired withdrawal stream, and solve for the unknown value. Enter either the planned deposit stream or the desired withdrawal stream. Select the option button for the value you wish to solve. button. In the Solve user form, Select the age being solved. Enter the desired account balance at the selected age. Click Solve. Click Close, or adjust the parameters and execute the Solve procedure again. The calculated result is entered and applied on the document. button to go to the Non-registered Investments data entry page. button to go to the Non-registered Investments ledger. button to open the Risk Tolerance user form. button to open the Investment Details user form. 11

18 Education Funding Projection The Education Funding calculator enables you to solve for the accumulation needs to meet education funding goals based on a selected asset allocation. The asset allocation selection functions are the same as on the Non-registered Investment document. Education Savings Deposits to the education savings plan may be entered as Monthly or Annual, and may be assumed to take place on the First day or Last day of the selected period. Type in the planned deposits. Select the age to which deposits should continue, using the spinner controls. Enter the desired Index on the deposits. button to update the document. Marginal tax rate Enter a Marginal tax rate if you are going to illustrate an In-trust account. Education Expenses Select the Type of plan from the drop-down menu. The plan can be an In-trust account or an RESP, in which case the CESG would be included in the calculations. The Grant is calculated based on your selections on the Dependants data entry page. Enter the Annual tuition to be funded, in today s dollars. Enter any additional desired amount for Monthly living expenses, also in today s dollars. Enter the assumed Index rate by which the expenses and/or tuition are expected to increase. Select the age at which each Dependant will start drawing on the funds, using the spinner controls. Select the number of years for which each Dependant will require funding, using the spinner controls. button to update the document. At this point you can assess whether or not your clients are on target to meet the need. You can use the controls to see the results of using different asset allocation assumptions, or by adjusting the return to reach the accumulation goal. 12

19 The Solve Tool With the desired asset allocation strategy selected, you can use the Solve tool to determine the exact deposit required to meet the need. Enter the Annual tuition and Monthly living expense to be funded. Select the Amount option button as the value you wish to solve. button. In the Solve user form, Select the age at which the last dollar will be needed. Enter 0 as the desired account balance at that time. Click Solve. Click Close, or adjust the parameters and execute the Solve procedure again. The calculated result is entered and applied on the document. You can also solve hypothetical questions based on a specific deposit, such as; How much annual tuition will the accumulation support? Enter the planned deposit stream. Enter the Monthly living expense to be funded. Select the Annual tuition option button as the value you wish to solve. button. In the Solve user form, Select the age at which the last dollar will be needed. Enter 0 as the desired account balance at that time. Click Solve. 13

20 Or How much will be available after tuition to fund monthly living expenses? Enter the planned deposit stream. Enter the Annual tuition to be funded. Select the Monthly living expense option button as the value you wish to solve. etc button to go to the Education Savings data entry page. button to go to the Education Savings ledger. button to open the Risk Tolerance user form. button to open the Investment Details user form. button to go to the Dependants data entry page. RRSP / RRIF Projection The RRSP / RRIF document projects the value of a portfolio based on a selected asset allocation. You can choose to use the Current allocation of your client s portfolio or the Recommended allocation based on their risk tolerance assessment. There is a document for each spouse with an RRSP account. between spouses. button to switch Your client s Current allocation appears on the document automatically. Click if it is not displayed. At this point, the projection graph is based on the calculated Weighted Return of the Current portfolio. (The balance is represented by a line graph associated with the values on the right axis for scaling. A line graph associated with the left axis tracks RRIF minimum.) button to show the Recommended portfolio. 14

21 The first Recommended allocation is automatically effective in the first year of the projection. A second series of Recommended allocation values enables you to show an adjustment to the allocation of the portfolio at any point in the future. Simply type in the age at which the realignment should take place. You can also type in changes to both recommended allocations. To base the projection graph on the Recommended allocations, select Recommended from the drop-down menu on the button bar. This control enables you to quickly switch back and forth between the two, for illustrative purposes. The projection graph adjusts itself based on the calculated Weighted Return of the Recommended portfolio. You can illustrate the effect of a change in the return of the portfolio, up or down, using the control to the right. button to reset the adjustment control to 0. Deposits and Withdrawals The controls at the bottom of the page enable you to enter deposit and withdrawal streams, and the Solve tool enables you to solve for specific deposits and withdrawals. Deposits (contributions) and withdrawals may be entered as Monthly or Annual, and may be assumed to take place on the First day or Last day of the selected period. Make your selections from the in-cell drop-down menus. These parameters have a major impact on the outcome of the projection. Type in the planned contributions and/or withdrawals. Select the age to which contributions should continue and/or the age at which withdrawals are to begin, using the spinner controls. You can also select an age at which to start a RRIF, which by default starts at age 69. Enter the desired Index on the contributions and/or withdrawals. button to update the document. At this point you can use the controls to show the results using different asset allocation assumptions, or by adjusting the return. 15

22 The Solve Tool You may wish to enter either the planned deposit stream or the desired withdrawal stream, and solve for the unknown value. Enter either the planned deposit stream or the desired withdrawal stream. Select the option button for the value you wish to solve. button. In the Solve user form, Select the age being solved. Enter the desired account balance at the selected age. Click Solve. Click Close, or adjust the parameters and execute the Solve procedure again. The calculated result is entered and applied on the document. button to go to the Registered Investments data entry page. button to go to the Registered Investments ledger. button to open the Risk Tolerance user form. button to open the Investment Details user form. Money Purchase Pensions The Money Purchase Pension document projects the value of a LIRA based on a selected asset allocation. You can choose to use the Current allocation of your client s portfolio or the Recommended allocation based on their risk tolerance assessment. There is a document for each spouse with a LIRA account. between spouses. button to switch 16

23 Your client s Current allocation appears on the document automatically. Click if it is not displayed. At this point, the projection graph is based on the calculated Weighted Return of the Current portfolio. (The balance is represented by a line graph associated with the values on the right axis for scaling. A line graph associated with the left axis tracks RRIF (LIF/LRIF) minimum.) button to show the Recommended portfolio. The first Recommended allocation is automatically effective in the first year of the projection. A second series of Recommended allocation values enables you to show an adjustment to the allocation of the portfolio at any point in the future. Simply type in the age at which the realignment should take place. You can also type in changes to both recommended allocations. To base the projection graph on the Recommended allocations, select Recommended from the drop-down menu on the button bar. This control enables you to quickly switch back and forth between the two, for illustrative purposes. The projection graph adjusts itself based on the calculated Weighted Return of the Recommended portfolio. You can illustrate the effect of a change in the return of the portfolio, up or down, using the control to the right. button to reset the adjustment control to 0. Deposits and Withdrawals The controls at the bottom of the page enable you to enter deposit and withdrawal streams, and the Solve tool enables you to solve for specific deposits and withdrawals. Employee and Employer contributions are entered as monthly only, on the Money Purchase Pension & LIRA data entry page. (You cannot change the deposit Frequency on the document.) Withdrawals may be entered as Monthly or Annual. Deposits and withdrawals may be assumed to take place on the First day or Last day of the selected period. Make your selections from the in-cell drop-down menus. Select the type of plan to be illustrated; either a Locked-in RRIF or a Life Income Fund. Type in the planned withdrawals. You can enter a planned dollar amount in either today s dollars or in future dollars. Make the selection from the Inflation adjustment drop-down menu. You can also choose to have Briefcase automatically calculate maximum withdrawals. Select the age to which contributions should continue and/or the age at which withdrawals are to begin, using the spinner controls. Briefcase automatically calculates the minimum withdrawal from the age at which the plan begins. Enter the desired Index on the withdrawals. button to update the document. 17

24 At this point you can use the controls to show the results using different asset allocation assumptions, by adjusting the return, or by illustrating various withdrawal plans. button to go to the Money Purchase Pension & LIRA data entry page. button to go to the Money Purchase Pension ledger. button to open the Risk Tolerance user form. button to open the Investment Details user form. Mortgage vs RRSPs The Mortgage vs RRSPs calculator enables you to compare the benefit of making additional payments on a mortgage, or any other debt, against contributing the additional amount to an RRSP, assuming the necessary contribution room is available. Mortgage Values Begin by selecting the mortgage or debt to be used in the analysis from the drop-down menu on the button bar. If you have not entered any mortgages or debts in the data entry pages, simply type the debt parameters in the Mortgage Values fields. Payment period and Compound period can be selected from the in-cell drop-down menus. Debts entered in the data entry pages are all entered with monthly payments. Select an alternate Payment period, if desired. Select the correct Compound period from the in-cell drop-down menu. The compound period determines how the mortgage is calculated. For Canadian mortgages, for example, the standard is Semi Annual. RRSP Values Enter the amount of the additional payment(s). The Number of years for a single lump sum amount is, of course, 1. You can use the spinner controls to select the number of years to analyze annual additional deposits over a period of years. Additional payments are always assumed to be made annually at the start of a year. 18

25 The tax advantage of the RRSP contribution is taken into account in the analysis. It is assumed on the RRSP contribution side of the analysis, that the contributor deposits the additional payment plus the resulting tax savings. Enter the Marginal tax rate for the gross-up calculation. On the accelerated mortgage payment side, the mortgage payments that would have to have been made, had the mortgage not been retired early, are in turn contributed to the RRSP. Refer to the ledger for full details of the calculations. Enter the assumed rate of return on the RRSPs. You can also Solve the return amount. (See below.) Summary of RRSP balances Briefcase automatically calculates the comparative results of accelerating repayment of the debt versus contributing to the RRSP, in terms of the accumulated value in the RRSP account at Mortgage term, at Retirement, and at Age 69. Briefcase calculates the RRSP enhancement which is the percentage amount by which the ultimate accumulation is better or worse for having made the additional payments to the RRSP. The Solve Tool The Solve tool enables you to solve for the balance, payment, or interest rate. Enter two of the parameters to solve for the third parameter. button. In the Solve user form, Select the Term of the loan. Click Solve. Click Close, or adjust the parameters and execute the Solve procedure again. You can also Solve for the RRSP annual return. Select the option button, then click the button. Briefcase calculates the RRSP return that yields an identical result in both scenarios. This tells you how much you have to earn in the RRSP for it to be the preferred choice. Click button to go to the Real Estate data entry page next to get to the Other Assets & Debts data entry page, or use the menu to navigate. button to go to the Mortgage vs. RRSPs ledger. 19

26 Mortgage / Loan Projection The Loan Schedule document illustrates Loans and Mortgages, enabling you to quickly project when a debt will be retired. Begin by selecting the debt to be illustrated. Briefcase draws in the balance, payment, and interest rate parameters from the relevant data entry page. (i.e. Real Estate, or Other Assets & Debts) All payments are entered as Monthly on the data entry pages, however on the document you can select various payment periods from the in-cell drop-down menu. Select the Compound Period from the drop-down menu. The compound period determines how the mortgage is calculated. For Canadian mortgages, for example, the standard is Semi Annual. Payment Options You can select Payment as a % of balance and enter a Minimum monthly payment to illustrate a revolving credit account. The Solve Tool The Solve tool enables you to solve for the balance, payment, or interest rate. Enter two of the parameters to solve for the third parameter. button. In the Solve user form, Select the Term of the loan. Click Solve. Click Close, or adjust the parameters and execute the Solve procedure again. Click button to go to the Other Assets & Debts data entry page next to get to the Real Estate data entry page, or use the menu to navigate. button to go to the Loan Schedule ledger. 20

27 Retirement Income Needs The Retirement Income Needs calculator enables you to solve for your clients systematic savings need to meet their retirement income goals. You can also solve for the lump sum capital need at retirement. The Asset Allocation feature enables you to solve for the need using your clients Current asset allocation or a Recommended strategy. There is no Solve user form for this calculator. Simply click the desired option based on the selected asset allocation and all other parameters. button to solve the button to enter all values in the cells underlined in red. This includes not only the Current asset allocation data, but also the income data from the various areas of the program. The income data controls are at the bottom of the page. The Update function restores all data fields on the page, so other changes can be lost when it is used after you have adjusted the data. Pension Income Briefcase automatically enters the estimated Defined Benefit Pensions entered on the data entry page. You can adjust all three values, amount, index, and start age. Other Pension Incomes are not imported. They must be entered manually in the Other Income field. Government Benefits CPP benefit parameters as entered on the Sources of Income data entry page are entered automatically when you click Update. Other Income Other Income amounts from the Sources of Income data entry page and Other Pension Income amounts are not imported when you update. They must be combined and entered as a single amount in the Other Income field on the calculator page. If any of the Other Income amounts is a non-taxable amount, it should be grossed up as the income is taxed at the Average Tax Rate entered. Retirement Goals The Retirement Age is drawn from the Personal Information data entry page. (Client s age is used.) The Lifestyle Need parameters are drawn from the Planning Needs data entry page. All of these values can be adjusted as needed. The Reduction to Needs feature enables you to illustrate a reduction in lifestyle need at some point in the future. Enter the percentage by which the need is to be reduced, and the age at which the reduction is to be illustrated. 21

28 Taxation Assumptions The Marginal Tax Rate is applied to non-registered accumulations. The Average Tax Rate is applied to income from all sources in retirement. The projection graph is presented in after-tax dollars. Asset Allocation Your client s Current allocation appears on the document automatically. Click if it is not displayed. The amounts represent the combined total of both spouses registered and non-registered accounts, including LIRAs. The projection graph compares projected income from all sources after tax, including pensions and investment income, with your clients desired retirement income goal. It is initially based on the calculated Weighted Return of the Current portfolio. tolerance assessment. button to show the Recommended portfolio based on the risk The first Recommended allocation is automatically effective in the first year of the projection. A second series of Recommended allocation values enables you to show an adjustment to the allocation of the portfolio at any point in the future. Simply type in the age at which the realignment should take place. You can also type in changes to both recommended allocations. To base the projection graph on the Recommended allocations, select Recommended from the drop-down menu on the button bar. This control enables you to quickly switch back and forth between the two, for illustrative purposes. The projection graph adjusts itself based on the calculated Weighted Return of the Recommended portfolio. You can illustrate the effect of a change in the return of the portfolio, up or down, using the control to the right. button to reset the adjustment control to 0. Registered / Non-registered Allocation Briefcase automatically calculates the percentage of the total current investment assets that is registered. The percentage is displayed for feedback only. As the planned systematic savings amount you will enter in the Amount field represents combined registered and non-registered deposits, In the % of Savings Registered field, enter the percentage of the systematic savings that is to be registered. 22

29 Systematic Investment Savings Savings may be entered as Monthly or Annual, and may be assumed to take place on the First day or Last day of the selected period. Systematic savings continue to retirement age. Make your selections from the Frequency / Timing in-cell drop-down menus. Enter the planned systematic investment amount (combined registered & non-registered) and the Index on the planned savings, if any, or Select the option button if you wish to solve for the amount of savings required. With the Current allocation selected, click to find out the necessary amount of systematic savings your clients must commit to, if they are to meet their goals. Switch to your recommended allocation, then solve again. You can perform numerous quick solve calculations as you make changes to the various parameters. Lump Sum Deposit at Retirement The Lump Sum Deposit feature enables you to include anticipated windfalls such as an inheritance, a retiring allowance, or the accumulated cash value in a life insurance contract. Enter the anticipated lump sum amount as either Registered or Non-registered, as appropriate. You can also solve for a registered or non-registered lump sum need: Enter your clients planned systematic investment in the Amount field. Enter the percentage of the systematic savings that is to be registered. Select the Lump Sum Deposit you wish to solve; either Registered or Non-registered. Enter any anticipated lump sum windfall in the other field, if any. Click button to go to the Retirement Income Needs data entry page. button to go to the Retirement Income Needs ledger. button to open the Risk Tolerance user form. button to open the Investment Details user form. 23

30 Survivor Capital Needs The Survivor Capital Needs calculator enables you to calculate today s life insurance need for each spouse, and illustrate the long-term consequences of a shortfall. There is a document for each spouse. button to switch between spouses. button to enter all values in the cells underlined in red. This includes income from all sources and lifestyle needs as entered on the various data entry pages, as well as return and inflation assumptions. If you did not complete the data entry pages, you can enter all values directly incell. The Update function restores all data fields on the page, so other changes can be lost when it is used after you have adjusted the data. To calculate today s capital deficiency, Briefcase compares the total Capital Need to available Sources of Capital. Capital Needs 1. Briefcase calculates the present value of the Monthly Income Need (survivorship need) for both the working and retirement years. These two amounts are added to the Lump Sum Needs, as entered on the Planning Needs data entry page to make up the total Capital Need in the event of the spouse s death. Sources of Capital 2. Briefcase then calculates the present value of all available Sources of Capital, including assets, life insurance benefits, and the present value of income from all sources that would continue to the survivor. 3. The difference between the total Capital Need and all available Sources of Capital is the Additional Insurance Need. Assumptions Rate of inflation Although there is only one assumed inflation rate entered in Briefcase, the Survivor Capital Needs calculator enables you to use different assumed rates for the working and retirement years. Simply type the desired rates over the rate drawn from the Assumptions data entry page. Investment return The Investment return is the rate used for the present value calculations. The Briefcase default is 8%, however you can enter any rate you choose. 24

31 Monthly Income Need The Monthly Income Need for both the working and retirement years are calculated as: (the stated lifestyle needs as entered on the Lifestyle Needs data entry page) ( % of lifestyle need provided ) x You can also enter an amount for a Child dependency period, and/or any other Additional income need. Use the spinner controls to select the age to which the incomes are assumed to be needed. Monthly Sources of Income Employment income, Pension income (defined benefit), and government benefits (CPP/OAS) are drawn from their respective data entry pages in Briefcase. You can adjust the amounts and/or the start ages directly on the Survivor Capital Needs page. Enter the combined total of other sources of income in the Other Income field. Lump sum Needs The amount in the Un-insured debts field is calculated automatically by Briefcase as the total amount of mortgages and debts entered on the data entry pages for which Yes was not selected in the Life Insured field. Funeral & final expenses, Bequests, and Other Needs are drawn from the Planning Needs data entry page. Available Capital The amounts in the individual Available Capital categories are drawn from their respective data entry pages. You can adjust the values, or even delete a value such as Real Estate if the property would not be liquidated in the event of a death. The Solve Tool There is no Solve user form for this calculator. Simply click the desired option based on all parameters. You can solve for: button to solve the Lifestyle Needs: working years Calculate the amount by which the survivor s standard of living would have to be reduced immediately, in the event of a shortfall, (or could be increased in the event of a surplus!) Lifestyle Needs: retirement years Calculate the amount by which the survivor s standard of living would have to be reduced in retirement, in the event of a shortfall, (or could be increased in the event of a surplus!) Monthly Sources of Income: working years Calculate how much the survivor would have to earn from employment, in the event of a shortfall. 25

32 You can change any of the values on the page, including amounts and life expectancy (To age) planned for, and re-solve to illustrate a wide range of possible scenarios. button to go to the Survivor Capital Needs data entry page. button to go to the Survivor Capital Needs ledger. Disability Income Needs The Disability Income document projects your clients position in the event of the permanent disability of either spouse. There is a document for each spouse. Each document assumes only the named spouse to be disabled, not both at the same time. button to switch between spouses. The bar graph compares your clients current income with the income they would receive if the named spouse were disabled. The projection graph projects the disabled spouse s disability benefits along with the other spouse s employment income, and any other income sources that would still be available. The combined incomes are graphed against the percentage of their lifestyle need assumed to be required. Enter the percentage need (Current Lifestyle Needs) and click to update the document. You can choose to display up to 40 years on the Disability projection graph. You may wish to adjust the display to show only to retirement age, or age 65, unless disability benefits are projected to continue beyond retirement. The number of years you choose to display here does not affect the number of years displayed on the other calculators and projection documents. Rate of return Enter the Rate of return assumption to be used to calculate the value of the Monthly Pension rider at the client s age 65. Assumed Income Tax Rates Enter the effective tax rates to be applied to each spouse s income. Briefcase draws income data and disability benefit data from their respective data entry pages. You cannot adjust these values directly on the Projection page. button to go to the Planning Needs data entry page, where you can enter or adjust the values relating to the disability benefits. button to go to the Sources of Income data entry page. button to go to the Disability Income ledger. 26

33 Investments Overview of the Investment Model All three FPS programs enable you to project several investment portfolios, including: Non-registered (Client, Spouse) RRSP (Client, Spouse) and RESPs For more comprehensive planning, FPS 2000 and FPS Briefcase can also project: Locked-in RRSP (Client, Spouse) and Money Purchase Pensions (Client, Spouse) FPS 2000 also includes: Corporate accounts Also in all three programs, each portfolio is allocated among the asset classes (Cash, Bonds, Equity) within a structure of seven investment categories: Cash & Equivalents Bonds: Canadian Bonds: Foreign Equities: Canadian Equities: Foreign and two user-definable categories The projected returns for each portfolio are calculated based on the Return Assumptions for each of the seven investment categories, and the Earnings Allocation of each category (i.e. distribution of interest, dividends, and capital gains). The common structure enables the sharing of files among the three FPS programs, however there are major differences in the level of detail, as well as the sophistication of the tax calculations among the programs. Q-plan and FPS Briefcase use marginal tax rates, while the tax calculations in FPS 2000 are T1-based, taking into account your clients' tax position in each of the years projected. Projected returns are also influenced by the rate of Realized Gains assumed for each category and the rate of portfolio turnover (i.e. investor style). FPS 2000 also automatically tracks ACB, and calculates current and deferred taxes based on distributions and withdrawals. Return Assumptions User-definable Investment Categories Two of the investment categories are user-definable. In FPS 2000 and FPS Briefcase, you must select the appropriate asset class for each of the two user-definable investment categories from the drop-down menus (i.e. Bonds or Equities), and also indicate whether the category is Canadian or Foreign. (This information is not relevant in Q-plan.) You can enter any name you wish for each of these categories in the text fields to the right. The names you choose are applied as labels throughout the program. The Return Assumption settings are global (i.e. they apply to all investment portfolios), therefore the two user-definable categories should be set up before you begin working on a client file. 27

34 Return Index You can enter a different rate of return for each of the seven investment categories in the Assumptions user form. (FPS 2000) In FPS Briefcase the rates are entered on the Assumptions data entry page. The fields are yellow to indicate that values must be entered. The rate entered for each category is assumed to remain the same over the course of the projections. In FPS 2000 you can use varying rates of return. They must be entered on the Assumptions Variables page either directly in-cell, or using the Custom Trend / Random Number Generator tools. 28

35 If varying rates of return have been entered for an investment category, that category's control in the Assumptions user form is disabled. Whenever any control is disabled, you must go to the corresponding Variables page to adjust values. (FPS 2000) Return assumptions are saved in the client file. Changes to the default assumptions are not automatically saved as program defaults. Management Expense Ratio You can include MERs in the calculations to show the effect on long term returns or for full disclosure. The net return for each investment category is calculated as the Return Index minus the MER. To exclude MERs from your projections, simply enter 0 in all Management Expense Ratio fields. The Index document in FPS 2000 shows the return assumptions for all seven investment categories, net of the management expense ratios. 29

36 Earnings Allocation You can enter a different allocation of interest, dividends, and capital gains for each of the seven investment categories. The earnings allocation entered dictates the tax treatment of non-registered investments. FPS 2000 also calculates and tracks foreign content, ACB, distributions, and portfolio turnover, as well as realized and unrealized gains. You can enter a different rate of realized gains for each category to project the results of varying degrees of tax efficiency. The Earnings Allocation document in FPS 2000 shows the MERs and assumed earnings allocation for all seven investment categories. If you have chosen not to include MERs by entering 0 in all fields, you can also exclude the MER section on the Earnings Allocation document by clicking the Show / Hide button ( - ) in the left margin. 30

37 Investment Profile Profile Overview You can develop portfolios for your clients in the Investment Profile module of FPS Briefcase or FPS 2000 using the investment database. The documents list the individual investments in each portfolio and graph the portfolios by investment category, and can also include Investment Details such as rank, MER, standard deviation, and historical returns. You can populate the investment database directly from the fund database programs. Import utilities are included for Bell Charts, Fund Profiler, Pal Trak, and Globe HySales. You can also enter investments manually. You can illustrate your clients' current portfolios as well as illustrate recommended portfolios. To assist in determining the appropriate asset mix to recommend, a Risk Tolerance questionnaire is included. The questionnaire features a series of 18 questions to assess investor profile and risk tolerance. The questions are designed to assess your clients' current financial position, their goals, investment knowledge, investor style, and whether they are active or passive investors, as well as their attitudes toward issues such as safety, volatility, and the need for liquidity. The FPS Risk Tolerance assessment is very unique. It enables you to save time by assessing tolerance for non-registered and registered portfolios for both Client and Spouse, all at the same time. In FPS 2000, the "lifetime" assessment goes beyond today's suggested asset mix, providing time and age weighted future balancing! Personal Risk Tolerance The Risk Tolerance questionnaire features a series of 18 questions to assess investor profile and risk tolerance. The questions are designed to assess your clients' current financial position, their goals, investment knowledge, investor style, and whether they are active or passive investors, as well as their attitudes toward issues such as safety, volatility, and the need for liquidity. Open the questionnaire in FPS Briefcase by clicking the button. Open the questionnaire in FPS 2000 by clicking the Investment Profile button from the Main Screen, or the Risk Profile button from within the Investment Profile workbook. 31

38 Select: Individual Assessment is selected by default when there is no spouse. Combine Client / Spouse Assessment to complete the questionnaire for a couple, with a single set of responses. The two spouses' risk tolerance is treated as being the same. Separate Client / Spouse Assessments to complete a separate questionnaire for each spouse. Two sets of response fields enable you to complete both simultaneously. Select the most appropriate response to each question from the drop-down menus. Each question carries a certain weighting depending on the response. The program suggests a model portfolio based on the combined weighting of all responses, and in FPS 2000, even calculates future realignments based on client age and the responses to time horizon questions. You can choose to use the suggested weighting in Year 1 only, or you can add the realignment suggestions at either 5 or 10 year intervals. (See Allocation Planner) 32

39 Where the response to a question may be different for RRSPs and non-registered investments, a field is provided for each. The need for liquidity, the need for income, and the time horizons associated with those needs may be quite different for the two portfolios, influencing suggested asset mix. Model Portfolios The results of the risk tolerance assessment are shown on the bar graph (meter) on the Profile document. As you can see, the results indicate different strategies for the RRSPs and non-registered investments. (You must click CALC to display the results. If no bar appears on the graph, it is because the results suggest an ultra-conservative approach.) The recommended portfolios are also displayed on the document. The allocation of the suggested portfolios can be customized in the Model Portfolios user form. You can modify the FPS defaults, and you can also adjust the settings for each client. (The user-definable categories are not used in the FPS default settings.) 33

40 Developing Portfolios Creating an Investment Database The Investment Database can be populated by one of four popular mutual fund database programs: Bell Charts Fund Profiler, Pal Trak Globe HySales. You can also add your own investments. Five user-definable Other Investment categories are available. (See Creating Custom Investments) FPS 2000 uses the 33 standard mutual fund categories as proposed by the Investment Funds Standards Committee. To populate the database the file must first be created in your database program. In FPS 2000, select Tools Mutual Fund Data Import from the FPS menu, then select your program. You will then be prompted to locate the file, and the database will be created. The utility creates a file from your mutual fund database program that includes all funds with their Category, Rank, MER, Standard Deviation, and 1, 3, 5, and 10 year historical returns, when available. (1, 3, 5, and 10 year historical returns are used per IFIC's guidelines for the use of marketing materials.) The four programs do not all Rank the funds the same way, and they may not calculate Standard Deviation in the same way, so there can be minor discrepancies in the data from one program to the next. You can use your mutual fund database program to update the data in the FPS database whenever you wish. Simply follow the same procedure to update using the same database program you used initially. If you use a different program to update the database, the utility will warn you that it must first purge the database of all investments imported using the original program. (Custom entries are not purged.) You will then have the option of continuing or canceling. The database can be viewed and sorted from the Database tab of the Investment Details user form. You can choose to view all investments or those of a specific category by making your selection from the Investment Type drop-down menu. You can then sort in ascending or descending order by Company, Name, Type, Rank, MER, Standard Deviation, or 1, 3, 5, or 10 year return. Select the primary sort criteria from the Sort by drop-down menu, and the secondary sort criteria from the Then by drop-down menu. Whenever the lettering on the Refresh button is red, click the button to update the database window. The sort criteria is included in the display window (i.e. the values you are seeking). 34

41 You can also use the two option buttons at the bottom of the user form to narrow the field to Show favorites only and/or Show custom funds only. Custom funds are those that you create manually. Favorites are all those "marked as favorite" in the Mutual Fund Data user form. The Favorite selection enables you to narrow the field, as you may have 2700 or more investments in the database, but only regularly use 100 or so. To mark an investment as a favorite: 1. Highlight the investment. 2. Details button. 3. In the Mutual Fund Data user form, check the Marked as favorite option. 4. Click OK. 35

42 Developing an Investment Portfolio Investment portfolios can be developed, using the investment database, from within any of the investment modules or from within Investment Profile. Investment Details Investment Details button to open the user form. The Portfolio selection drop-down menu enables you to enter all of the investments in all of the portfolios, without having to go to each respective workbook. When you access Investment Details from within an investment module, you can choose to update that specific portfolio with the investment details entered. Although you may have entered details for more than one portfolio, only the active portfolio is automatically updated. (Select the Apply Investment Details to active module option.) You can only update all portfolios at once using the Export feature in Investment Profile. (The Rank, MER, Standard Deviation, and Return values are displayed on the Ratings document.) You can select investments from the database and/or enter investments manually. Entering Investments Manually You can manually enter investments simply by typing in the edit fields. Investments entered manually are saved in the client file, but not the Database. To save custom entries in the database, use the Create procedure. 36

43 1. Click New to enable the edit fields. 2. Select the portfolio the investment is to be included in, from the Portfolio drop-down menu. 3. Enter the value as of January 1st of the current year, or the projected value as of January 1st of the coming year, depending on the Plan year entered in the Personal Information user form. 4. Type in the name of the investment. 5. Select the category of the investment from the drop-down menu. 6. You can enter Rank, MER, Standard Deviation, and Return values to appear on the Ratings document if they are known, otherwise leave the fields blank. 7. Click Update to accept the investment, then click New to enter the next investment. Selecting Investments from the Database 1. Click New to enable the edit fields. 2. Select the portfolio the investment is to be included in, from the Portfolio drop-down menu. 3. Database tab. 4. Highlight the desired investment in the database window. 5. Click Transfer to Investment Details. All fields for which data is available are then populated. All you have to do is enter the amount of the investment and the ACB. 6. Enter the value as of January 1st of the current year, or the projected value as of January 1st of the coming year, depending on the Plan year entered in the Personal Information user form. Click Update to accept the investment into the portfolio, then click New to enable the fields to accept a new investment. (Update and New are the same button.) Database tab to select the next investment... Category button if you want to review the allocation of the investment category. The allocation of categories can only be adjusted from within Assumptions. You can also name the five user-definable Other Investment categories through Assumptions... 37

44 Fund Return Details button in the Assumptions user form in FPS Allocation button on the Assumptions page in FPS Briefcase. Select an Other Investment category. Edit button that appears when a user-definable category is selected. Enter the name you wish to use for that category. Enter the desired allocation. Selecting Investments in a Logical Sequence Although you can select investments in any sequence you wish, you may find that the quickest and easiest way to develop a portfolio is to select investments in order of asset class. The filter in the database makes it easy to select investments in a logical sequence. 1. Select a category from the Investment type drop-down menu (e.g. Canadian Bond). 2. Select Type from the Sort by drop-down menu. (Choose any desired secondary criteria from the Then by menu.) 3. Click Refresh. 4. Choose all investments from that category, then select the next category (e.g. Global Equity). 5. Click Refresh, then choose all investments from that category etc... Notes You do not have to select investments from the Database, as you can also develop a portfolio entirely with custom entries to be saved in that client file only. The section on the right-hand side of the Investment Details tab is provided for user feedback. The amounts invested in each portfolio are displayed and updated as you proceed with your investment selections. This is particularly helpful if you are developing several different portfolios at the same time. All investment data is saved whether you choose to immediately update the portfolios or not. Also, the individual investments selected are saved in the client file. Even if a selected investment is subsequently removed from the database, it will still appear whenever you load that client file. Making Changes The scroll bar in the Investment Details section enables you to scroll through the investments entered. You have two options when you wish to make changes to any of the investments. You can choose to Delete the investment, in which case the dollar value is also removed, or you can Edit the investment, for example when you wish to update the file to reflect a switch. Click Edit to enable the fields. You can then adjust the value of the investment or click the Database tab to select an investment to replace it with. The Portfolio and Ratings Documents The Portfolio and Ratings documents in Investment Profile summarize the investment details for presentation to your client. The Portfolio document summarizes the portfolios with their specific investments, while the Ratings document includes full details of each investment including Rank, MER, Standard Deviation, and 1, 3, 5, and 10 year historical returns when available. (In FPS Briefcase the Investment Details and Investment History documents summarize these details.) 38

45 Disclaimers Because of the nature of the information provided on these documents, a disclaimer appears at the bottom of each document. Disclaimer button in the Investment Details user form to edit the disclaimers. You can also choose not to include them. If you are using these documents to sell a recommended portfolio, the documents are considered to be a sales communication and the Disclaimer should be there. Creating Custom Investments You can add any investment to the investment database. Click Create when you wish to manually add an investment. Enter the Company and Name of the investment to be added. Select the category it belongs in from the Type drop-down menu, to establish the return allocation. If Rank, MER, Standard Deviation, and/or historical returns are known, enter them in the edit fields. If the values are not known, simply leave the fields blank and no values will be shown on the Ratings document for that particular investment. If you want the investment to be included in the database as a favorite, check Marked as favorite. Click Save to save the investment and return to the database. You only enter custom investments into the database if you intend to use them again. If you don't need them in your database you can simply enter them in the client's portfolio, in which case they are saved with the client file, but not in the database. 39

46 Investment Variables (FPS 2000) You can also enter investment details on the Investment Profile Variables page as an alternative to the user form. Select the Variables tab in the Investment Profile workbook to get to the page. Click on a cell in the Portfolio column to display the Portfolio selection drop-down menu. Select the portfolio, then enter the name of the investment in the next field. (You can only access the database from the user form.) Enter the values, then scroll to the right to the Category column. Click on a cell to display the Category selection drop-down menu. You can enter investments for as many portfolios as you wish in any sequence. Use the Sort button to arrange the investments by portfolio. Category The Category drop-down menu offers the choice of the 33 standard mutual fund categories as proposed by the Investment Funds Standards Committee. Also included are 5 Other Investment categories for flexibility. (The names of these Other categories are user-definable.) Each category is allocated among the seven Asset Class categories according to the weightings suggested in the committee's document "A Proposed Standard to Canadian Mutual Fund Classification". 40

47 You can modify the default settings in the Return Allocation user form accessed by clicking the Allocation button from the Assumptions page. (The Return Allocation user form can also be accessed from within Investment Details by clicking the Category button, however this access point does not allow you to edit the values.) Simply select each category to review its allocation and make adjustments as you see fit. The changes you make are only applied to the current client file. The Return Allocation of the five Other Investment categories is defaulted to 50% user-definable asset class 1, and 50% user-definable asset class 2. You should set the desired allocation at the same time as you enter a name for the category. The name you enter should be generic rather than investment specific (e.g. Stocks, not Bell Canada), so that the category can be broadly used in all portfolios. Also, you cannot repeatedly rename each Other Investment category within a single client file. Exporting Portfolios (FPS 2000) You may wish to develop all portfolios at the same time. Although you can do so from within any investment module, you can only update them all at the same time from within Investment Profile, using the Export utility. Once you have finished entering the investments for one or more portfolios, click Export. The Export user form enables all of the portfolios detected to have been modified. If a portfolio from an investment module not currently available in the file has been modified, the procedure will open and add that module to the plan. The feedback from this form can also point out errors to you, such as entering investments in the wrong portfolio, or forgetting a portfolio entirely. Simply deselect any portfolio that you may not wish to immediately update. When you are ready to proceed with the Export, click OK. 41