FAQs

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Discovery provides access to the Discovery visual plan editor. Plans can be created and brought through to Approved status.

Premium provides access to all the features of Discovery, plus data aggregation, the Invest and Track areas, tracking analytics, segment alerts, and more.

Pro introduces a tax calculation engine that supports additional features such as Roth conversion modeling, RMD analysis, IRMAA projections, and much more.

See a full list of features on the Pricing page.

IncomeConductor maintains a current list of all Broker-Dealers and RIAs that have undergone firm-level due diligence and approved IncomeConductor for use. Contact Us if you are unsure if your firm is on the list. Don’t worry – if it is not approved yet, we are happy to engage in the approval process.

For many reasons, TS provides value over SWP.

– TS is very appealing to retirees because it is intuitive by illustrating the compartmentalization of money for specific uses at specific times.
– TS eliminates or indefinitely defers “the sequence of returns” risk that is inherent with SWP.
– TS develops a customized “safe” withdrawal rate for each client rather than just applying a standard rate.
– Segmentation has proven to be superior in managing client behavior during market volatility.

IncomeConductor has a feature to illustrate future retirement dates so there is no restriction on how early you can run an illustration. Most advisors will begin generating basic Proposal Reports when a client is 5-10 years from retirement.  When a client is 5 years from retirement, it is advised that they begin funding the strategy and at least position the first 5 years of their income needs in some guaranteed type of account or stable value fund.

The location of the money can add challenges to implementing an IncomeConductor plan, but wealthy individuals typically need income in retirement just like most retirees.  Keep in mind that each plan segment can be funded with multiple registrations.

The terms of some trusts may define the amount of income that the trust can distribute, but that can be easily addressed when you are inputting the client’s sources of income.  Trust income can be considered an income floor instead of having to be assigned to fund a segment.

A retiree who has absolutely no need for income from their investments, now or in the future. This could be an individual who has a defined benefit pension with guaranteed COLAs and the income it generates more than meets their need. Also, if a client has less than $150,000 to dedicate to an income plan, it would not make a lot of sense to attempt to divide a relatively small amount of money into multiple segments.

The appropriate time horizon is based on several factors. 
1. Is the plan for an individual or couple?
2. At what age will retirement begin?
3. What is the health status of the individual(s) in the plan?
4. Is longevity a concern?

It is impossible to predict a person’s life expectancy, but studies show that most individuals live longer than they think they will.  Baring health issues and family genetics, most advisors are running their income plans to age 90+. Learn more about long plans in this Tuning Tip.

The choice of solve type is often a function of what question the client is asking.  Some clients may say “I have X amount of money and I want to know the amount of monthly income I could expect to receive”.  You would then solve using the investment amount.

Others may say “I have a specific monthly income goal and I want to know how much money is required to produce it”.  You would solve using monthly income.

Finally, there may be clients who have a specific monthly income goal and specific amount of assets and they want to know whether they have enough.  You would then solve using both.

Learn more about Solve Settings.

Product selection for funding the income can often inform this decision. Some advisors like to use short term SPIAs and the carrier they use may not offer COLAs. Thus, larger increases at the beginning of each segment are calculated by IncomeConductor. There isn’t a particular advantage of one over the other. Some retirees may want annual increases and others are comfortable with less frequent adjustments.

Learn more about Inflation options.

Some advisors feel that future inflation could be different than current inflation.  Other advisors like to “stress test” a temporary period of hyperinflation like what occurred in the late 70’s early 80’s. It gives you the ability to model inflation’s impact in a variety of ways. Learn more about Inflation options.

When you convert a segment to income it is assumed that the money is moved to an account that has little to no market risk. These accounts will typically credit a low Rate of Return (ROR) during the payout. Over shorter payout periods the ROR is insignificant.  For this reason you may wish to avoid very long segments that could deprive the client of market opportunity for extended periods of time.

Life events can also help guide the length of segments. If someone decides to defer claiming their Social Security for the first few years of retirement, you may want a segment that shows no Social Security income, and then create a new segment when it begins.

If a mortgage is scheduled to be paid off at a future date, you may want segments prior to that date to reflect an income need for a house payment, then start a new segment when the mortgage ends.

Learn more about managing Segments.

Although IncomeConductor does not mandate any ROR assumptions, there are default ranges based on the time horizons when you first create a plan. Also, we have created a Historical Analytics Tool that allows you to test our index portfolio data to determine reasonable RORs based on the time horizon and asset allocation you use.

Keep in mind that there is nearly a 50% probability of one spouse living to age 90. Aggressive asset classes, when given 20-25 years to re-invest have a very high probability of outperforming more conservative allocations.  Obviously, history is no guarantee of future results.

When your client receives the income they will find something enjoyable to spend it on like travel, home improvements or other major purchases.  They may also want to consider using it to purchase Long Term Care Insurance, Life Insurance, gift to a 529 Plan for other family members, gift it to your favorite charity, or reinvest the excess.

This decision is a function of your client’s risk tolerance and the rate of returns you are trying to achieve. If you believe that the long-term money (10 years and beyond) should have an equity orientation, then you must decide if you want to assume both the principal and market risk.

If you are comfortable assuming both the principal and market risk, then mutual funds, ETFs, or advisory fee accounts may be appropriate. If you would still like some guarantees and want to shift the principal risk, then certain annuities may be appropriate.

For non-qualified money, annuities offer some tax advantages:
1. If using a SPIA for the income segment, the IRS does allow an “exclusion ratio”, making a portion of the income tax free.
2. Any growth of non-qualified money held in an annuity is tax deferred.
3. When converting each segment to a SPIA, you can take advantage of a section 1035 tax free exchange.

Keep in mind that many funds and advisory fee accounts offer tax managed options.  Additionally, all gains in annuities are taxed as ordinary income when taken and do not get a “stepped up” tax basis at death.  Obviously, there are many tax considerations when creating an income plan.  Coordinating these decisions with a tax professional is highly recommended.

The plan will probably have to be modified based on whatever the current IRS 72t interest assumptions are.  Since these assumptions change from year to year, you may have to retest the income amounts. Also, when using 72t, the first segment of IncomeConductor must be for 5 years or until you turn 59½, whichever is longer. If the qualified money is in a 401K or 403b there is an age 55 exception that would allow you to leave the first segment of income in the employer plan and roll the balance to any IRA. There are special rules around this exception and only applies to someone between age 55 and 59 ½. If used, the 72t calculations would not apply.  

When your client reaches the age of 72/73/75, depending on date of birth, they must begin taking their minimum distributions requirements.  For most clients, required distributions to meet expenses will far exceed the required minimums. If the client has significant qualified money, they may have to take additional RMDs creating income distributions above their planned spending. Reinvesting or reallocating this forced distribution should be part of any comprehensive distribution plan.

You may feel that your client client could average a higher interest rate with CDs.  Be sure to ask the question: “What is more important, the old ROI: Return on Investment or The New ROI: Reliable Ongoing Income?”  The Immediate Annuity guarantees the income for the entire 5 years. However, laddered CDs may offer more liquidity than an immediate annuity.

When liquidating an asset, (both principal and interest) over a short period of time (5 years or less), the rate of return is insignificant since approximately 95% of your income is going to be a return of principal and only 5% attributable to the actual rate of return.

In general, the rate of return that you should be most focused on is that of the long-term segments. IncomeConductor is not skewed to favoring one product over another.  We will try to help you utilize the most appropriate types of products, but the final choice is made between you and your client.

There are many variables to consider:
1. Will the client’s tax bracket likely increase or decrease in the future?
2. Is there a desire to leave a legacy and should it be a tax efficient transfer?
3. Will the RMDs potentially put the client in a higher tax bracket when taken?
4. Are there favorable opportunities to do ROTH conversions?

Unfortunately, there is no “one size fits all” answer.  Some planning tools have automatic liquidation order assumptions built in, but everyone’s goals and objectives vary.  IncomeConductor’s case support staff is available to talk through the advantages and disadvantages of different liquidation orders, but, as always, a tax professional should be included in the decision.

A major concern of a total “income rider” solution is the low probability of the income keeping up with inflation.  Not because the investment accounts are inferior, but rather because the total product costs are often a significant drag on the yield. An income rider is can suffer from the same issues as a systematic withdrawal from an overall fund.

When (not if) markets decline the combination of the withdrawal rate, and market losses and product costs will typically create total losses that have a very low probability of recovering while still drawing income.  A total income rider solution is not consistent with the IncomeConductor philosophy and certainly limits the liquidity features that enable plan modifications along the way.

However, there certainly is nothing wrong with using income riders to create lifetime income floors.  The technology easily accommodates them in the reports.  Additionally, immediate or deferred lifetime income floors can be modeled when stress testing a client’s plan for longevity risk.

First, remember that at the beginning of each segment the money in that account is available to do things other than provide the next segment of income.  Secondly, depending on the types of products that you use there may be substantially more liquidity in the longer-term segments.

Many retirees do not put 100% of their money into their retirement income plan.  Remember, as we all were taught in designing financial plans, the first account we need to create for a client is their liquidity position.  So, find out from your client how much cash they would feel comfortable having available at all times, at no risk and at no cost.

Additionally, clients may have some of their assets earmarked for things other than regular income. You may be able to track these other goals using Non-Income Segments. Then, you can put the balance of their money into IncomeConductor and not worry about the liquidity.

Early on, you need your client to make the decision whether the primary client objective is The Old ROI: Return on Investment or The New ROI: Reliable Ongoing Income®. When someone says they want the ability to take advantage of market conditions and capitalize on opportunities they are obviously still focused on the return on their investment.

If, in fact, reliable income is what your client is seeking, then chasing returns during the course of the plan could potentially put that reliability in jeopardy. The client first needs to decide how much of their money they want the focus on creating reliable income. The balance of the money they do not put into their IncomeConductor plan can be used to take the advantage of what ever market opportunities they perceive happening along the way.

Our job is to make sure that they have an income they won’t outlive and an asset base that won’t go away due to poor investment decisions. A retirement income strategy is the last place you want to be attempting to time the markets. Remember, attempting to increase income reliability is a function of time “in” the market, not timing the market.

You can view the full list of our integration partners and associated guides in the Integrations article section.

An IncomeConductor plan can be generated with as little as a client’s name and date of birth. You can elect to enter contact information for them at any time. If you utilize any of data integrations, such as Albridge, Orion, or Plaid, the system will import and store their financial account data to facilitate tracking of their income plan.

IncomeConductor retains only the minimum amount of Personally Identifiable Information (PII) to provide our services. Any data provided by a custodian or counterparty that is not necessary is deleted upon receipt. All account numbers are redacted for display. Data such as SSN and passwords are stored only in “hashed” format. All data stored in the system is encrypted with AES 256 standards, and all communications between users and the system are via SSL HTTPS encryption.

More information on our cybersecurity policies are available upon request for use in due diligence reviews.

IncomeConductor receives information on your clients’ investments and allows you generate Review Reports, helping you to document and manage the plan status. IncomeConductor does not send out information to make trades or changes to investment allocations automatically.

When position changes are made in your clients’ underlying accounts, they should appear in the Invest area for that client the day after settlement. You can link additional connections or delete obsolete links in this section to meet the clients new or changed goals