The Proposal is a report that can be run on plans in Proposed status. The Proposal is designed to illustrate all the plan data necessary for pitching an income plan to a client or prospect. Read on to learn about the different sections of the report.
Branded cover page and disclosures
The logo and titling you provided upon sign up will appear on the cover page, and the disclosure you provided will appear on the following page.
Introduction to IncomeConductor & Time Segmentation
The next two pages set the stage for explaining the goals of the Proposal and dive into the philosophy around time-segmented income distribution.
Pre-Retirement Warm Up (optional)
When a plan is slated to start more than a year from today, the Plan Editor will make a basic calculator available under the investment field in the Solve Settings tab. This calculator helps estimate a future asset level based on a current asset level and contributions and growth.
If you use this calculator, the Pre-Retirement Warm Up page will appear in Proposals for the plan.
Plan Assumptions
Many of the major decision points and parameters of the plan appear here. They are all defined below to help clients understand and explain the report with a spouse or friend.
Cash Flow by Segment
This page features a visual breakdown of the projected cash flow in the plan by income source. Investment income is always in green, tax liability in blue, and additional income in other colors.
Below the chart is a table listing details of each segment including any notes taken and the projected starting monthly income for each.
Lastly, if the plan has any other segments such as a Legacy/Longevity segment, details about them are in the table at the bottom of the page.
Income Detail
If Income Floors are incorporated into the plan, details on the cash flow generated by each is shown here. Growth rates and tax rates for them are displayed at the top of each column. The required investment income is then shown, with the total income in the final column.
All figures on these pages are gross, or pre-tax. If no floors are specified, these pages will not appear in the report.
Expense Detail
If inflation for the plan is set to Expense-Level, all expenses will be shown in detail here. Each expense’s cash flow projection and growth rates are displayed. If a Distribution Tax rate is specified for each segment, there will also be a column showing Estimated Taxes.
Because all expenses are assumed to be after-tax income needs, the Total Monthly Income Goal figure in the last column is net, or after-tax. If either Plan-Level or Segment-Level inflation is used, these pages will not appear in the report.
Hypothetical Illustration
This illustration shows a consolidated view of all plan information.
- Plan Start Date, with client ages and starting balance.
- Segment assumptions including Growth ROR, Distribution ROR, Tax Rate, Investment Amount, and Allocation
- Net monthly income by year for investment (IC) income, floor income, and total income.
- Segment balances at year-end for each plan year, with distribution years highlighted in green.
- Total plan balance by year.
Hypothetical Illustration – 1.5% Loss
This is identical to the first Hypothetical Illustration, except the Growth RORs on all segments are replaced with -1.5%. This scenario assumes 0% growth on assets and 150bps of fees on all segment investments.
It represents a worst-case scenario designed to show that income could typically still be generated from all segments, albeit without inflationary increases.
Plan Summary
The final page of the Proposal report shows total figures for Gross/Net income for both the proposed strategy as well as the 1.5% loss scenario.
