‘The market didn't need another trial and error application’

With over a decade spent as an advisor at IG Wealth Management and even more years spent teaching hundreds of other individuals how to use the organization’s financial planning software, Michael Jack is arguably the most qualified person to talk about how the system worked – and how it needed to change.

Speaking to Wealth Professional, Jack explained that IG’s pre-existing financial planning platform had many good capabilities, but it was far from a perfect solution.

“As an advisor, you still had to know directionally where you wanted to go with a plan and try different things,” he said. “What that means is if an advisor has certain strategy biases that they're always recommending, then that could come through in the solution.”

That’s one of the crucial problems IG Wealth Management and Conquest Planning set about solving when they formalized their strategic partnership last year. After months of iterative collaboration, with IG’s advisors providing feedback and Conquest tweaking their app based on that feedback, they arrived at a solution that made for a better experience for the advisor as well as better outcomes for the client.

“When an advisor is going through and looking at solutions based on client preferences that they collaboratively input with the client, the software will actually suggest various strategies that may not otherwise occur to the advisor,” Jack said. “That aspect is a huge leap forward for us.”

Not just another calculator

“The market didn't need another trial and error application,” Ken Lotocki, chief product officer at Conquest Planning, told Wealth Professional. “What we needed and wanted to do was build this digital financial planning assistant to help guide advisors as they formulated plans for their clients.”

At the heart of the financial planning support capabilities of the new platform Conquest offers IG Wealth Management is its Strategic Advice Manager, or SAM. In an exclusive demonstration of the platform for Wealth Professional, Lotocki said SAM’s computing engine draws from four key parameters: who the client is, what they have in terms of wealth, their financial goals, and their planning preferences, which are an extension of KYC.

“Advisor users can use three planning modes,” Lotocki said. “There’s Step by Step Planning, which is a literacy-first approach; Auto-planning, which gives SAM the first crack at solving the plan while still giving the advisor ultimate control; and Expert Planning, which puts the advisor firmly in the driver’s seat.”

In Expert Planning Mode, the advisor can get a view of the client’s financial goals, as well as different strategy recommendations generated by SAM to help achieve those goals. Strategies to support any given goal are ranked on a holistic basis; rather than just considering its impact on the goal itself, each strategic recommendation is also evaluated based on how they could potentially detract from achieving other goals defined in the client’s plan. When a given strategy is selected, SAM reflects its impact by re-ranking and re-prioritizing other recommendations.

One criticism common to many data analysis software packages is that they’re essentially black boxes that accept inputs and spit out results, but don’t let users understand the underlying calculations. To help avoid that pitfall, the Conquest platform provides advisors with a more transparent view of the data and calculations it performs.

“At the top of the dashboard, advisors are able to see key performance indicators with charts and graphs,” Lotocki said. “They can click on those elements and drill deeper to get better context.”

Taking on cash flows and decumulation

Another key differentiator for the Conquest planning platform is its approach of blending goals-based planning with cash-flow planning, with the ability to view cash flow data granularly down to the daily level. And with all Tier 1 tax forms implemented in the system, including Revenue Quebec, the software has the ability to anticipate and make recommendations around key events such as tax refunds.

“In terms of legacy planning, our platform is also able to simulate a fair market value deemed disposition of all the assets in the plan, and figure out the final tax bill in the provinces that still calculate probate as well as the final net estate value,” Lotocki said.

Conquest Planning’s platform also sets itself apart by including decumulation strategy recommendations. In a simulated scenario, Lotocki showed how a strategy to manage taxable income could be implemented by smoothing out taxable income including account withdrawals throughout retirement, resulting in a significantly lower estate tax bill and a significant bump in their final net estate value

“The software is fully aware of the client’s fixed income sources, their CPP/QPP payments, and the minimum withdrawals they have to make from their RRIFs,” he said. “The software also includes CPP/QPP optimizer and OAS optimizer functionalities, which can give an idea of when it makes sense for a client to delay collecting their benefits.”

More recently, Conquest introduced the ability to include unscored strategies in a financial plan. As Lotocki explained, that functionality accommodates the possibility of clients taking on financial decisions that are specific and unique to their circumstances.

“If a client has and is planning to give $40,000 to one of their dependents for a mortgage down payment, for example, that can be included in the plan as a ‘redeem from investment’ strategy,” he said. “SAM may not suggest that because it's unique to the client. But we wanted to make sure that there's that ability to do that.”

With the ability to quickly simulate and view the impacts of given strategies on a financial plan, the platform gives advisors very refined control over the financial planning process. Beyond that, it also offers a fairly intuitive and visual view of the financial plan, which gives advisors the confidence to get clients more involved in charting their financial future.

“Traditionally, you’d have the advisor working on the plan based on what they knew of the client, and then turning around and presenting a series of recommendations for the client to accept or reject, in whole or in part,” said Jack of IG Wealth Management. “With the new Conquest platform, we’re getting away from that paternalistic paradigm and going toward a more exciting collaborative process.”