Post-Monte Carlo Planning: A Modern Platform For Managing An RIA With A Revolutionary Planning App Based On Safe Savings Rates Hot

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(Across the bottom of the video, colorful text boxes indicate the topic discussed in each section of the video, allowing you to quickly scan.) 


“Current systems have been in somewhat of a homeostasis from a goal-based Monte Carlo approach,” says Alex Murguia, the founder and CEO of inStream Solutions. “Really it was just a matter of time until…. And you’re beginning to see a signaling of new types of planning that are beyond cash-flow, beyond, frankly, goals-based Monte Carlo, that have to do with safe savings rates. This will lead to sustainable withdrawal rate planning that we’ll have coming out soon.”

“This is the foundation for all of that,” says Murguia, who built a successful RIA in McLean, Virginia before starting inStream in 2010. “But the time is right for this approach and we’re very proud to be the first ones to release this in this manner.


Post-Monte-Carlo Financial Planning. Research on safe retirement savings and withdrawal rates has fundamentally changed retirement planning. Meanwhile, demographics are driving financial professionals to craft plans for clients based on safe withdrawal rate assumptions and safe savings rates. 
Murguia says financial planning software is about to enter a “post-Monte-Carlo period.” inStream supports this new approach to financial planning based on safe saving and withdrawals rates. To answer the crucial question in financial planning — will I outlive my money? — inStream applies a methodology that the current generation of planning apps does not now support.
“The safe savings rate is, one could argue, a more effective planning tool to guide someone in retirement because, for someone who is 20 or 30 years away from retirement, it’s very tough for them to say that two years into retirement they will want to buy a boat,” says Murguia, who with his wife’s uncle took McLean Asset Management from $30 million AUM 12 years ago to $600 million AUM today. “A better approach in advising them is by saying that saving at least 13% of your income has allowed people to spend a specific amount in retirement for the rest of their lives.”
Not Just A Planning App. Don’t think of inStream as just a financial planning software. Yes, it does a very capable job of planning based on safe savings rates and sustainable withdrawals as well as using Monte-Carlo/goals-based planning, but inStream’s loaded with additional features for running an RIA.
Business Intelligence (BI). BI is a popular software category in enterprise applications used by corporate managers, but no software aimed at financial advisors has ever offered extensive BI reports to managers at RIAs. inStream is improving the desktop used by practitioners and managers at RIAs by displaying business intelligence data about your practice in its dashboard for advisors. For instance, you’ll get snapshots reminding you that most of your clients do not have financial plans that are trackable. In addition to providing metrics on client engagement and other data based on your clients’ profiles, inStream feeds crowdsourced information about your practice versus other users. For instance, you can see that 15% of your plans are out of tolerance, while other advisors using inStream average 10% — and area where you need to improve your service.
Document Management. Instream allows you to store documents to a secure encrypted server and tag them for keywords. So you can tag all tax documents with terms like “1099” or “1040” and they will be indexed and searchable for those terms.
Alerts. A heads up at the moment of need for a client. Prioritizes what advisors need to do day to day. Tells you when a client’s plan is out of tolerance. Generate alerts when clients are not achieving a specific goal or not tracking against a calculator.  “These are not the same kind of alerts you get from a CRM system, telling you to call someone or attend a meeting,” says Murguia. “These alerts are generate off each client’s financial plan.”
Mind Maps. The beauty of a mind map is that it organizes ideas. Using the mind map to show a client his financial profile allows an advisor to illustrate how elements of a plan are connected.


Document Management. Integrated document management. You can tag any document. Murguia says documents will be indexed and tagged automatically for keywords by the end of 2014.

Niche Analytics. See that 80% of clients are women or carpenters and discover new niches as well as to measure your depth of penetration in a particular niche. What’s the average
Alerts For Teams. You can set alerts for teams working on the same client and apply an establish workflow sequence across a team to create processes specific to different service levels. So you can segment clients and apply a set or workflows and processes that go along with a subset of clients. 
Previous coverage of inStream:
I first wrote about inStream in March 2012, and progress has been slow. Apart from a follow-up in January 2013, I did not write about inStream for many months because the code powering the system was being rewritten. Murguia realized that the first iteration of his app was not strong enough to be used by enterprises and he re-coded the system so that it could be rolled out by a corporate RIA with hundreds of reps as well as custodians, institutions and independent advisors. According to Murguia, inStream went from a free app to costing $1,200 a year in January 2014. As early as August 2014, when the rest of the platform is completed, the cost of the app will rise to $2,400 annually, he says.


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