User experience: Moneyscope's rising star in the Lone Star State

Mon 3 Oct 2011

In a guest post by Moneyscope's first registered user in the United States, John Gay (pictured) of Frisco Financial Planning in Frisco, Texas, tells us how Moneyscope fits in with his financial planning and investment advice practice.

There are plenty of "heavy-weight" financial planning tools out there. Many use sophisticated statistical methods such as Monte Carlo simulations, historical back-testing, mean-variance analysis and the like.

Such tools have their place but they have several problems:

  1. they give the illusion of precision where none exists
  2. they are awkward, slow, inefficient, and cumbersome, and
  3. the output is too voluminous and complicated to effectively communicate to clients.

Moneyscope is basic and straightforward. The output is concise, easy to communicate, and easily understood by clients. The two page deliverable avoids "financial planning by the pound."

There are certain cases when a more thorough analytical tool is needed, but for the majority, I can apply my knowledge and experience in a way that gets the job done effectively without all the complexity involved with other planning solutions.

I use Moneyscope for retirement projections, life insurance needs analysis, and college planning projections. In short, any financial problem that requires projecting cash flows into the future, Moneyscope is often the right solution.

I've adjusted my illustrations and conversations with clients to make sure they are mindful of "sequence risk" (ie, I use a conservative real rate of return assumption, lower than the historical average, and one that equates to similar Monte Carlo and back-tested results), as well as tax considerations (since Moneyscope doesn't explicitly treat income taxes, we have to use general assumptions such as "after-tax" going in and "pre-tax" coming out).

If you're on Twitter, you can follow John at @johncgay or catch up with his lastest blog posts at Frisco Financial Planning's blog.

October 2011