Located under the Investment Planning tab, the Plans page provides a grid for viewing stored plans.
Investment planning in Morningstar Office allows you to use a variety of tools and methodologies to select the best asset allocation for your client. The client’s risk tolerance level is measured, then used to select a recommended allocation, which you may accept or modify. A Monte Carlo simulation is run to compare the potential performance of the new allocation to that of the client’s current allocation. This simulation incorporates the client’s current wealth, future income and taxes, as well as expenses such as college tuition costs and retirement needs.
After a new allocation has been selected, Investment Planning can automatically calculate the best combination of investments to most closely achieve the target allocation.
With the plan complete, you can generate an Investment Policy Statement and/or Investment Recommendation report. You can also design and generate your own custom investment plan report.
When you open an existing plan, a prompt will appear asking you whether you wish to update the plan. There are two types of information which can be updated, and the you can choose to update either or both using checkboxes.
Plan Holdings: checking this box will update all of the accounts, holdings, and currency amounts associated with the plan. The current portfolio will be updated, and the currency amounts associated with the proposed allocation and proposed portfolio will be updated using the same percentage weights as when saved.
Assumptions: This box will be greyed out and unchecked if the underlying set of assumptions used to create the plan has not been updated since the plan was last updated. If the underlying assumptions have changed, the checkbox will be checked by default. If you elect not to update the plan with the latest assumptions, can do so later by clicking the Reset Assumptions button in the Market Assumptions page (inside the plan). You will also have the option again the next time you open the plan.
When a new plan is created, the plan start year always defaults to the current year. When opening a plan which was last saved in the previous year, you will see an Update dialog that says the following:
"This plan was last saved in a prior calendar year. It must now be updated to the current year. This may cause wealth simulation results to differ."
After you click OK, any cash flows, income records, or savings records which took place in the prior year will be removed from the plan.
See Also
Efficient Frontier Methodology