Financial Planning Solutions User Guide

SOFTWARE LICENSE AGREEMENT

The Financial Planning Solutions software (the Software), including FPS 2000, FPS Briefcase, ROI Analyst, and Q-plan, is protected by copyright law. Do not use the Software until you have carefully read the following Agreement setting forth the terms and conditions of the non-exclusive limited license granted. If you use the Software, you agree to be bound by the terms and conditions of this Agreement. If you do not agree, you should promptly return the Software, including all media and documentation, to CCH Canadian Limited for a full refund. In no way is anyone permitted to dismantle, decompile, reverse engineer, or otherwise modify the Software or any part thereof. Unauthorized reproduction for any other purpose, or distribution of the Software or any portion of it is strictly prohibited. You may not give, rent, loan, sublicense, or otherwise distribute the Software or copies of it to any other person or organization. In addition, no part of any documentation may be used or reproduced in any form or by any means, without the written permission of CCH Canadian Limited. CCH Canadian Limited owns the Software, the media, and the accompanying documentation. No title in the Software, the media, logos, or the documentation is transferred to you by this Agreement. You have the right only to use the Software during the one-year subscription period for which the license is granted, subject to the terms and conditions set forth in this Agreement. You have the option of renewing your subscription at the end of the one-year period. If you choose not to renew, you must cease using the Software, and must also delete the Software from all computers to which it has been installed. This licensing agreement extends to the use of the Financial Planning Solutions software only. CCH Canadian Limited makes no representations whatsoever as to the licensing requirements of Microsoft Office®. The single individual granted a non-exclusive limited license is the registered licensee. The registered licensee may install not more than three copies of the Software on three different computers. The Software may only be used for the benefit of the registered licensee, by the registered licensee and/or their support staff during the subscription period.

Limited Warranty

Portfolio Publishing Inc. warrants the physical media and manuals to be free from defect. Should you discover any physical defects in the media or manuals, Portfolio Publishing Inc. will replace them at any time during your subscription period. If you are not 100% satisfied with this Software, Portfolio Publishing Inc.’s entire liability and your exclusive remedy shall be either: (1) return of the Software, including all media and documentation to Portfolio Publishing Inc. within 30 days for a full refund; or (2) replacement of the Software, and/or all media and documentation within the subscription period.

Disclaimer of Warranties and Limitation of Liability

THE SOFTWARE IS DESIGNED TO ENABLE FINANCIAL PLANNERS TO DEVELOP FINANCIAL PROJECTIONS AND TO ANALYZE AND MODEL VARIOUS SCENARIOS. CCH CANADIAN LIMITED HAS NO CONTROL OVER THE USE OF THE SOFTWARE. THE USER MAINTAINS FULL CONTROL OVER THE PROGRAM ASSUMPTIONS AND VARIOUS OTHER PARAMETERS, AND AS SUCH, IS SOLELY RESPONSIBLE FOR THE RESULTS OBTAINED THROUGH THE USE OF THE SOFTWARE. IN NO WAY SHOULD THE RESULTS BE CONSTRUED AS TAX, LEGAL, INVESTMENT, OR OTHER ADVICE FROM CCH CANADIAN LIMITED. THE SOFTWARE IS NOT GUARANTEED TO BE ERROR-FREE, ALTHOUGH EVERY EFFORT WILL BE MADE BY CCH CANADIAN LIMITED TO CORRECT ANY ERRORS DISCOVERED. IT IS AGREED THAT THE USER ASSUMES THE ENTIRE RISK OF USING THE SOFTWARE WITH ANY CLIENTS IN A PROFESSIONAL OR OTHERWISE ADVISORY CAPACITY. CCH CANADIAN LIMITED, ITS OFFICERS, DIRECTORS, AND EMPLOYEES SPECIFICALLY DISCLAIM ALL IMPLIED WARRANTIES, REPRESENTATIONS OR CONDITIONS, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY, PERFORMANCE AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL CCH CANADIAN LIMITED BE LIABLE FOR DIRECT OR INDIRECT DAMAGES RESULTING FROM ANY DEFECT IN THE SOFTWARE OR ITS DOCUMENTATION, INCLUDING BUT NOT LIMITED TO, ERROR, OMISSION OR DEFECT, RESULTING IN, BUT NOT LIMITED TO, LOSS OF DATA, LOSS OF GOODWILL, DAMAGE TO OR REPLACEMENT OF EQUIPMENT.

Installation To install the software: • Insert the CD into the CD-ROM drive, the Autorun should begin automatically. If the Autorun does not

start select Run from the Start menu and browse your CD drive for the Autorun.exe. • Choose the FPS 2000 option to install all of the programs available on the CD. When you launch FPS 2000, the Software Activation dialog box will appear. • In the Software Activation dialog box, enter your name exactly as it appears in your Welcome letter.

Next, enter the 15 digit Key Code provided and click Validate. NOTE: You will periodically be provided with a new Key Code. Select Tools | Update Licence from the FPS menu to open the Software Activation dialog box and enter the code. If the code should ever fail to validate your license, click Demo Only to enable you to use the software while you wait for a new Key Code. (Build Report is the only non-functional feature in demo mode.) Contact CCH if you wish to change the way your name appears.

Microsoft Office® Microsoft Excel® 97 or 2000 is required to run the FPS software. The FPS programs were developed in MS Excel® 97 to take advantage of the powerful calculation engine, as well as the superior programming features.

Spreadsheets were specifically designed for financial analysis. There is no better platform for a financial planning package!

As MS Office® is the industry standard, most software and even hardware components are designed to be compatible with Microsoft. Our direct interface with MS Office® is a major advantage to both us as developers, and to you our end-users. This translates into flexibility and ease-of-use, as well as high quality output. It also enables us to develop rapidly, while capitalizing on Microsoft’s leading edge innovations. With the modular design of FPS 2000, we can quickly and easily add new features essentially as plug and play components. Many new components are planned for the coming months!

Introducing the FPS Software Each FPS program is made up of a series of fully integrated workbooks within the spreadsheet format of Microsoft Excel®. There are three FPS programs; FPS 2000, FPS Briefcase, and Q-plan. These programs are designed to meet your planning needs at all levels, from basic single needs at point-of-sale to fully integrated, comprehensive planning.

FPS Briefcase was developed to be your essential day-to-day tool. The program contains a collection of easy-to-use calculators built around a logically organized and comprehensive fact-finder that mirrors the data entry requirements of FPS 2000. The Briefcase tools enable you to perform various single needs calculations and analyses. Briefcase is not designed for integrated cash flow-based planning, however the Briefcase file provides the link to progressively more comprehensive planning tools. It can be opened in FPS 2000 or exported to Q-plan to enable you to move seamlessly to more integrated planning as required. Briefcase effectively connects your varied software requirements at the data gathering, single needs point-of-sale, and fully integrated planning levels. Q-plan was developed to facilitate cash flow-based planning at point-of-sale. Q-plan is effective for either total needs or single needs planning. The program is designed to guide you through a simple planning process to enable you to identify needs and develop solutions with an absolute minimum of time and effort. The process helps you to develop fully integrated plans in a logical and methodical manner. Basic plans can be completed with relative ease in less than half an hour. FPS 2000 is a highly sophisticated financial modeling tool, designed to provide you with analytical and illustrative capabilities far beyond those available anywhere else. The program facilitates virtually all areas of financial planning, offering the capabilities to be used with speed and precision for the simplest of needs, while providing the power and flexibility to deal with the most complex planning issues. The full integration of every aspect of every plan is automatic! The FPS software is also designed to facilitate the sharing of files among the three programs. Briefcase files can be opened in FPS 2000 or exported to Q-plan, and FPS 2000 includes an import utility to convert Q-plan files. The FPS software is a continuously evolving package. Our goal is to always be improving and advancing in a changing industry to ensure that our subscribers always have the finest tools at their disposal, while providing the highest level of support possible. We want to help make your job easier, so you have more time to do the things you do best!

Table of Contents Getting Started

How to use FPS 2000............................................................................... 1 Common Planning Strategies ................................................................... 3

The FPS 2000 Environment Overview ................................................................................................... 4 The Main Screen....................................................................................... 4 Document View......................................................................................... 6 Spreadsheet View..................................................................................... 7

Navigation Getting Around in FPS 2000..................................................................... 9 Navigating from the Main Screen ............................................................. 9 Navigating from within the workbooks ...................................................... 9 Navigating from within the user forms .................................................... 10

Program Operations Managing Files........................................................................................ 11 Scenarios ................................................................................................ 12 Creating Default Print Packages............................................................. 13 Printing Documents................................................................................. 15 Custom Documents ................................................................................ 16 Comparative Analysis ............................................................................. 21 Creating a Default File ............................................................................ 22 Importing Portfolio Analyst and Q-plan files ........................................... 24

Entering Data The Client Profile Wizard ........................................................................ 26 Creating Default Component Packages ................................................. 28 Inflation ................................................................................................... 29 Investments............................................................................................. 30 Developing the Plan................................................................................ 40 Optimize Cash Flow................................................................................ 41 The Simulation Tool ................................................................................ 47 Build Report ............................................................................................ 54

Investments Overview of the Investment Model ......................................................... 56 Return Assumptions ............................................................................... 56 Investment Profile ................................................................................... 60 Personal Risk Tolerance......................................................................... 60 Model Portfolios ...................................................................................... 62 Creating an Investment Database .......................................................... 63 Developing an Investment Portfolio ........................................................ 65 Creating Custom Investments ................................................................ 68 Investment Variables .............................................................................. 69 Category ................................................................................................. 69

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Getting Started How to use FPS There are a number of different ways to use FPS, depending on the scope of the plan you want to develop. You may wish to use the Client Profile Wizard to open the necessary components for the type of plan you will be creating, or you may prefer to open components as required as you move through the Main Screens. FPS Briefcase was designed to facilitate the data gathering process enabling you to get started quickly and effectively. The following process using FPS Briefcase, offers the most effective way of developing a multi-scenario comprehensive plan.

Step 1 (enter basic data) Complete the fact-finding interview using FPS Briefcase.

In many cases, where single needs planning is all that is required, you will be able to use the planning tools in FPS Briefcase to solve the needs and close the sales. For comprehensive planning needs, save the file and go to Step 2.

Step 2 (review basic data) Open the Briefcase file in FPS. Review the “Basic Data” and “Plan Notes”. Enter current and future planned savings. Review all modules, making any necessary adjustments to the data. Save the file.

Step 3 (worst-case scenario) Create a “Current Financial Position (no additional savings)” scenario. Optimize your clients’ income goals for retirement only, using the Optimization utility. Review all modules, taking note of planning shortfalls. Type in the “Potential Problems” you identify. Save the file.

Notes:

If your clients are projected to be able to maintain their desired lifestyle throughout retirement, go to Step 5. (Further planning may include survivor income, estate tax and liquidity needs.)

If it appears that your clients will not be able to maintain their desired lifestyle throughout retirement, go to Step 4.

Step 4 (create a best-case plan) Reset the scenario to “Basic Data”. Create a “Current Financial Position (excess cash flow invested)” scenario. Optimize your clients’ income and savings goals for the entire period projected (allyears) using the

Optimization utility. Review all modules.

This scenario represents the best that your clients can expect to achieve based on the underlying assumptions. Make any necessary changes to “Potential Problems”. Save the file.

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Step 5 (enter your recommended planning strategies) • Reset the scenario to “Basic Data”. • Create a “Recommended Financial Position (step one)” scenario. • Enter the planning strategies appropriate for your clients. (See Common Planning Strategies below)

Do not enter any specific product solutions in this step. • Optimize your clients’ income and savings goals (all years with strategies) using the Optimization utility. • Review the results, then type in your Recommendations. • Save the file!

If your clients are projected to be able to maintain their desired lifestyle throughout retirement,

go to Step 6. (Further planning may include survivor income, estate tax and liquidity needs.)

If it appears that your clients will not be able to maintain their desired lifestyle throughout retirement, consider:

• lowering Lifestyle Needs before and/or during retirement. • increasing the percentage of equity in the asset allocation of their portfolios. • increasing their annual savings commitments.

After each change, re-optimize. (Repeat as necessary.) Step 6 (add product to your recommended planning strategies) • Start with the “Recommended Financial Position (step one)” scenario active. • Create a “Recommended Financial Position (step two)” scenario. • Review your clients’ needs for life insurance (survivor income & estate needs). • In the Cash Flow module, reset the “step one” Optimization. • Enter an “estimated premium” that you feel your clients could support, in the Lifestyle Needs adjustment

column on the Variables worksheet. • Optimize your clients’ income and savings goals.

(Reset and adjust the “estimated premium” as necessary.) • Once you have decided on an appropriate premium, create a life insurance solution that fits the financial

plan parameters. • Enter the specific cash values, death benefits, and premiums for the specific life insurance solution. • Go to Investment Profile and enter the specific investment products you are proposing for the desired

asset allocation strategy. • Finish by adding the “Action Plan”. • Save the file! Step 7 (prepare a comprehensive financial overview) • Open the appropriate “Financial Plan Custom Document”. • Change the scenario to “Current Financial Position (excess cash flow invested)” and update the

values. • Change the scenario to “Recommended Financial Position (step two)” and update the values. • Review the “Financial Plan Custom Document” making any necessary changes to text and graphs. • Save the file!

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Common Planning Strategies

There are several planning strategies that you can employ with many of your clients. While not exhaustive, this list includes most of the areas that you might want to address before developing investment or insurance solutions. The cumulative effect of these strategies can be quite significant. Sources of Income • Split CPP between spouses. [CPP / OAS] Non-registered Investments • Set your clients’ investment allocation to match their risk profile. [Allocation Planner] • Have taxable distributions paid out in cash automatically, starting in retirement. [Taxation] • Adjust the percentage of portfolio turnover to reflect a buy and hold strategy. [Taxation] • Direct future savings into the lower income spouse's account, if possible. [Deposit / Withdraw] Education Savings • Set your clients’ investment allocation to match their risk profile. [Asset Allocation] • Increase annual contributions up to maximum, if appropriate. [Deposit / Withdraw] RRSP/RRIF • Set your clients’ investment allocation to match their risk profile. [Allocation Planner] • Maximize contributions, if affordable, in the higher income spouse's account first. [Deposit] • Balance spousal and non-spousal RRSPs for future income splitting opportunities. [Deposit] • Make contributions annually at the beginning of each year, if affordable. [Deposit] • Adjust the percentage of portfolio turnover to reflect a buy and hold strategy. [Taxation] • Maximize foreign content to 20% of book value. [Taxation] • Use the younger spouse's age for RRIF minimums. [Withdrawal] Money Purchase Pensions • Set your clients’ investment allocation to match their risk profile. [Allocation Planner] • If income is required, withdraw maximum. [Withdraw] • Use the older spouse's age for LRIF / LIF minimums. [Withdraw] • Adjust the percentage of portfolio turnover to reflect a buy and hold strategy. [Taxation] • Maximize foreign content to 20% of book value. [Taxation] Real Estate and Other Debt • Consider changing payment periods to “weekly”. • Accelerate the repayment of the highest interest debt. • Make interest tax deductible where possible. Optimize Cash Flow • Optimize deposits & withdrawals for the full planning period. (60 years) • Select Deposit to RRSP. (Enter up to 100% for the higher income spouse, using spousal RRSPs) • Select Deposit to non-registered, but enter 0%. (Enter up to 100% allocation to the lower income

spouse) • Select Withdraw from RRSP, but enter 0%. Enter up to 100% to be drawn from the lower income

spouse) • Select Withdraw from non-registered. (Enter up to 100% to be drawn from the higher income spouse) Life insurance • When life insurance is needed, optimize the planned premium first to ensure that the client can afford the

cost, then enter the values from the illustration.

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The FPS Environment Overview FPS has a user-friendly interface designed to make both data entry and navigation a breeze. The modular design of the program enables you to develop everything from the simplest to the most complex plan. You only have to open the necessary workbooks... as many or as few as required. Simply add workbooks when you need to expand the scope of a plan, and remove unneeded workbooks to maximize system resources. All documents are created automatically. FPS offers you three different working environments:

The Main Screen Document View (WYSIWYG) Spreadsheet View (Variables Pages)

The Main Screen Almost all operations can be performed directly from the Main Screen. This includes data entry, navigation, and system operations.

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Main Screen Controls Section titles The different facets of the program are grouped into sections and listed on the left-hand side of the Main Screen, with the selected section highlighted and underlined in red. The section titles act as hyperlinks. Simply click on a title to select it.

Data entry buttons The data entry buttons to the right enable you to access all of the user forms related to the selected section, directly from the Main Screen. These buttons change automatically to correspond with the highlighted section.

The data entry buttons are formatted to enable you to easily identify open workbooks. A red title indicates an open workbook. Click the button to open the user form. A grey title indicates that the related workbook is not a component of the current plan. Click on the button if you wish to add that component to the plan. The program prompts you for confirmation before opening the workbook. The title that is both grey and italicized indicates that the component, Family Trusts, is not yet available.

Note: To close a workbook, click the Close Window button from within the workbook. Navigation buttons

Beside each data entry button is a navigation button . Click this button when you want to go directly to the corresponding workbook. Main Screen button bar

The buttons across the top of the Main Screen give you access to system operations and enable you to enter program assumptions.

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The Menu bar

The FPS menu system provides access to virtually all program features, as well as offers an alternative method of navigation.

Document View The documents generated in FPS are all pre-formatted and can be viewed as you work. The documents appear on screen exactly as they do when printed for a client. (WYSIWYG)

Each workbook's button bar provides access to the user form relevant to that workbook. Although client data can be entered directly from the Main Screen, you can also choose to enter or modify data from within each workbook so that you can see the results as you work. The graphs and ledgers provide you with the necessary feedback to identify problems during the planning stage. Note: You must click the button when you want to update the documents to reflect input data. Viewing the displayed document The workbook button bar conceals the upper portion of each document, while the graph and basic document data is frozen in place. Use the vertical scroll controls to scroll the ledger portion up and down on portrait documents, and the horizontal scroll controls on the landscape documents. To view the entire document, use Print Preview.

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Ledger format

There are several basic ledger display options available for most of the documents. You can choose to display 20, 30, 40, 50, or 60 years of projected results on a document’s graph and ledger. The graph resizes to show only the period selected. Ledger details are summarized at 5 year intervals, except when you select an option with a + sign, in which case each year is shown. Choose the desired format for the displayed document from the drop-down menu on the workbook's button bar. You can also use the -/+ signs to expand or a collapse a 5 year segment of values. (See Show / Hide details below) Select Tools | Global Change View if you want to change the display on all documents within the program.

Show / Hide details

The Show / Hide details feature is available on several documents. This feature enables you to add details to a ledger or display an audit trail. To expand a row to show all included values, click the + sign in the left-hand column. To hide the displayed rows, click the - sign.

The documents are formatted to print with the audit rows hidden in most cases. When these rows are displayed they will print, however document formatting is affected.

Spreadsheet View The Variables pages offer you the flexibility to freely manipulate data in an open spreadsheet environment. A Variables page can be accessed from within the corresponding user form by clicking the Edit Variables button, or by selecting the Variables tab within a workbook.

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Data can be manipulated by direct in-cell editing, or by using the tools provided for certain columns. The Custom Trend tool enables you to enter a level or indexed stream of values for a specified period of time. The Random Number Generator calculates series of random values within a specified range. A button at the top of a column provides access to these tools when they are available.

Navigating the spreadsheet

Many of the Variables pages contain several columns to provide total editing flexibility. You can use the vertical and horizontal scroll controls to move around the spreadsheet, or you can use the drop-down menu on the control panel. When you select a column heading from the menu, the page moves to display that column for editing.

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Navigation Getting around in FPS FPS has been designed to make it as easy as possible to get around within the program. There are always various navigation options available depending on which area of the program you are working in. Navigating from the Main Screen Main Screen navigation buttons

The Main Screen navigation buttons take you directly to the workbook related to the corresponding data entry button. Goto menu

The FPS menu bar is available throughout the program. From the Goto menu, you can jump to any workbook within the program. This is the fastest way to navigate, as you can accomplish in a single click what might otherwise take two or three clicks.

Shortcut menu

The shortcut menu is also available throughout the program. The shortcut menu is displayed by right-clicking on an open area of the program. Simply select the desired workbook. The shortcut menu also includes the Zoom option which enables you to modify the size of the viewing area, as well as a convenient Back feature.

Navigating from within the workbooks Moving from document to document

To move from one document to another within a workbook, simply click on the labeled page tabs, or use the tab scroll buttons.

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Tab scroll shortcut menu

You can also display a shortcut menu by right-clicking on the tab scroll buttons.

Moving from workbook to workbook

The cycle buttons on the workbook button bars cycle you from one workbook to the next, either forward or backward.

Spouse name buttons

In many areas of the program such as RRSPs and Investments, there is a separate workbook for each spouse. The spouse name buttons enable you to toggle between the spouses' workbooks, to display reciprocal documents or reciprocal Variables pages. The buttons are found on the workbook button bars and the Variables page control panels. The name on the button also serves to identify the current workbook.

Navigating from within the user forms

Most data is entered through the user forms, either from the Main Screen or from within the various workbooks. The user forms are tabbed for convenience. They have been arranged in logical order and should generally be selected in sequence, however you can select any tab for quick data entry. Edit Variables

In many cases, you will want to take advantage of the flexibility of the Variables pages that enable you to modify input data by in-cell editing. The Variables pages can be accessed from within the user forms by clicking the Edit Variables button. The Main / OK button on the Variables page control panel returns you to the user form you started from.

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Program Operations Managing Files A Client subdirectory is created automatically when you install the software as a convenient location for storing client files. You do not have to use this subdirectory, as you can store client files in any directory you choose, however they should not be stored in the same directory as the program files. New

When you launch FPS, the program opens the Client Profile Wizard. From there you can choose the default file you wish to use as a starting point. When you have finished working on a file and wish to start a new one, reopen the Client Profile Wizard by selecting File | New from the menu bar. Open

You can choose to open an existing file from within the Client Profile Wizard. You can also select File | Open from the menu or click the Open button on the Main Screen or workbook button bars. The Open client file dialog box opens to enable you to locate the desired file.

Open

Save

Save

Select File | Save from the menu bar or click the Save button on the Main Screen or workbook button bars to open the Save as dialog box. All relevant information is saved with each client file, including client data, assumptions, default settings, and investment details. (The client file records the province used for the tax calculations, not the specific tax rates.) When you launch a client file, the program loads only the workbooks that were included when the file was saved.

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Scenarios

You can save up to 10 different scenarios in each FPS client file. The Scenarios dialog box is displayed whenever you load an existing file, and can be recalled at any time by selecting File | Scenarios.

In the Scenarios dialog box you can Add, Load, or Remove scenarios. When you save a client file, it is automatically saved as Basic Data. (The FPS Briefcase file is also saved as Basic Data.) The Basic Data scenario should not be optimized, and the data should be as provided by your client, without adjustments. This allows you to create new scenarios from the same base starting point, at any time. You can also create scenarios that are modifications of other scenarios.

Add

To create a new scenario, click Add and type in a name for the scenario. Be as descriptive as possible, so that you can quickly and easily identify the scenario later. When you add a scenario, it automatically becomes the Active Scenario.

Changing scenarios

The scenarios you add are listed in the window. To switch scenarios, highlight the name of the desired scenario and click Load, or click Reset to Basic Data to restore the Basic Data scenario.

All data changes are saved within each scenario, except for Data Notes (as entered in FPS Briefcase), Goals and Objectives, Potential Problem Areas, Recommendations, and Action Plan text entries, which are common to all scenarios within a client file. Plan Notes are specific to each scenario. When you click

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View Notes, the user form expands to display four Plan Notes fields. Creating and saving scenarios

Once you have created a Basic Data scenario, add a Current scenario. Optimize only deficiencies from retirement age on.

You may also wish to save a fully optimized Current scenario.

Open the Scenarios user form and add another scenario. Reset the Optimization, then optimize both Excesses and Deficiencies for the full 60 year period.

When you are ready to develop solutions:

Open the Scenarios user form and click Reset to Basic Data. Add a Recommended scenario. Make the necessary changes and save the file.

You may also wish to save several different recommended scenarios, using alternate solutions, or with different optimization parameters. In many cases you will want to Reset to Basic Data before creating new scenarios, however you may also save a scenario that is a variation of a scenario other than Basic Data.

Creating Default Print Packages A facility is included in FPS that enables you to create and save up to five different print packages. This facility saves you the trouble of having to sort through the dozens of documents available for printing each time you complete a plan. To open the Customize Print Packages user form, select Tools | Customize | Print Packages from the menu bar.

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1. Select the option button next to the print package you wish to customize. 2. In the text field, type in the title you wish to use to define the package. (Overwrite the default text.) 3. Click Next to open the second user form from which you can choose the documents to be included.

4. In the left pane, highlight the first module; Assumptions. In the right pane, the documents from that module are listed with checkboxes.

5. Select the documents you wish to include from that module. 6. Highlight each module in succession, selecting the documents to be included. The selected

documents are saved with the pre-defined print package when you click OK. Note: The first two packages are pre-defined as program defaults, however you may change them to suit your own needs. You can also use this procedure to make minor adjustments on a case by case basis.

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Printing Documents Page Setup

The Page Setup dialog box enables you to adjust scaling and/or margins, as well as enter text to appear on the footer of your documents. Printing a single document

To print a single document, with the document displayed click on the button on the workbook's button bar. Selecting documents or a default package

To open the Print Financial Plan dialog box, click the button on the Main Screen or select File | Print from the menu bar. Print selected documents

To choose the individual documents you wish to print, select Print selected documents, then click the Select documents button. Select the desired Planning Documents from within each Planning Module.

You can also select documents from within the program. As you move from one page to another, simply check the box on the far right of the button bar of each page you want to select for printing. When you open the Print Financial Plan dialog box all of the pages checked off will show as selected for printing.

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Printing a default package

To select a print package, choose Print selected package, then make your selection from the drop-down menu.

Custom Documents The Excel® development platform offers numerous advantages. One of these advantages is the ease with which custom documents can be created. Custom documents enable you to present any aspect of the calculated results from the program in any manner you wish. The documents combine graphs, charts, and text. The graphs and charts are linked to the program and the text is fully editable. The default text is generic in nature and should be edited to directly address your clients' specific position. There are custom documents already included with FPS. Others will periodically be made available for download from our website as well as included with future releases of FPS. You can also create your own custom documents. Open and Goto

To open a custom document, select Tools | Custom Documents from the menu bar or click on the Custom button on the main screen. You can open as many custom documents as you wish. To navigate to a previously opened custom document, select Goto | Custom Documents or click on the Custom button on the main screen.

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Custom documents are stored in the Custom subdirectory under the FPS directory, but are saved with an .xcd extension so that they can easily be located in the Open dialog box. All program files which have .xls extensions are automatically filtered out.

The tools available from the button bar in the Custom workbook facilitate the customization of the documents.

Save

The custom documents that we provide are saved as Read only. That simply means that if you want to save changes to the file, you must save using a different file name. This avoids the possibility of a file that you have modified being overwritten with the installation of a future release of FPS. When you save a custom document as a template for future use, you should save it with the other custom documents in the English or French subdirectories. When you save a custom document as a client-specific file, you should save it in the client subdirectory with your client files. The name you give to a custom document should be as descriptive as possible.

Do not select File | Save from the menu bar or click when you want to save a custom document. That procedure saves the client file. The Save button is provided to enable you to save custom documents. It opens the Save as dialog box defaulted to prompt you to name and save a file with an .xcd extension.

When opening or navigating to a custom document the List of Custom Document opened window will appear. Click the Open button to open one of the custom documents. To view one of the previously opened custom documents select the title of the document and click the Goto button.

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Unprotect

Custom documents must be unprotected before you can make changes. Click Unprotect to prepare the document for editing. The program switches to Excel® editing mode and the button title changes to Protect.

After you have made your changes, click the Protect button to restore the protection. Custom Shape

The Insert Shape user form makes it easy for you to point out and comment on important areas of a document to make it easier for your client to understand. Before you click Custom Shape, highlight a cell in the approximate area where you would like the shapes placed. Select the desired shapes. Point and drag to move the shapes, and use the handles to resize them. Type the desired text in the text boxes. You can also format the shapes, to change color for example, by highlighting the shape and right-clicking to display the shortcut menu. Select Format text box.

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Editing text

With the document unprotected, click on an area of the document containing text to display the text box. Simply type in the desired changes. To change font size or appearance, highlight the text to be changed and right-click. Select Format text box from the displayed menu. The text box can also be resized and/or moved.

Update Values

Some of the custom documents compare the results from two scenarios or two different files (i.e. before and after). Update Plan Values is an import utility that enters the values in the custom document.

Preparing a custom document using Update Values

1. Open the client file to be used, and load the scenario to be used as the "Current" scenario. 2. Click CALC to update the values from the client file. 3. Select Tools | Custom Documents and choose the custom document. 4. Click Update Values. 5. Select Update client's current financial position and click OK.

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6. Select the scenario to be used as the "Recommended" scenario. 7. Click CALC to update the values. 8. Click Update Values. 9. Select Update recommended financial position and click OK. 10. Click Unprotect to unprotect the document to add custom shapes and edit the text. 11. Click Protect to restore the protection. 12. Click the custom document Save button to save the custom document with the client's name.

Goals and Objectives

The Goals and Objectives, Potential Problem Areas, Recommendations, and Action Plan documents are updated with the text entered in the Goals and Objectives user form. Do not enter text directly on these documents, except to modify the header, as the Update procedure will overwrite it.

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Graph Display

The drop-down menu enables you to select the time frame to be displayed on the graphs in the custom document. You can choose to show either 30 years or 60 years. 30 Years

60 Years

Printing custom documents

Custom documents can only be printed from within the Custom workbook. You can print a single custom document, or a series of documents by holding down the CTRL key as you click on the tabs of the

documents to be printed. With all the desired tabs highlighted, click on the icon on the button bar. Creating your own custom documents

If you or a support person is familiar with Excel®, then creating custom documents to take advantage of the powerful FPS calculations will be a breeze. Select Tools | Excel Menu to switch from the FPS menu to the Excel® menu. From the Excel® menu you can open all the necessary tool bars. A custom document template (New custom document.xcd) is available to help you get started quickly on your own custom document. The document is preformatted to have the same look as custom documents that we create.

Comparative Analysis

The Comparative Analysis module enables you to compare various aspects of any two scenarios of a file on a series of documents. The module can be launched from the Financial Projections section of the Main Screen. You must have a file with at least two scenarios loaded when you open the module.

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• Click the Data Entry button to open the user form. • Select the two scenarios to be included from the first two

drop-down menus. • Select the data to be included on the documents from

the next four drop-down menus.

Creating a Default File FPS includes a facility for saving custom default files. You can create and save as many custom default files as you wish. You may want to create different default files to suit clients of different profiles. (If you are satisfied with the program defaults, there is no need to create your own default files.) Start by launching the program with our system defaults. Select Basic Financial Plan in the Client Profile Wizard. If you have not already done so, you might wish to start by setting up Default Component Packages and Default Print Packages. There are system defaults set up throughout the program. Many don't require any adjustments, however you may wish to review the default settings in the following workbooks. Some of the workbooks will not yet be open. Simply click on the data entry buttons to add them as components. Suggested settings to review: Assumptions

You might wish to customize all of the Assumption default settings, including:

Return Index Management Expense Ratio

(enter 0 in all MER fields to exclude MERs) Earnings Allocation Realized Capital Gains Fund Return Details

(The categories have been allocated as proposed by the Investment Funds Standards Committee.)

Inflation Investment Profile

There are 10 model portfolios... 5 non-registered and 5 registered. These portfolios are suggested based on the results of the Risk Tolerance Questionnaire. Enter the desired allocation for each portfolio. Non-registered Investments

Select the Taxation tab to set...

Annual portfolio turnover (Enter the default assumption for the annual rate of portfolio turnover. This is the rate of turnover

based on the buying and selling of investments, as opposed to the rate of realized gains which should reflect distributions.)

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Marginal tax rate RRSP

Select the Taxation tab to set the rate of portfolio turnover for Canadian and foreign content respectively. Locked-in RRSPs

Select the Taxation tab to set the rate of portfolio turnover for Canadian and foreign content respectively. Pensions

If you work with a group of people who all have the same pension, you may wish to enter default pension factors to reflect that particular pension. If so, you may also wish to set the joint survivor defaults as well. Projected Cash Flow

Although the Optimize Cash Flow settings will frequently be adjusted to suit each client's particular circumstances, you may wish to enter standard defaults for the initial optimization of "before" scenarios. Net Worth

Although Deferred Taxes are not normally included on a Net Worth Statement, you can choose to include them as a liability by selecting this option. Both a Living and Estate Value are calculated for all annuities and pensions. You can choose to include either value on the Net Worth Statement. Needs

The needs analysis calculations are based on three different investment strategies ranging from conservative to aggressive. Enter the default portfolios for each of the strategies on the Return Assumption tab of each of the following Needs user forms. You can also change the default labels. Return Assumption defaults are required for:

Retirement Capital Needs Survivor Capital Needs (each spouse) Disability Income Needs

The Return Assumption settings in each Needs user form are independent of each other. You may also wish to enter default Executor / Trustee fees in the Estate Needs user form. Saving the default settings Once you have finished adjusting the default settings, select File | Save User Defaults. If you are going to be creating more than one default file, name each default file so that it can be easily identified. Whenever you launch FPS, you can select the desired custom default file from within the Client Profile Wizard.

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The custom default file included in the program, IFSC Fund Category.xud, makes use of all seven investment categories. The two user-definable categories are named U.S. Equity and Small Cap, (Equity Foreign). The corresponding fund categories are linked to these two user-definable fields. If you wish to change the user-definable categories in this default file, you must also modify the Return Allocation settings. (Click Fund Return Details from within the Assumptions user form to modify the settings.) This file also has all deposits set to annual, at the end of the year, and withdrawals set at monthly, at the beginning of the period. This will often be the reality in a "current" scenario. When using this default file, timing adjustments will normally be part of a "recommended" scenario. Registered deposits should usually be reset to start of year, while the non-registered deposit timing may or may not be changed. The long-term impact of beginning of period deposits versus end of period deposits is significant when the selected period is annual, but there is very little impact when the selected period is monthly.

Importing Portfolio Analyst, Q-plan, and RetireWise files Portfolio Analyst 4.0, Q-plan 2.0, and RetireWise files can be imported into FPS. Portfolio Analyst 4.0 is the version that is included in FPS 98, and Q-plan 2.0 is the Excel® 97 version. From the File menu, select Import | Portfolio Analyst 4.0, Q-plan 2.0, or RetireWise. The Open dialog box is displayed prompting you to locate the client file you wish to import. When you click OK, the data is converted and you are prompted to save the new file. F2k is added to the file name automatically, however you can choose to save the file with any name. The name you choose should be different than the original file. After the file is saved you can choose to load the converted file in FPS.

The procedure is designed to convert the majority of the input data, however defaults and assumptions are not included in Portfolio Analyst or Q-plan converted files due to the significant differences between the programs. The Q-plan procedure converts the basic program data only. Any deposits and/or withdrawals entered either manually, or as a result of optimizing are also excluded from the converted file. All converted files should immediately be reviewed for required adjustments.

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Areas to review in Portfolio Analyst and RetireWise files (Before reviewing the data, open the Optimize user form and select Reset Optimization.) Asset Allocation

FPS includes seven investment categories. Bonds and Equities are now separated into Canadian and foreign, and two new user-definable categories have been added. Portfolio realignments entered using the Portfolio Reallocation feature in Portfolio Analyst are not included in the converted file. Portfolio realignments can now be entered without restriction in any of the 60 years projected on the Variables page. Education and Child Care Expenses

Education and Child Care Expenses are no longer entered through Lifestyle Needs, as FPS now includes a detailed RESP module. Bequests

The Bequest options are not included in the converted file. The program provides for the entry of tax deductible bequests and those that are not deductible, separately. They are considered at 2nd death in the Estate Capital Needs calculation, and at 1st death in the Survivor Capital Needs calculation. Final Expenses and Emergency Fund Final Expenses and an amount for the Emergency Fund are now entered separately for each spouse. Other Income Other Income amounts are now entered in two columns on the Income Variables page. One column is for taxable amounts and the other column is for non-taxable amounts. Indexing Defined Benefit Pensions The Defined Benefit calculations now provide the opportunity to include two different index rates. Annuity Calculations

The method of calculating annuities has changed entirely. The new calculation is based on life expectancy and an assumed interest rate. The Annuity factor is no longer used. Leveraged Investments

Leveraged investment illustrations must be re-entered in the new Debts module. Portfolio Turnover and Realized Capital Gains

FPS now calculates the effect of Portfolio Turnover, and the method of calculating Realized Capital Gains has changed. A different rate of realized gains can be assumed for each of the seven investment categories.

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Entering Data The Client Profile Wizard FPS is a powerful tool with the sophistication to enable you to develop the most complex case, however not every case requires the full scope of the program. The Client Profile Wizard is designed to allow you to run the program with only the modules needed for the plan you want to develop. Each client file is customized to include only the necessary components.

To start a plan:

1. The first screen gives you the choice of starting a new plan or opening an existing plan. Select Create a new plan. If you choose to open an existing plan, the program will prompt you to find the file. You can also click Cancel, to close the wizard and create your plan from scratch.

2. If you are creating a plan for a couple, check the Spouse option. (Client is always selected.) 3. Fill in the two date fields. The program calculates on the basis of a complete calendar year. The data

can be entered to reflect values as of January 1st of the current year, or the upcoming year.

The Notes fields are provided for your own reference purposes. They can serve as memory joggers regarding certain aspects of the plan, and/or to identify the particular scenario. The Note is displayed in the Open user form when the file is highlighted. This enables you to quickly identify the desired file when there may be several similarly named files in the directory (e.g. Smith1.xls – Smith 7.xls).

4. Click Next to display the second screen.

Predefined plans

There are several predefined plans included as program defaults. Each is comprised of a different set of components. Some of the predefined plans can be modified while certain others can't be changed. You can also create up to five custom default plans of your own. The plans are divided into three categories for ease of selection:

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Concept Planning Needs Planning Financial Planning

Concept Planning

The Concept Planning packages enable you to quickly complete a single needs plan. There is no guesswork or searching required, and you can run the program without the clutter of unnecessary components.

Needs Planning

The Needs Planning packages are all predefined to include all related components required to complete each specific Needs calculation.

Financial Planning Basic Financial Plan includes all the necessary components to get you started quickly when you need to develop a full plan. You can modify Basic Financial Plan to include the specific components that you want to load by default.

You can also create up to five default selections that suit your own day-to-day needs. For example, you might have a default plan called Retired Couple, or Young Professional etc...You can enter a default title, then select the desired components. To load a predefined package

1. Select the category you wish to choose from. Only the selected category will display the choices available from the drop-down menu.

2. Choose the predefined package you wish to load, and click OK. It's that simple. The program loads the necessary components and you're ready to start. Adding and removing components

Depending on your clients' position, you will sometimes need to add a component, and sometimes you may wish to remove an unneeded component. To add a component

1. To add a component, select the section in which it is included from the left-hand side of the Main Screen, then click its data entry button. (The text is grey to indicate that the component is not

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currently part of the plan.) 2. The program will display a message advising you that the particular component is not part of the

current plan. Click Yes to add it or click No to cancel out.

To remove a component

1. You can only remove a component from within its workbook. Navigate to the unneeded workbook. 2. Click the Close Window button in the right-hand corner. This is the second level button. (The

Close Program button just above it does not work in FPS. The program must be closed using the Exit procedure.)

Creating Default Component Packages Whether you want to develop a single needs plan or a comprehensive plan, the fastest way to load the required components without loading the entire program is to select a default component package. There are ten component packages available to choose from. The first five are set up as program defaults, with the required components pre-selected. There are also five user-definable packages which you may set up to suit your own needs. To open the Customize plans user form, select Tools | Customize | Planning Packages from the menu bar.

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The components of Basic Financial Plan and the four needs analysis packages have been pre-selected. You can add components, but you cannot remove required components or change the package name. To review a package, select it then click Next.

The required components are pre-selected and dimmed to prevent their deletion. Other components such as Investment Profile in this case, can be added if desired. You can set up five custom default plans of your own. Select a user-definable package and type in the package name. For example, you might have a default plan called Retired Couple, or Young Professional etc... Click Next to move through the user form, selecting the desired components as you go. Your default package is saved automatically when you click Finish on the last tab. A default component package can only be launched from within the Client Profile Wizard. Select File | New to launch the Wizard.

Inflation The Inflation control in the Assumptions user form enables you to enter a global inflation assumption for the course of the projections. If you wish to use varying rates of inflation, go to the Assumptions Variables page.

1. Click the Index button at the top of the Inflation column to open the Custom Trend user form. 2. Enter an inflation rate and select the desired range, either in terms of age or years. 3. Click Apply to enter the inflation rate over the selected range, then repeat the process for as many

ranges as desired. You can also change values for individual cells directly on the spreadsheet.

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Whenever there are two or more different rates of inflation entered, the Inflation control in the Assumptions user form is disabled. Variance The Variance control in the Assumptions user form enables you to make across-the-board adjustments to your Return Assumptions, to see how the financial plan would turn out with global returns being either somewhat higher or somewhat lower. The control enables you to make the change without having to adjust each separate asset class. In the Variance field, enter a positive value to calculate the effect of long term returns being somewhat higher on average, over the course of the projections, or a negative value to test whether the plan would still hold up if returns turned out to be somewhat less than projected.

Rerun the Optimization procedure and save the results as an individual Scenario. This control enables you to view the effect throughout the plan, of a single positive or negative change to your Return Assumptions. You can also use the Simulation Tool to test the impact on Asset and Estate values of multiple possibilities within a range of variance, both positive and negative. Investments Asset Values

Asset values can be entered for the entire portfolio by asset class, or you can enter each individual investment's asset value using the investment database and let the program calculate the totals for the seven categories.

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Non-registered Asset Values

FPS tracks ACB on non-registered portfolios. Enter the portfolio value of each of the seven categories and each category's ACB. If you prefer to enter each individual investment, click Investment Details.

The percentage allocation of each category is calculated by the program and displayed in the user form for feedback. RRSP Asset Values

A column for each of Personal and Spousal amounts are available for convenience, however the total amount is tracked as a single portfolio. The program also tracks the percentage of foreign content. Enter the Book Value of the combined Personal and Spousal amounts for each of the seven categories.

Asset Allocation

Periodic realignments of a portfolio can be entered on the Asset Allocation tab of the user form. (You can also use the Allocation Planner.) The current percentage allocation from the Asset Values tab is automatically displayed in the first column, so you can see the current alignment as you enter future realignments. Simply select an age and enter the desired alignment. You can use this feature to create a new mix, or to adjust the portfolio back to the original desired mix. (FPS tracks the normal shift in the weighting based on different returns for different asset classes, as well as the effects of different tax efficiencies.)

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Each age for which a realignment has been entered is marked with an asterisk to provide you the necessary feedback within the user form. You can enter two future realignments at a time. After entering the desired alignments, you must click OK to register the values.

You might prefer to enter periodic realignments directly on the Variables page, where you can see the changes in weighting, and make all necessary adjustments for the entire period of the projections. The Portfolio Allocation graph provides a helpful graphic overview.

Deposits and Withdrawals

Deposits and withdrawals can be entered as streams using the controls in the user forms or directly in-cell on the Variables pages. You can also use the Custom Trend tool accessed by clicking the buttons at the top

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of each column on the Variables page. Portfolio Average

Deposits and withdrawals entered as streams through the user forms are automatically assumed to be by "portfolio average". This means that each deposit is allocated according to the percentage allocation of the portfolio in the year in which the deposit is made. Likewise for withdrawals. To make deposits to, or withdrawals from specific asset classes, go to the Variables page. Non-registered Deposits and Withdrawals

Deposits and withdrawals can be assumed to be made monthly or annually, as well as at the beginning of each period or the end of each period. Enter an amount and select the range

from the From age and To age drop-down menus. (You can also type in the ages.) Enter an index, if desired.

Two sets of fields are provided to enable you to enter two streams at a time. You must click OK, and then CALC to register the values entered. The Deposit and Withdrawal controls are generally only used once, as they can only be used when there are no values on the Variables page. As soon as you use the controls, the values entered are written to the Variables page, disabling the controls. Further adjustments must be made on the Variables page, or you can zero out the values on the Variables page to enable the user form controls. RRSP Deposits

FPS automatically calculates and tracks RRSP contribution room. Select Deposit maximum to have the program automatically contribute the maximum allowable each year. Enter the desired allocation between Personal and Spousal contributions. When selected, the program will make the maximum contribution whether the money's available or not, thereby creating deficiencies in cash flow. These deficiencies can later be corrected by the Optimize procedure, which manages projected excesses and deficiencies according to rules that you set.

The Deposit controls are enabled if you choose not to have the program automatically contribute the maximum allowable.

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RRSP Withdrawals

Minimum RRIF is calculated automatically by the program, and can be based on either spouse's age. You can also enter withdrawals on the Variables page or use the withdrawal controls to enter specific income streams. The program will always make sure that no less than minimum is withdrawn in any year after the age entered in the Begin RRIF at age field.

RESP Deposits

As with RRSPs and non-registered investments, deposit streams can be entered using the user form controls, however the RESP user form also includes a Solve utility to calculate precise funding requirements. The total need is calculated based on the amounts that will be required in the future as set using the Withdrawals controls. Select the range over which the contributions are to be made from the From age and To age drop-down menus. Enter an index to be applied to the deposit stream. You must enter a value in all fields including Index, even if the rate is to be 0. Click Solve for "Amount" to calculate the required deposits. The calculated amount is the amount required to meet all expenses over the education period for all selected Dependants, leaving a zero balance at the end of the period. (You must enter Dependants and select Education for the Solve calculation to work.) The control is automatically disabled once the calculation is complete. You must Reset all values to use the Solve utility again. If you wish to assume that education credits will be transferred from the children during their respective education periods, select either Transfer credits to Client or Transfer credits to Spouse. The Annual Tuition Expense is the only amount eligible, up to the maximum allowable as per the program's T1-based tax calculations.

Entering deposits and withdrawals on the Variables pages

Click the Edit Variables button from within an investment user form to go to that investment's Variables page. To enter deposits and withdrawals, select Deposits from the navigation drop-down on the control panel. Deposits and withdrawals can be made from a specific asset class, or by portfolio average. Use the Custom Trend tool accessed by clicking the buttons at the top of each column, or type directly on the spreadsheet. For example, you may wish to recommend that certain goals be funded from the Cash

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component of your client's portfolio to avoid forcing unrealized gains. Simply enter the required withdrawal in the Cash column.

Taxation The Taxation tabs include features that enable you to control and manage the tax implications of maintaining each portfolio. Non-registered: Distributions

Distributions are automatically reinvested each year, however since they are taxable according to the calculated allocation of interest, dividends, and capital gains, you may wish to bring them into cash flow at some point, for example in retirement. Select the asset classes you wish to include, and the percentage of each. In the starting at age fields, enter the ages at which you wish to switch from "automatic reinvestment" to "paid in cash".

Non-registered: Taxation

Enter the assumed rate of portfolio turnover according to investor style. This field is for quick entry, to enter a global rate that will be assumed to be the same for each of the 60 years projected. You can use the Variables page to enter changes to the rate to reflect anticipated changes in investment strategy. When variations to the rate are entered, the Annual portfolio turnover field in the user form is disabled. Enter any unused capital losses available to your client from previous years. The program calculates future capital losses automatically.

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Select the Fund income tax from growth option to withdraw money from the account annually to fund each year's tax liability. Each year's withdrawal is calculated based on the approximation of each year's tax liability, using the Marginal tax rate entered. When this option is deselected, the tax is funded from cash flow, and there is full compounding in the investment portfolio. Annual Portfolio Turnover

The Annual Portfolio Turnover controls enable you to factor-in the tax implications of investor style. The frequency with which your client buys and sells investments, thereby forcing gains, has a major impact on projected returns. In the RRSP modules, you can control the Portfolio Turnover rates for Canadian and Foreign content separately. This enables you to effectively illustrate how over time, you can weight the portfolio more heavily in foreign content, while adhering to the 30% book value rule (25% for 2000). The Variables page enables you to make adjustments to the Turnover assumption. Balance foreign content automatically

As the weighting of the portfolio changes from year to year, the foreign content can be reduced. The Balance foreign content feature automatically rebalances the portfolio each year to maintain the percentage of foreign content entered. The program will allow the book value of foreign content to exceed 30% to enable you to illustrate the effects of derivatives and segregated funds.

Contributions and Deductions

Enter the amount of unused RRSP contribution room available from previous years. The Optimize procedure includes the Carry Forward amount in the calculation of allowable RRSP contribution room. While the program can calculate each year's contribution room, certain assumptions must be made for the first year's limit, as it is based on the previous year's income. This data is not available to the program, therefore the assumed first year limit may not be accurate. If the exact available contribution amount is known, or can be obtained from your client's current tax assessment, add the amount to any other Contribution Carry Forward amount and select Includes 1st year maximum. When you select this option, the program doesn't have to estimate the 1st year's allowable contribution room. You can also select Set maximum contribution limit to over-ride the program-calculated limits for all other years. This feature should normally be used only for single needs illustrations. When this option is selected, the amount entered is automatically indexed at your global Inflation assumption. In the Deduction Carry Forward field, enter the amount of RRSP contributions made in previous years, but not yet deducted. The Taxable income threshold option enables you to control the brackets in which RRSP contributions are deducted. For example, only a portion of a given year's deduction may be required to get your client into the bottom bracket. Enter the threshold income under which you do not want the program to deduct contributions made. The threshold entered is automatically indexed at the assumed rate for tax brackets and tax credits.

Carrying Charges

You can choose to enter a rate to be applied on new deposits as a sales charge. The rate is applied on all deposits entered through the user form, as well as on the Variables page. It is not applied on reinvestments, or deposits made by the Optimize procedure. This facility enables you to illustrate the impact of charges. To

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exclude sales charges from your projections, simply leave the field blank.

Account Charges

You can illustrate the impact of Managed / Wrap Account Charges on long term returns for either competitive purposes or to provide full disclosure. You can also choose to include an amount for Administration and Trustee Fees. Select the Pay account charges option if you want the program to fund account charges (Annual administration / trustee fee and Managed / Wrap Account expense) from cash flow, outside of the account. When selected, the charges are funded from cash flow up to the age entered. The program reverts to funding the charges from the account once the age entered is reached. In the case of an RRSP account, it may be a good idea to pay account charges outside prior to retirement to maximize tax-sheltered growth, however once RRIF income begins, you might want to switch to paying account charges inside the RRSP. This option enables you to avoid the possibility of using taxable RRSP income to pay non-deductible charges.

Other Features

RRSP Miscellaneous

The RRSP Miscellaneous tab includes the facilities to include the effects of participation in the Lifelong Learning and Home Buyers' Plan programs in your projections. Also included is the facility to include RRSP Rollovers. Lifelong Learning

An individual may withdraw up to $10,000 per year, to a cumulative maximum of $20,000 under the Lifelong Learning program. If RRSP withdrawals have been made prior to the start date of the financial plan, enter the total amount already withdrawn and the calendar year in which the first withdrawal was made. The program calculates the minimum repayment schedule for the prescribed 10 year repayment period automatically, with the first payment due in the fifth year following the year in which the first withdrawal is made. Repayments are assumed to be made on January 1st of each projection year. You can enter a greater amount to illustrate faster repayment, however the program will not use an amount less than the calculated minimum. (If for any reason, you do not want to make the payment in a given year, offset the automatically calculated minimum payback amount with a manual withdrawal.) Enter the annual amount to be withdrawn in the future. The sum total of all future withdrawals and prior

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withdrawals cannot exceed $20,000. Enter the calendar year in which the amount entered as Future annual withdrawals are to begin, and the number of consecutive years in which the withdrawals will be made.

Home Buyers' Plan

Enter the amount already withdrawn or to be withdrawn at some point in the future, under the Home Buyers' Plan. The combined total for both spouses cannot exceed $20,000. Enter the calendar year in which the withdrawal was, or is to be made. The program assumes that repayments begin in the second calendar year following the Year of withdrawal. The program calculates the level payment required to repay the RRSP loan based on the prescribed 15 year period. You may enter a greater amount, however the payment cannot be less than the calculated minimum. (If for any reason, you do not want to make the payment in a given year, offset the automatically calculated minimum payback amount with a manual withdrawal.) RRSP Rollovers

Enter the amount of a retiring allowance, and select the age at which it is to be received. You can choose to include the retiring allowance as income with an offsetting deduction on the Projected Income Tax document by checking Tax Document. If you do not check this option, the retiring allowance is simply added to the RRSP balance. RESP / CESG

FPS tracks RESP contributions and includes the facility to enable you to model the withdrawal of contributions, as well as the transfer of eligible amounts to RRSPs. Allocate the source of RESP contributions between the two spouses. This allocation is a factor in the

withdrawal of growth subject to tax penalties and the transfer of unused amounts to contributor RRSPs. Enter all RESP contributions made prior to the first year of the projection. The program adds this amount

to future contributions entered to keep track of total overall contributions (subject to the maximum allowable), as well as the amount eligible as a contribution withdrawal.

Enter the calendar year in which the plan was created. The program will not allow the withdrawal of

contributions until the plan has been in place for 10 years. The age of the plan is also a factor in determining RRSP transfer eligibility.

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Each eligible child is entitled to $2,000/year of Grant Room, which can be carried forward, although only $4,000 may be used in any given year. Enter the total Grant Room available from previous years for all eligible children, and the total amount of CESG Grants already paid into the plan. The program calculates the maximum as the number of children selected to be plan beneficiaries x $7,200. Locked-in RRSPs

The Annuity feature enables you to convert a Locked-in RRSP account to an annuity. Enter the age at which the plan is to be annuitized, and any guarantee period for the purposes of the Estate calculations. A LIF must be annuitized no later than age 80. If this option is not selected, the program will do it automatically. An LRIF can also be annuitized, if desired. If you have an annuity quote, select Manual Calculation, then enter the total monthly income to be received from the annuity. If you do not have an annuity quote, select Automatic Calculation to have the program calculate the annuity for you. The calculation is based on Life expectancy and the assumed Interest rate. The program calculates life expectancy for you as a guideline, however you can adjust the program's default value. Any change to life expectancy will of course alter the calculation.

The program can come close in calculating the annuity income according to the parameters you enter, however the result is only an approximation.

Allocation Planner

The Allocation Planner utility is designed to facilitate the development of an investment strategy, taking into account future realignments. Realignment is as necessary in the program as it is in reality, due to the accuracy of the projections. With the varying returns on the asset classes and the differences in the tax

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treatment these returns receive, a portfolio will move further and further out of alignment each year. The Allocation Planner enables you to periodically rebalance a portfolio. If you have already entered your client's current position, you can have the program automatically realign the portfolio to that specific allocation at 5 or 10 year intervals by making your selection from the Frequency drop-down menu. You can also select Use recommended allocation, if you have completed the Risk Tolerance questionnaire. Select Year 1 only from the Frequency drop-down menu to enter the recommended asset mix for the first year only. FPS also calculates future realignments based on the answers to several of the questions, in addition to the initial recommended asset mix. The suggested realignments take into account your client's need to access funds over different time horizons, as well as attained age. Select Every 5 years or Every 10 years to include the suggested periodic realignments.

You can also choose to enter a specific percentage allocation for the seven investment categories and choose to realign the portfolio to that specific allocation at 5 or 10 year intervals. Select Set allocation manually to enable the edit fields. This selection also enables you to quickly show "what if" scenarios for illustrative purposes at point-of-sale. After you have automated the realignment of a portfolio, you can further adjust the realignments for the portfolio on the portfolio's Variables page. If you make adjustments on the Variables page however, then return to the Allocation Planner to make further changes, the procedure will overwrite the values entered on the Variables page.

Developing the Plan Entering client data

FPS offers you two methods of data entry; form-based and spreadsheet-based. The user forms are most often used for basic data entry, while the Variables pages offer the flexibility and convenience of the spreadsheet environment for detailed modeling purposes. Data can be entered in any sequence using a combination of the two methods of data entry. Whether you enter data from the Main Screen, from within the workbooks, or primarily on the Variables pages, is strictly a matter of preference. Reviewing the documents After you finish entering your clients' data, click to update all the documents. There are literally dozens of pre-formatted documents created automatically in FPS. Although they can all be printed for presentation to the client, a plan should normally only require a select few. The documents also serve another useful purpose however. By cycling through the various documents, you can easily identify your clients' needs and potential problem areas. Some planners like to present their case as "before and after" comparisons, using a number of different scenarios, while others simply prepare one plan including all

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recommendations. Whatever your personal preference, you should always save a Basic Data scenario, which will reflect your clients' position based on what they're doing without your advice.

Optimize Cash Flow Optimize Cash Flow is an artificial intelligence utility that automatically manages cash flow according to sets of rules that you define. The object of the procedure is to manage amounts projected to be available in excess of your clients' lifestyle needs, and solve projected deficiencies using accumulated assets. The result is the management of cash flow to the exact lifestyle need to find out how long the assets are likely to last. This helps you to assess the likelihood of success for the plan, as well as determine the appropriate courses of action required to make the plan work.

The procedure is based on two series of logic settings that you adjust according to your clients' particular position. The first series allows you to set parameters for the management of amounts projected to be available in excess of your clients' lifestyle need. This includes allocating amounts to be contributed to RRSPs, invested in non-registered accounts, or applied to outstanding debts. Excess cash flow can also be allocated to consumption beyond the lifestyle need. The second series allows you to set parameters for projected deficiencies. This includes sourcing income from RRSPs and/or non-registered accounts. Deficiencies can also be managed by borrowing the necessary funds, and you can show your clients the less desirable option of reducing expectations for income in retirement. Running the procedure

You will normally want to run the procedure from within the Cash Flow workbook, so that you can see the cash flow graph.

1. Choose the time frame to be optimized. 2. Enter the logic settings for Cash Flow Excess. 3. Enter the logic settings for Cash Flow Deficiency. 4. Enter the parameters for RRSP contributions. (if selected) 5. Enter the parameters for RRSP withdrawals. (if selected) 6. Enter the parameters for non-registered deposits. (if selected) 7. Enter the parameters for non-registered withdrawals. (if selected) 8. Select the order of priority for the paydown of debts. (if selected) 9. Select the debt category to be used to cover deficiencies. (if selected) 10. Choose the Optimization Method. 11. Click Optimize.

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Cash Flow graph prior to optimizing

Cash Flow graph after optimizing

The Logic Settings From Age To Age

You can choose to optimize any time frame within the period covered by the projections. The time frames for excesses and for deficiencies do not have to be the same, however more often than not you will probably optimize the entire 60 years projected for both. Select the periods to be optimized from the drop-down menus. The procedure runs a series of iterations to produce the desired result. One iteration is a series of calculations starting in the first year selected and continuing through each consecutive year until the last year selected. Multiple iterations are required, as the changes made in each year affect every other year in the projections. The greater the number of iterations, the more precise the result. (See Advanced Settings below.) Cash Flow Excess

Select the categories to be included in the calculations and enter the percentage of projected excess cash flow to be allocated to each category. The sum of the percentages must equal 100%. The percentage settings enable you to prioritize the allocation of projected excess cash flow. Any item not checked is ignored by the procedure. For example, you may wish to manually enter RRSP contributions, in which case you would not select that category. You may also choose to allocate 0% to a selected category.

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In the example on the right, the procedure will contribute 100% of excess cash flow to RRSPs. Amounts projected to be available beyond the clients' available contribution room will be used to pay down debts. In any given year where contribution room is maximized and debts retired, excess amounts still projected to be available will remain unallocated, as no other categories are selected. If Deposit to Non-registered had also been selected, with a 0% allocation, all excess amounts beyond allowable RRSP contribution room would be split equally between non-registered accounts and the pay down of debts. If it had been selected with an allocation other than 0%, no amounts would be applied to debt reduction as there is no limit to the amount that can be invested in non-registered accounts.

Note: To include a category, to be used only when other selected categories have been maximized, select the category and allocate 0%. All categories selected and allocated a percentage other than 0 are treated as priority categories. When more than one category is included with a 0% allocation, excess amounts still remaining after the priority categories have been maximized are divided evenly among the 0% categories. Cash Flow Deficiency

Select the categories to be included in the calculations and enter the percentage of projected cash flow deficiencies to be offset from each category. As with Cash Flow Excess, the sum of the percentages must equal 100% and any item not checked is ignored by the procedure. The percentage settings enable you to establish where funds will be drawn from to cover projected deficiencies, and the order of priority. In the example on the right, the procedure will draw 50% of the funds required to offset a projected deficiency from RRSPs and the other 50% from non-registered accounts. Once all of the funds have been exhausted from either the RRSP or non-registered accounts, 100% of deficiencies would be drawn from the remaining accounts. After all accounts have been depleted, the procedure will automatically recalculate Lifestyle Needs in the remaining years to illustrate for your client the reduction that would be necessary.

RRSP / RRIF

If you have chosen to include RRSPs, select the RRSP / RRIF tab. Here you set the allocation priorities for the percentage of excess cash flow to be contributed to RRSPs and the priorities for offsetting projected deficiencies. You can choose to have contributions made on behalf of either spouse or both. If only one spouse is selected, contributions will only be made for that spouse. If both are selected, contributions are made for both according to the percentage allocation entered. In many cases, you will want to maximize the spouse in the higher tax bracket's contribution room before any contributions are made on behalf of the other spouse. To do this, enter 100% for the spouse in the higher tax bracket. The procedure will then allocate all excess

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cash flow to that spouse's RRSP first. Only excess amounts still remaining would be contributed on behalf of the other spouse. For the amounts to be contributed, enter the percentage to be allocated to Personal and Spousal accounts for each selected spouse.

Select the accounts from which projected deficiencies should be offset. If one of the RRSP accounts is not selected, it only means that the Optimize procedure will not use that spouse's account. RRIF minimum is automatic. You may also select a spouse's account and enter 0%, in which case the procedure will use that spouse's account, but not until the other spouse's RRIF account has been depleted. The No RRSP withdrawals pre-retirement option is an over-ride control to prevent the procedure from drawing on RRSPs to offset projected deficiencies in the pre-retirement years. Non-registered

If you have chosen to include non-registered accounts, select the Non-registered tab. Here you set the allocation priorities for the percentage of excess cash flow to be invested in non-registered accounts and the priorities for offsetting projected deficiencies. You can choose to have deposits made to either spouse's account or the joint account. Deposits are made according to the percentage allocation entered for the selected accounts. As there are no limits to amounts that can be deposited to a non-registered account, a percentage other than 0 must be entered for a selected account to be recognized by the procedure.

Select the accounts from which projected deficiencies should be offset and the percentage of each projected deficiency to be drawn from the selected account. You can choose to enter 0% for a selected account, in which case the account will be used by the procedure, but not until other selected accounts have been depleted.

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Debts

If you have chosen to include debts, select the Debts tab. Here you set the allocation priorities for the percentage of excess cash flow to be allocated to the paydown of debts. Select the debts to be paid down using excess cash flow in the order of priority that they should be retired. If your client is managing high interest consumer debt (Household), that should be the first priority. In the subsequent drop-downs, select the debts to which excess cash flow should be applied as the higher priority debts are retired. Select the category of debt from which the necessary funds to cover projected deficiencies should be borrowed. The selected category should normally be the same category as the first priority debt to be reduced by excess cash flow.

Advanced Settings

There are four different Optimization Methods. The method should be selected as a function of the degree of control you want to have over the procedure, as well as the degree of accuracy desired.

Basic

When you select Basic, the procedure performs 5 pre-RRIF iterations, then 3 more complete iterations. Basic usually achieves the desired result. You may wish to manually run an additional iteration in some cases for fine-tuning.

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Extended

When you select Extended, the procedure performs 8 pre-RRIF iterations, then 4 more complete iterations. Extended takes longer to execute, however it achieves a higher degree of accuracy than Basic. Custom

When you select Custom, the Custom Settings controls are enabled allowing you to adjust the number of iterations as desired. Manual

Select Manual for the highest degree of control, executing a single iteration at a time. Optimization to Recommended Settings FPS has the ability to implement 20 common planning strategies, 6 of these strategies make adjustments to the optimize settings. Clicking the Optimization to Recommended Settings button will implement the common planning strategies that have to do with the optimization settings. Optimization to Default Settings

Clicking the Optimization to Default Settings button will restore the optimize settings to their defaults. The default settings in the optimize module are to make all deposits to the non-registered investments and all withdrawals from both registered and non-registered in equal percentages. The settings between the client and spouse are also defaulted to a 50 - 50 allocation. Other optimization controls Reset Optimization

Click Reset Optimization to reset values to 0. This feature acts only on the selected items. Deselect any option for which you do not want the values changed, prior to resetting. Undo Last Optimization

Click Undo Last Optimization to reset all values to what they were prior to the last optimization.

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The Simulation Tool FPS offers a highly sophisticated modeling environment for comprehensive financial planning, with in-depth tax calculations and virtually unlimited flexibility. This enables you to illustrate the global impact of virtually any financial planning strategy. Even within such a complex framework however, there is still that dependence on a single set of return assumptions. For this reason, planning is usually built around assumptions that are conservative or historically probable (expected returns) to make sure that our recommendations are sound. Yet we still advise clients that the "ultimate outcome will not be exactly as illustrated". Markets go up and markets go down, and timing can make all the difference in the world.

The Simulation Tool offers groundbreaking new methodologies that make dependence on a single set of assumptions a thing of the past! It is designed to enable you to assess the projected results of an entire financial plan or individual investment portfolios taking into account the realities of market volatility. Simulation is a process whereby the projections are recalculated over and over, each time with changes to the variable assumptions. With Monte Carlo simulations, the changes are random, while with our new Variance simulation procedure, the changes to the parameters are controlled. Monte Carlo Simulation Monte Carlo Simulation is a technique that is used extensively in finance. Its use has been limited by the fact that the calculations can be very intensive, taking from several minutes to several hours to solve a problem. It has not been used in advanced financial planning until now, due to the complexity of the variables involved. The technique repeatedly samples random values to calculate multiple scenarios of a model, producing a multitude of possible outcomes. The random selection of values is much like a roll of the dice, which is where Monte Carlo Simulation gets its name. The Simulation Tool allows you to perform Monte Carlo simulations using a random sampling of values within the standard deviation of the various asset classes. You can also include deviation of the rate of inflation, as well as the rate of realized gains on equity investments. Within the context of a comprehensive financial plan, Monte Carlo simulation creates an analytical model that enables you to assess the potential effects of the volatility of financial markets. The report details and organizes the multitude of different outcomes, depending on the number of simulations you choose to run. Monte Carlo simulation opens up new discussions of risk vs. reward and the realities of market volatility. The simulation results effectively validate the benefits of acting on your recommendations and enable you to focus on the probability of success. Historical Simulation The Historical Simulation feature (not yet available) performs simulations using indexes that you select. These simulations are not random. They are performed in order, using the actual historical values from the indexes selected. Variance Simulation The Variance Simulation performs a series of what-if trials, adjusting the return assumptions within a user-specified range to test the results of a financial plan assuming returns are somewhat lower, as well as somewhat higher than those used as the basic assumptions. This effectively tests the margin of error on your plan assumptions. (A simplified Variance test may also be performed using a new control in the Assumptions user form.)

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Using the Simulation Tool

To load the Simulation Tool, select Tools | Simulation Tool from the FPS menu.

The Analysis document features two graphs and a ledger detailing the results of each simulation that is run. Three Results pages allow you to save the results of up to three complete simulation procedures.

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The text box at the top of each of the three documents enables you to type-in details of the simulations displayed on that page. All other features of the Simulation Tool can be accessed from the button bar.

Click the Simulation button to open the user form.

You select the Type of Analysis to be performed and enter your Report Settings on the Probability Analysis tab.

Type of Analysis

Select either Monte Carlo Simulation or Variance Test. (The Historical option is not yet available.) If you are performing a Variance Test, enter the variation to be applied on the projected rates of

return of the various asset classes. The procedure runs 8 simulations (4 higher and 4 lower) at evenly distributed intervals within the variation entered, plus the Base Plan.

Next, you choose to perform simulations on the Full Financial Plan or Single Assets. When you choose Full Financial Plan, you should confirm your Optimize Settings. When you

choose Single Assets, the Single Assets to Include fields are enabled. You can choose any or all of your clients' investment portfolios. (Pension accounts cannot be included.)

Report Settings The Analysis document displays the results of each simulation at three specific points in time that you choose. For example, you may wish to summarize results at your client's retirement age, life expectancy, and some point in between.

Enter the ages at which you would like the results displayed for comparison with the Base plan.

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The projected asset accumulations from each simulation include only investment assets, as the assets that will be used to produce income, by default. If you wish to include all assets, deselect the Calculate values using investment assets only option. The probability graph charts the probability of assets lasting to each age displayed on the graph. A line is drawn across the graph at the 70% probability level to serve as a confidence yardstick, representing a favourable probability of the assets lasting. You can also add markers on the line to indicate male and female life expectancy.

In the Life Expectancy fields, enter the values from any life expectancy tables, or estimate them for comparative purposes. (FPS will calculate the values using life expectancy tables in a future release.) If you do not wish to show life expectancy, simply enter values that are outside the range of the period to be graphed. (You cannot enter 0.)

Number of Simulations

The number of simulations you should choose to perform, depends on the type of analysis, the degree of accuracy desired, and the time required to perform the simulations. Single asset calculations are not particularly intensive and therefore do not take very long at all. You should set the Simulation Tool to perform at least 250 simulations to get an adequate sampling, however you can perform as many as 1000. Monte Carlo simulations on a full financial plan are much more intense, as the program reoptimizes with each simulation. You can perform as few as 10 or 20, as the procedure recalculates every aspect of the plan, however you should run 100 or more for a wider sampling. This can take from a few minutes to several hours, depending on your Optimization settings. To reduce the time required to perform the simulations, you can use the Custom feature in the Cash Flow user form and set the Optimization tool to perform as few as 2 iterations, i.e. 2 Total, 1 Pre-RRIF. (Excesses and deficiencies that are not optimized, are credited and charged interest respectively, at the Cash rate.) For most cases, these settings will be adequate to produce results worthy of dependable analysis. For certain other cases where there may be a lot at stake, or for scientific analysis, you may wish to run the simulations at the Basic or Extended setting while you are at lunch, or overnight for example. Your system resources can be significantly diminished after intensive simulations, so it is advisable to save your results, then reboot your computer. Although the Variance simulation procedure also reoptimizes with each simulation, time is not so much of an issue as only 8 simulations are run. Assumptions The Return Assumptions and Earnings Allocation tabs provide access to the Assumption settings from within the Simulation Tool. The Assumption settings in the Base plan should be the same settings used when performing simulations. Standard Deviation The Monte Carlo procedure uses random values in each simulation, for each year projected, based on:

the Return Index for each asset class as entered on the Return Assumptions tab. the Standard Deviation of each asset class. the Rate of Realized Gains as entered on the Earnings Allocation tab. the deviation rate to be applied on the Rate of Realized Gains for each asset class. the Inflation assumption. the deviation rate to be applied to Inflation.

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All deviation rates are entered on the Standard Deviation tab of the Simulation tool. With a wide range of variability, on the number of variables involved, there are literally millions of possible outcomes. You can further widen the sampling by entering multiple assets for each asset class. For example, if you were working with stock portfolios, you could enter the number of individual stocks from each asset class.

Enter the number of individual investments in the # of Assets per Investment field. Although this increases the number of variables for a potentially wider sampling, standard deviation effectively reduces as the number of investments in an asset class increases.

If you have opted to perform simulations on a Full Financial Plan, click the Optimize Settings button to open the Cash Flow user form to adjust your optimization settings.

As previously mentioned, you might wish to use the Custom controls to minimize the number of iterations with each optimization, in the interest of saving time. In general, most of the other optimization settings should be the same for your simulations as for the basic plan. However, if your plan was optimized over different time periods, or you manually entered deposits for example, you may wish to adjust the time frame to be optimized in the simulations.

When you are satisfied with your Report and/or Optimize settings, click the Run Simulation button to run either Monte Carlo or Variance simulations.

It is not generally advisable to run other applications during an intense simulation process, as the procedure can terminate before completion when too many other demands are placed on your computer. Simulation Status The Simulation Status window displays an estimate of the time remaining to complete the simulations based on the time required to complete the first one. You may wish to change the number of simulations to be performed, depending on the amount of time you are willing to allow the process to continue.

Click the Pause After Current Simulation button to interrupt the simulation process. (If it is in the middle of a simulation, it will pause when that simulation is complete.)

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Click OK when the message window appears. The Pause button switches to Abort and the Resume button is enabled.

If you choose to Abort, all values from simulations to that point are registered on the document. The Base Plan does not show up on the document when you Abort however, as it is the last simulation run.

If you wish to terminate the procedure but want the Base Plan values included, revise the number of simulations to be performed, in the Simulation Status window. (Enter the same number as the Performing number for fastest termination.) Of course, you can also increase the number of simulations to be performed.

Click Resume to continue from where the process was interrupted. Viewing the Results

The top graph on the Results page charts the path of each individual simulation, clearly illustrating the ups and downs of the simulations, as well as the wide range of possible outcomes. When you perform more than 250 simulations, only the first 250 are graphed. As the simulations are random however, this usually represents a legitimate cross-section of the total sampling.

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The second graph summarizes the results of all simulations. For each age, the bar graph shows the percentage of simulations where the assets successfully generated income to that age. The line on the graph is set at 70% to serve as the yardstick for a favourable probability of success. The ledger displays the specific values for each of the simulations. The Base Plan simulation, which is always completed last, uses the exact same assumptions as were used in the development of the financial plan, with no standard deviation. This maintains the integrity of the comparison by ensuring that all of the results in the report are obtained within the same parameters. (The financial plan, more often than not, will have been developed with more rigorous optimizations.) The Average and Median results of all trials run are calculated and compared to the Base Plan results at the top of the ledger. Sort Results Both Asset and Estate values, for each of the three ages selected, are displayed for each simulation. They are initially organized in the order they were generated (Sim #). Click the Sort Results button to open a user form that enables you to sort the results in any of the eight columns in ascending or descending order.

In the small sampling illustrated above, the results range from being $343,000 short, to still having $790,000 in assets at the age selected! Clear You can click the Clear button to clear all values from a Results page. This is done automatically however, whenever you choose to run a new simulation over existing results. Saving the Results Do not use File | Save to save the Results pages, as simulation results are not saved in the client file.

Click the Save button. This launches the Build Report tool which creates a new Excel workbook. Although there are only three Report pages, enabling you to only show three simulations in FPS at the same time, you can save as many simulation reports as you like in the workbook created when you Save. After adding the Report documents to your new workbook, simply run new simulations in FPS over the existing results. Chart Range You can also adjust the range of ages to be displayed on the graphs.

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Click the Chart Range button to open the user form.

Select the range of ages to be displayed

from the drop-down menus.

Build Report The Build Report tool enables you to transfer any combination of documents from FPS to a standalone Excel workbook. The workbook can then be saved to a diskette, or e-mailed to a client offering you a new way of packaging a financial plan.

Clients who do not have Excel can view the report using the Excel viewer which can be downloaded for free from the Microsoft website. To launch the tool, select File | Build Report.

The Build Report tool bar can easily be manipulated and moved around your workspace.

It can also be docked, for convenience. To dock the Build Report tool bar, simply drag it up to the FPS menu bar.

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To create a new Report workbook, go to the first document in FPS that you wish to transfer, and click Add Document on the Build Report toolbar.

A user form appears that enables you to rename the sheet being copied. (You can also rename a sheet at any time by simply highlighting the name on the sheet tab and typing in a new name.)

A Report Notes sheet is automatically created and included at the front of each new workbook.

To return to FPS, click Go Back. To add another document, go to the desired document and click Add Document again. You can

add as many documents as you like. Click View Report to return to the Report workbook without adding a document. Click Save Report to open the Save As user form when you want to save and name your workbook.

(Do not use File | Save as that saves the client file.) Click Print Report to open Excel's Print user form. Click Close Report when you are finished, or when you wish to open or start another report. (You

should not have more than one Report workbook open at the same time.) Click Open Report to locate and open a previously saved report. Click the button on the Build Report toolbar to close the tool. You can also right-click on the

toolbar and uncheck Build Report on the menu.

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Investments Overview of the Investment Model All three FPS programs enable you to project several investment portfolios, including:

Non-registered (Client, Spouse) RRSP (Client, Spouse) and RESPs

For more comprehensive planning, FPS 2000 and FPS Briefcase can also project:

Locked-in RRSP (Client, Spouse) and Money Purchase Pensions (Client, Spouse)

FPS 2000 also includes:

Corporate accounts Also in all three programs, each portfolio is allocated among the asset classes (Cash, Bonds, Equity) within a structure of seven investment categories:

Cash & Equivalents Bonds: Canadian Bonds: Foreign Equities: Canadian Equities: Foreign and two user-definable categories

The projected returns for each portfolio are calculated based on the Return Assumptions for each of the seven investment categories, and the Earnings Allocation of each category (i.e. distribution of interest, dividends, and capital gains). The common structure enables the sharing of files among the three FPS programs, however there are major differences in the level of detail, as well as the sophistication of the tax calculations among the programs. Q-plan and FPS Briefcase use marginal tax rates, while the tax calculations in FPS 2000 are T1-based, taking into account your clients' tax position in each of the years projected. Projected returns are also influenced by the rate of Realized Gains assumed for each category and the rate of portfolio turnover (i.e. investor style). FPS 2000 also automatically tracks ACB, and calculates current and deferred taxes based on distributions and withdrawals.

Return Assumptions User-definable Investment Categories

Two of the investment categories are user-definable. In FPS 2000 and FPS Briefcase, you must select the appropriate asset class for each of the two user-definable investment categories from the drop-down menus (i.e. Bonds or Equities), and also indicate whether the category is Canadian or Foreign.

(This information is not relevant in Q-plan.) You can enter any name you wish for each of these categories in the text fields to the right. The names you choose are applied as labels throughout the program. The Return Assumption settings are global (i.e. they apply to all investment portfolios), therefore the two user-definable categories should be set up before you begin working on a client file.

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Return Index

You can enter a different rate of return for each of the seven investment categories in the Assumptions user form.

The rate entered for each category is assumed to remain the same over the course of the projections. If you wish to show varying rates of return, they must be entered on the Assumptions Variables page either directly in-cell, or using the Custom Trend / Random Number Generator tools. If varying rates of return have been entered for an investment category, that category's control in the Assumptions user form is disabled. Whenever any control is disabled, you must go to the corresponding Variables page to adjust values.

Return assumptions are saved in the client file. Changes to the default assumptions are not automatically saved as program defaults. Management Expense Ratio

You can include MERs in the calculations to show the effect on long term returns or for full disclosure. The net return for each investment category is calculated as the Return Index minus the MER. To exclude MERs from your projections, simply enter 0 in all Management Expense Ratio fields.

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The Index document shows the return assumptions for all seven investment categories, net of the management expense ratios.

Earnings Allocation

You can enter a different allocation of interest, dividends, and capital gains for each of the seven investment categories. The earnings allocation entered dictates the tax treatment of non-registered investments. FPS 2000 also calculates and tracks foreign content, ACB, distributions, and portfolio turnover, as well as realized and unrealized gains. You can enter a different rate of realized gains for each category to project the results of varying degrees of tax efficiency.

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The Earnings Allocation document shows the MERs and assumed earnings allocation for all seven investment categories. If you have chosen not to include MERs by entering 0 in all fields, you can also exclude the MER section on the Earnings Allocation document by clicking the Show / Hide button ( - ) in the left margin.

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Investment Profile

Profile Overview

You can develop portfolios for your clients in the Investment Profile module of FPS Briefcase or FPS 2000 using the investment database. The documents list the individual investments in each portfolio and graph the portfolios by investment category, and can also include Investment Details such as rank, MER, standard deviation, and historical returns. You can populate the investment database directly from the fund database programs. Import utilities are included for Bell Charts®, Fund Profiler®, Pal Trak®, and Globe HySales®. You can also enter investments manually. You can illustrate your clients' current portfolios as well as illustrate recommended portfolios. To assist in determining the appropriate asset mix to recommend, a Risk Tolerance questionnaire is included. The questionnaire features a series of 18 questions to assess investor profile and risk tolerance. The questions are designed to assess your clients' current financial position, their goals, investment knowledge, investor style, and whether they are active or passive investors, as well as their attitudes toward issues such as safety, volatility, and the need for liquidity. The FPS Risk Tolerance assessment is very unique. It enables you to save time by assessing tolerance for non-registered and registered portfolios for both Client and Spouse, all at the same time. In FPS 2000, the "lifetime" assessment goes beyond today's suggested asset mix, providing time and age weighted future balancing!

Personal Risk Tolerance The Risk Tolerance questionnaire features a series of 18 questions to assess investor profile and risk tolerance. The questions are designed to assess your clients' current financial position, their goals, investment knowledge, investor style, and whether they are active or passive investors, as well as their attitudes toward issues such as safety, volatility, and the need for liquidity. Open the questionnaire by clicking the Investment Profile button from the Main Screen, or the Risk Profile button from within the Investment Profile workbook.

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Individual Assessment is selected by default when there is no spouse. Select:

Combine Client / Spouse Assessment to complete the questionnaire for a couple, with a single set of responses. The two spouses' risk tolerance is treated as being the same.

Separate Client / Spouse Assessments to complete a separate questionnaire for each spouse. Two sets of response fields enable you to complete both simultaneously.

Manually select risk tolerance to set the risk tolerance on the four portfolios without completing the questionnaire.

Select the most appropriate response to each question from the drop-down menus. Each question carries a certain weighting depending on the response. The program suggests a model portfolio based on the combined weighting of all responses, and even calculates future realignments based on client age and the responses to time horizon questions. You can choose to use the suggested weighting in Year 1 only, or you can add the realignment suggestions at either 5 or 10 year intervals. (See Allocation Planner)

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Where the response to a question may be different for RRSPs and non-registered investments, a field is provided for each. The need for liquidity, the need for income, and the time horizons associated with those needs may be quite different for the two portfolios, influencing suggested asset mix.

Model Portfolios The results of the risk tolerance assessment are shown on the bar graph (meter) on the Profile document. As you can see, the results indicate different strategies for the RRSPs and non-registered investments.

(You must click CALC to display the results. If no bar appears on the graph, it is because the results suggest an ultra-conservative approach.) The recommended portfolios are also displayed on the document. The allocation of the suggested portfolios can be customized in the Model Portfolios user form.

You can modify the FPS defaults, and you can also adjust the settings for each client. (The user-definable categories are not used in the FPS default settings.)

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Developing Portfolios

Creating an Investment Database The Investment Database can be populated by one of four popular mutual fund database programs:

• Bell Charts® • Fund Profiler®, • Pal Trak® • Globe HySales®.

You can also add your own investments. Five user-definable Other Investment categories are available. (See Creating Custom Investments) FPS 2000 uses the 33 standard mutual fund categories as proposed by the Investment Funds Standards Committee. To populate the database the file must first be created in your database program. In FPS 2000, select Tools | Mutual Fund Data Import

from the FPS menu, then select your program. You will then be prompted to locate the file, and the database will be created.

The utility creates a file from your mutual fund database program that includes all funds with their Category, Rank, MER, Standard Deviation, and 1, 3, 5, and 10 year historical returns, when available. (1, 3, 5, and 10 year historical returns are used per IFIC's guidelines for the use of marketing materials.) The four programs do not all Rank the funds the same way, and they may not calculate Standard Deviation in the same way, so there can be minor discrepancies in the data from one program to the next. You can use your mutual fund database program to update the data in the FPS database whenever you wish. Simply follow the same procedure to update using the same database program you used initially. If you use a different program to update the database, the utility will warn you that it must first purge the database of all investments imported using the original program. (Custom entries are not purged.) You will then have the option of continuing or canceling. The database can be viewed and sorted from the Database tab of the Investment Details user form. You can choose to view all investments or those of a specific category by making your selection from the Investment Type drop-down menu. You can then sort in ascending or descending order by Company, Name, Type, Rank, MER, Standard Deviation, or 1, 3, 5, or 10 year return. Select the primary sort criteria from the Sort by drop-down menu, and the secondary sort criteria from the Then by drop-down menu. Whenever the lettering on the Refresh button is red, click the button to update the database window. The sort criteria is included in the display window (i.e. the values you are seeking).

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You can also use the two option buttons at the bottom of the user form to narrow the field to Show favorites only and/or Show custom funds only. Custom funds are those that you create manually. Favorites are all those "marked as favorite" in the Mutual Fund Data user form. The Favorite selection enables you to narrow the field, as you may have 2700 or more investments in the database, but only regularly use 100 or so. To mark an investment as a favorite:

1. Highlight the investment. 2. Click the Details button. 3. In the Mutual Fund Data user form,

check the Marked as favorite option. 4. Click OK.

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Developing an Investment Portfolio Investment portfolios can be developed, using the investment database, from within any of the investment modules or from within Investment Profile. Investment Details

Click the Investment Details button to open the user form. The Portfolio selection drop-down menu enables you to enter all of the investments in all of the portfolios, without having to go to each respective workbook. When you access Investment Details from within an investment module, you can choose to update that specific portfolio with the investment details entered. Although you may have entered details for more than one portfolio, only the active portfolio is automatically updated. (Select the Apply Investment Details to active module option.) You can only update all portfolios at once using the Export feature in Investment Profile.

(The Rank, MER, Standard Deviation, and Return values are displayed on the Ratings document.) You can select investments from the database and/or enter investments manually. Entering Investments Manually

You can manually enter investments simply by typing in the edit fields. Investments entered manually are saved in the client file, but not the Database. To save custom entries in the database, use the Create procedure.

1. Click New to enable the edit fields. 2. Select the portfolio the investment is to be included in, from the Portfolio drop-down menu.

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3. Enter the value as of January 1st of the current year, or the projected value as of January 1st of the coming year, depending on the Plan year entered in the Personal Information user form.

4. Type in the name of the investment. 5. Select the category of the investment from the drop-down menu. 6. You can enter Rank, MER, Standard Deviation, and Return values to appear on the Ratings

document if they are known, otherwise leave the fields blank. 7. Click Update to accept the investment, then click New to enter the next investment.

Selecting Investments from the Database

1. Click New to enable the edit fields. 2. Select the portfolio the investment is to be included in, from the Portfolio drop-down menu. 3. Click the Database tab. 4. Highlight the desired investment in the database window. 5. Click Transfer to Investment Details.

All fields for which data is available are then populated. All you have to do is enter the amount of the investment and the ACB.

6. Enter the value as of January 1st of the current year, or the projected value as of January 1st of the coming year, depending on the Plan year entered in the Personal Information user form.

Click Update to accept the investment into the portfolio, then click New to enable the fields to accept a new investment. (Update and New are the same button.) Click the Database tab to select the next investment... Click the Category button if you want to review the allocation of the investment category. The allocation of categories can only be adjusted from within Assumptions. You can also name the five user-definable Other Investment categories through Assumptions...

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Click the Fund Return Details button in the Assumptions user form.

Select an Other Investment category. Click the Edit button that appears when

a user-definable category is selected. Enter the name you wish to use for that

category. Enter the desired allocation.

Selecting Investments in a Logical Sequence

Although you can select investments in any sequence you wish, you may find that the quickest and easiest way to develop a portfolio is to select investments in order of asset class. The filter in the database makes it easy to select investments in a logical sequence.

1. Select a category from the Investment type drop-down menu (e.g. Canadian Bond). 2. Select Type from the Sort by drop-down menu. (Choose any desired secondary criteria from the

Then by menu.) 3. Click Refresh. 4. Choose all investments from that category, then select the next category (e.g. Global Equity). 5. Click Refresh, then choose all investments from that category etc...

Notes

• You do not have to select investments from the Database, as you can also develop a portfolio entirely with custom entries to be saved in that client file only.

• The section on the right-hand side of the Investment Details tab is provided for user feedback. The amounts invested in each portfolio are displayed and updated as you proceed with your investment selections. This is particularly helpful if you are developing several different portfolios at the same time.

• All investment data is saved whether you choose to immediately update the portfolios or not. Also, the individual investments selected are saved in the client file. Even if a selected investment is subsequently removed from the database, it will still appear whenever you load that client file.

Making Changes

The scroll bar in the Investment Details section enables you to scroll through the investments entered. You have two options when you wish to make changes to any of the investments. You can choose to Delete the investment, in which case the dollar value is also removed, or you can Edit the investment, for example when you wish to update the file to reflect a switch. Click Edit to enable the fields. You can then adjust the value of the investment or click the Database tab to select an investment to replace it with. The Portfolio and Ratings Documents

The Portfolio and Ratings documents in Investment Profile summarize the investment details for presentation to your client. The Portfolio document summarizes the portfolios with their specific investments, while the Ratings document includes full details of each investment including Rank, MER, Standard Deviation, and 1, 3, 5, and 10 year historical returns when available. (In FPS Briefcase the Investment Details and Investment History documents summarize these details.)

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Disclaimers

Because of the nature of the information provided on these documents, a disclaimer appears at the bottom of each document. Click the Disclaimer button in the Investment Details user form to edit the disclaimers. You can also choose not to include them.

If you are using these documents to sell a recommended portfolio, the documents are considered to be a sales communication and the Disclaimer should be there.

Creating Custom Investments You can add any investment to the investment database. Click Create when you wish to manually add an investment.

• Enter the Company and Name of the investment to be added. • Select the category it belongs in from the Type drop-down menu, to establish the return allocation.

If Rank, MER, Standard Deviation, and/or historical returns are known, enter them in the edit fields. If the values are not known, simply leave the fields blank and no values will be shown on the Ratings document for that particular investment.

If you want the investment to be included in the database as a favorite, check Marked as favorite. Click Save to save the investment and return to the database. You only enter custom investments into the database if you intend to use them again. If you don't need them in your database you can simply enter them in the client's portfolio, in which case they are saved with the client file, but not in the database.

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Investment Variables You can also enter investment details on the Investment Profile Variables page as an alternative to the user form. Select the Variables tab in the Investment Profile workbook to get to the page. Click on a cell in the Portfolio column to display the Portfolio selection drop-down menu. Select the portfolio, then enter the name of the investment in the next field. (You can only access the database from the user form.)

Enter the values, then scroll to the right to the Category column. Click on a cell to display the Category selection drop-down menu. You can enter investments for as many portfolios as you wish in any sequence. Use the Sort button to arrange the investments by portfolio.

Category The Category drop-down menu offers the choice of the 33 standard mutual fund categories as proposed by the Investment Funds Standards Committee. Also included are 5 Other Investment categories for flexibility. (The names of these Other categories are user-definable.) Each category is allocated among the seven Asset Class categories according to the weightings suggested in the committee's document "A Proposed Standard to Canadian Mutual Fund Classification".

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You can modify the default settings in the Return Allocation user form accessed by clicking the Fund Return Details button from within the Assumptions user form. (The Return Allocation user form can also be accessed from within Investment Details by clicking the Category button, however this access point does not allow you to edit the values.) Simply select each category to review its allocation and make adjustments as you see fit. The changes you make are only applied to the current client file. The Return Allocation of the five Other Investment categories is defaulted to 50% user-definable asset class 1, and 50% user-definable asset class 2. You should set the desired allocation at the same time as you enter a name for the category. The name you enter should be generic rather than investment specific (e.g. Stocks, not Bell Canada), so that the category can be broadly used in all portfolios. Also, you cannot repeatedly rename each Other Investment category within a single client file.

Exporting Portfolios

You may wish to develop all portfolios at the same time. Although you can do so from within any investment module, you can only update them all at the same time from within Investment Profile, using the Export utility. Once you have finished entering the investments for one or more portfolios, click Export. The Export user form enables all of the portfolios detected to have been modified. If a portfolio from an investment module not currently available in the file has been modified, the procedure will open and add that module to the plan. The feedback from this form can also point out errors to you, such as entering investments in the wrong portfolio, or forgetting a portfolio entirely.

Simply deselect any portfolio that you may not wish to immediately update. When you are ready to proceed with the Export, click OK.