Advisors may be giving retirees and near retirees bad advice without realizing it—in fact, Bill Meyer is certain of it, so he’s introducing a digital tool to help advisors plan their clients' drawdown strategies.

“I would say 90 percent of the financial advisors out there are using software that gives them the wrong answers,” Meyer says. “It’s because as an industry, we’re all focused on growing your money, not how it should be withdrawn during retirement.”

Meyer, president of Retiree Income and Social Security Analyzer, has launched Income Solver, software designed to optimize withdrawal strategies.

The conventional wisdom regarding retirement withdrawals is that advisors should first draw from a client’s taxable accounts, then tax-deferred accounts, then tax-exempt accounts, then non-deductable IRAs and finally from a non-qualified annuity—but Meyer says that’s not necessarily the case.

“Big institutions like Fidelity and Vanguard are using this conventional wisdom and it’s wrong almost every time,” Meyer says. “If you draw down in a strategic way, you can optimize your outcome, but if you drawdown willy-nilly and you don’t think about this in the context of the individual client, the client often ends up with less money.”

Consider a single client with a $600,000 nestegg: $250,000 in a taxable account, $250,000 in a tax-deferred account and $100,000 in a tax-free Roth account. Meyer says the conventional strategy would turn that nestegg into $1.8 million over the client’s planning horizon. Using the opposite of conventional wisdom—withdrawing from the tax-free account first, then the tax-deferred account, then the taxable account—would result in an additional $15,629 for the client across the planning horizon, he says.

If Roth conversions are used to keep that client within an average marginal tax rate of 15 percent over the planning period, the client would end up with an additional $122,129 throughout their retirement, says Meyer.

“Vanguard says that by coordinating Social Security and drawdown strategies, advisors can find their clients an additional 3 percent a year, and David Blanchett’s research puts that number at 1.6 percent,” Meyer says. “Our paper also found that optimizing these strategies creates value for clients, but it was a research paper. Advisors couldn’t really do anything with it. It was interesting, a nice read, but there were no tools.”

Theoretical strategies are great, says Meyer, but until the launch of Income Solver, advisors lacked a tool that would help them implement the strategies.

Income Solver, launched in May, is the result of 10 years of research and programming.