“We base a lot of our planning on tax-efficient spending strategies under different circumstances to see if it is going to be sustainable,” McElheny says. “We like to run scenarios based on the client’s estimated spending and what they want the net amount to be. Then we can make small tweaks to say ultimately what’s the best long-term scenario, what impacts their probability of success in terms of the order of withdrawals.”
eMoney also makes things more interactive with the client, she says. “That helps bring it to life for people. People are just wowed by that and it makes the conversation easier for us and makes them feel more comfortable.”
Kevin Michels, a fee-only financial planner at Medicus Wealth Planning in Draper, Utah, recently switched to eMoney after using Money Tree for the past five years.
Money Tree “does a really good job of calculating tax liability for the different withdrawal strategies you model out,” he says. “You can drill down to marginal and effective tax rates and it really helps in determining when to do Roth conversions and which accounts to withdraw from first.”
However, he says, “Money Tree is behind the curve when it comes to technology. It’s spreadsheet-based and you can tell. It’s tough to do interactive planning with clients, and it isn’t really designed for that. It also doesn’t integrate with any other software.” eMoney, by contrast, has more features when it comes to working with clients and integrates with a lot of third-party software, he says.
“If we could combine the technical and tax ability of Money Tree with the interface, integrations and tools of eMoney, I believe we’d find a perfect solution for our planning software,” Michels says.
Erin Voisin, director of financial planning at EP Wealth Advisors in Torrance, Calif., uses both eMoney and MoneyGuidePro. “MoneyGuide is great to show various risk/return scenarios, but because it is goal-based, I feel it limits the conversation with a client,” she says. “eMoney is a cash flow-based software that really allows you to have a deeper conversation with clients, not only about their portfolios, but on spending, distribution planning, tax planning and estate planning.”
Morgan Stanley’s 16,000 advisors use LifeYield in order to implement tax-efficient accumulation and withdrawal strategies for their clients.
“This technology gives a financial advisor a quicker, more efficient method to review a client’s multi-account portfolio and recommend strategies designed to help improve after-tax returns,” says Jed Finn, chief operating officer at Morgan Stanley Wealth Management.
LifeYield says it is “the industry’s only tax-efficient portfolio software with actionable multi-account advice.” It is now being rolled out at some of the major custodians.