FP Alpha, a New York-based financial planning technology company, has announced a series of upgrades to its Estate Lab offering, which is part of its estate planning module. The changes are meant to help advisors illustrate the effects that clients will see on their estate plans when the 2017 Tax Cuts and Jobs Act sunsets at the end of 2025.
Unless the law is renewed, a number of investors will find their estate tax exemptions greatly cut, meaning they will have to fork over more to the government. Advisors are looking for ways to demonstrate to their clients what effect those changes will have on the clients’ overall financial plans.
To assist them, FP Alpha has added an asset projection function to Estate Lab. The system currently illustrates the assets an individual owns, but the new feature gives advisors the ability to customize the growth rates per asset and project balances over time, allowing clients to visually represent the impact asset growth could have on their estate tax liabilities and the amount of wealth passed to heirs.
That can show clients how to minimize the impact if the tax law sunsets, according to Andrew Altfest, the founder and CEO of FP Alpha.
“A lot of clients are speaking to their advisors about how the changing tax legislation is going to affect them,” said Altfest, who is also the president of his family’s namesake firm, Altfest Personal Wealth Management, in an interview. “This is a way for the financial advisor to speak to the client [and] get ahead of changing tax legislation.”
Estate Lab is an advisor platform that takes tax, estate and insurance planning documents and creates visual representations of them in a matter of minutes. Since 2020, the firm has used a combination of AI and attorney reviews for the more complicated documents. The firm said the process would otherwise take days.
Along with the asset projection upgrade, FP Alpha will also begin using just AI to read certain documents, thus reducing the time it takes to incorporate them into the system to just minutes, Altfest explained.
“We’ve been doing this for so long that the AI models have gotten so strong and so accurate that now the document reading is being automated for more and more cases,” he said.
The documents that will be reviewed by AI only include outright revocable trusts, A/B trusts (otherwise known as bypass trusts, which split trusts between spouses), joint trusts, wills, powers of attorney and healthcare directives, according to Altfest.
While the changing tax law was a factor in the recent enhancements, Altfest said the beefed up tech will also benefit advisors looking to spend more time with their clients and offer them more services.
“The advisor is becoming more like the general physician of finance,” he said. “The advisor is now able to serve clients [by] offering more services and helping them with more things that are important to them.”