The Boulevard to Financial Independence

Most online calculators focus on a specific event, like retirement, buying a home or college savings.  Boulevard R, however, takes an integrated approach that considers all these factors and does it in a way that is designed to be used on an ongoing basis.  Our goal is to simulate the planning process someone would go through with an independent financial advisor by looking at the bigger financial picutre, since it’s rightly said that “Retirement is the one financial event that you can’t borrow for.”

Nearly all the online tools you’ve ever used have assumptions hard-wired into the calculation that do not allow for adjustments and forecast on a linear basis (assuming the same rate of return year in and year out).  Our approach is based on best practices and is effectively the process you would get if you sat down with an independent financial advisor, so we take into account your income, number of kids, cost of living and also run 1,000 Monte Carlo simulations based on historical market return (which also changes the results, because we run a new calculation with Monte Carlo simulations every time you adjust a variable).  In short, Boulevard R’s engine tries to more realistically simulate all the impacts on retirement calculations (and there are many) than any other tool available and that makes it more sensitive to smaller adjustments.

Boulevard R’s approach to planning for retirement is a lot like sailing from San Francisco to Maui.  You don’t set your course, kick back and then assume you’ll be in Maui in 2 weeks (this is the approach most online planners take).  You have to make course corrections along the way.  One of the the great aspects of the tool is that it models the impacts of different financial decisions or events, so that consumers can make more educated financial decisions.

Boulevard R makes a realistic forecast based on the many different factors, but if you tweak some of them- inflation, for example - you’re going to get a drastically different result, since that % is compounded over many years.

We’re continually working to customize our calculation and improve the user experience to help consumers reach a secure retirement.  Success for us is helping consumers who are not on track to get on track and for those who are on track, we want to help them retire even sooner.  As we talk with users we continue to learn.  We appreciate that there may be better ways to return results, particularly for those who might end up in the “red” and we’re working on ways to do this effectively so that we don’t mislead people and at the same time motivate them to look at some changes they can make to improve their situation.  While we also want to return results that inspire hope, we also have an obligation to be realistic.  If we were just calculating what people need to retire, and not considering their financial goals like buying a home or saving for college, their finances would look a lot better.  But the reality is that those goals have a very significant impact on retirement, since they represent a real opportunity cost.  That’s something that most retirement calculators won’t tell you.

Please keep the feedback coming- support@boulevardr.com

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It is clear that banks have a lot of catch up work to do when it comes to the retirement market. A recent survey that comes from the banking industry points out:

“Only 14 percent of mass affluent consumers cited their bank as their
primary provider of retirement savings, compared to 53 percent for
investment and brokerage firms. Additionally, banks captured just 18
percent of 401(k) rollovers to an IRA compared with 67 percent for
investment and brokerage firms in the past year.”

However, it’s not like consumers aren’t planning for retirement. The study points out:

“…the mass affluent are clearly engaged in
retirement planning. A majority (59 percent) cite saving for retirement as
their top financial priority, followed by paying bills (cited by 34 percent
as a top priority). Nearly all (89 percent) report having done some form of
retirement planning.”

The study goes on to say that banks are now getting punished for being focused on transactions instead of advisory focused and that consumers do not consider them the go-to source for financial advice. Given that most bankers are not trained as advisors, who do banks then make the transition to a model that is more focused on customized solutions? For banks in wealthy areas, they can build out a wealth management team, but what about banks that don’t have enough customers with over $500k in investable assets?

At Boulevard R, we’re focused on delivering actionable, customized advice to consumers who don’t qualify for wealth management services. These are the people that no one has yet figured out how to reach . While investing is important for these folks, we’re more interested in helping them save for retirement and then make investment decisions that aligned with their risk profile and what they want to do in retirement. We feel a mix of a non-threatening interface, actionable advice and community generated tips on how to get on track for retirement will be a great start.

There was an op-ed in Investment News the other day that underscored the reason why consumers are distrustful of their financial providers and increasingly dissatisfied.

The article briefly discussed the scarcity of qualified financial advisors and then provided a first person account (from the perspective of a newly minted planner) of how the planner profession had an aggressive emphasis on sales and branding.  In essence, the article said that in the planner job market, sales skills are more than it is  a strong grasp of fiancial planning.  While knowing how to attract and retain clients is important, the ability to move product shouldn’t take precedent over the knowledge of appropriate client solutions.

It’s not like consumers haven’t noticed.  Nearly 70% of investors feel that “financial advisors and advisory firms put their own interests ahead of their clients” (Annual Securities Industry Association Investor Survey). Given this statistic, the interests of consumers and the interests of their providers seem seriously out of alignment. A recent study put out by BAI advocates that banks need to focus on establishing a dialogue with customers around their plan for retirement. While this is an important first step, a dialogue that doesn’t result in a retirement plan with the consumer firmly in the driver’s seat is insufficient. Planners need to act as customer advocates, not product advocates.

New startups, like Cake Financial, are beginning to recognize that there is a significant opportunity in providing unbiased advice to consumers while leveraging the knowledge of it’s users. Similarly, Boulevard R is developing features that will deliver the customized advice that consumers need to get on track for retirement- including experts who can respond to technical questions, as well as peers who are coming up with creative ways to save for retirement.

This sort of alignment (or common sense) with what consumers are looking for, will ultimately benefit everyone involved. Even though financial services is a conservative industry, we hope that providers start to think more creatively about how they can best serve their customer’s needs so that they can drive that 70% down towards 0%.

Thanks to Davis Janowski, we were recently featured in an Investment News article.  Investment News covers issues for financial advisors and it was great speaking with Davis who understood the need to provide services to the mass market and also liked the interactive nature of the interface.

The opportunity to address the larger market, not the millionaires, is what is really significant in Boulevard R’s model.  Retirement is such a concerning issue for so many people that  if we can provide them with effective, customized tools and the support they need, we’ll be successful.

By Randy

Marriette, you have good instincts. While saving for retirement should always be a priority, one of the most effective ways to “earn” a good return on your money is to pay down your debt. When you consider that the long run returns of the stock market are somewhere in the vicinity of 10-11% per year pre-tax, a realistic after tax return expectation is closer to 8%. If you are paying interest on debt, other than the mortgage on your house, at a rate above 8% you actually will get a better “return” paying off the loan as opposed to investing the money in stocks. It’s easy to think of your student loans or credit card debt as just a payment, but a good part of that payment is interest. If you can’t earn more on your investments after tax than you are paying in interest on your loan then your priority should be to pay off the loan.

There is an exception though (isn’t there always) when it comes to most people’s 401k savings. If your employer offers a match for a portion of your savings then that’s a gift to you that you do not want to miss. Think of it this way, if your employer matches your 401k contribution up to $5,000 then your $5,000 savings just got a 100% return! I sincerely hope that a 100% return beats the interest rate on even your worst loan.

So good work Marriette and keep whittling away at your debt. The beauty of that is as you begin to eliminate debt you’ll have fewer payments and more free savings to make the rest of the debt go away even faster. It may not feel like you’re making progress at first but you’ll be surprised how quickly you’ll get ahead if you just keep it up.

By Matt

Just like in the real world, the “Innovation” in our heading has a big “I” and a small “i.”

Curve-jumping, paradigm-shifting innovation belongs to the big “I.” Incremental change and tweaking belongs to the small “i.” They each have their place and deserve recognition, but here are Boulevard R, we’re more interested in the former. That’s mostly because we’re trying to do something that hasn’t been pulled off effectively online- financial planning. There is quite a list of companies who have gone the route of offering online financial advice to consumers, but only to be forced into other markets- Financial Engines (does mostly asset management now), AdviceAmerica (does mostly software for planners now), OneHarbor (sold to a large financial services company in order to re-coup investor’s money).
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By Mariette

It’s National Save for Retirement Week! Who knew? In an effort to promote the idea that saving for retirement is important for everyone, regardless of income, the Senate and the House have declared this National Save for Retirement Week. So in doing our bit to promote this idea I want to look at one of the biggest stumbling blocks that people have to planning their finances in general and saving for retirement in particular, feeling too intimidated or overwhelmed at the idea of learning something new.
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By Mariette

Yesterday’s Chicago Tribune reported that more and more cash-strapped Americans are borrowing or taking hardship withdrawals from their 401k’s. There are numerous reasons why someone may consider doing this: paying a down payment on a first home, unexpected medical expenses, prevention of foreclosure on an existing home, paying off creditors, etc. However, except in truly desperate instances this is a very bad idea, for a number of reasons.
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By Mariette

Change is difficult, and the hardest things to change are our habits. This is important to remember when we are trying to change our relationship to money. When we are trying to get out of debt, develop healthy saving and investing habits, or beginning to save for retirement, we must have patience with ourselves as it will not happen overnight. Most of us will slip back into our old habit patterns, particularly in the beginning; we will go over our budget with our spending, blow too much money on that gadget we thought we just had to have and therefore not be able to pay down the debt that month, or not put as much money into our retirement fund as we had intended.
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By Randy

For those of you who may not have noticed, the mortgage market has tightened up and banks that only a few weeks ago were calling you at home during dinner to refinance your mortgage now won’t even return your call. It’s not quite that bad but the mortgage market has changed dramatically and if you are hoping to buy a house or need to refinance your adjustable rate mortgage anytime soon you may have a problem. Let’s take a look at where we really are.
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