Planit:Assets and Liabilities
Assets & Liability screen allows you to identify the client’s investments and personal use assets and liabilities. It can also identify your client's savings within this screen. Sufficient data can be inputted to allow you to generate a net worth statement for your client. We have ELearning module on the assets and liabilities area. We feel you will benefit by viewing this training movie.
When entering assets and liabilities into the PlanPlus Planit, you have the option to enter assets at a “Summary” level or at a more “Detailed” level of information of all accounts and investments within those accounts.
Summary Level Entry with Accounts
To enter summary level assets you can simply just enter the amount within the appropriate account.You also have the ability to enter in as many accounts as you need.
- The non-registered investments are entered separately from the registered assets.
- Personal Use Assets are entered under “Personal Use” such as a house or a car.
- Liabilities are entered in the appropriate fields either under investment liabilities or personal.
- When you click on the “Save” button, all sub-totals and totals for the screen will be calculated. Clicking on the “Next” icon will also do these totals, but you won’t see the results since you’ll move to the next screen with this click.
We have now changed the Assets and Liabilities screen to simplify the way you enter in your savings for each of the client’s accounts. In past versions you entered your savings directly on the Cash Flow screen, but now you will enter these savings on the Assets and Liabilities screen right beside each account.
These savings will then automatically flow through to the Cash Flow Management screen as seen below and be displayed in read only mode. This means that should you want to edit these savings later, you’ll make your changes on the Assets and Liabilities screen. This approach allows you to more clearly document the precise accounts where new savings are being made.
Adding in Additional Accounts
You have the ability to create as many accounts as you require for your clients. To do this you would simply click on the <New Account> button.
Enter in a description for this account then under “Account Types”, you can select the type of account it will be. Within the Ownership section you can enter what percentage is owned by either the spouse, client or dependant. In our example you will see that 100% is owned by Mark.
The “Managed” check box tells the system whether or not you actually manage this particular account as the client’s advisor.
The “Include in Planning” checkbox is a handy feature that allows you to tell the system to ignore an account, either one you’ve entered manually or one that has come in electronically through integration. This allows you to control what gets included in the IPS you are preparing or even what’s included in any long-term life goals planning you are doing. If we turn off this check box, it will be as if this account is invisible on every other screen and in all documents.
The Liquid on Death and Liquid on Emergency, fields where you can choose if the account is liquid on death or not, the same with the Liquid on Emergency. These fields are also used for when you want to create a Estate Liquidity Report from the Will Information screen.
Subject to Probate check box is used for estate planning, probate is one of those items that can sometimes be avoided through joint ownership and other maneuvers. Hence we allow you to identify if a particular account will be subject to Probate on the death of the current owner. When this is checked off, the analysis will automatically create a probate expense record based on the probate rate specified on the Planning Assumptions screen.
The “Beneficiary is where you can identify if there is a named beneficiary for the holdings of this account. The default for a married person is usually “Surviving Spouse” however, you can also indicate that the beneficiary is the “Estate” or some other third party.
NEW to version 5.3.1 when you select the other radio button it opens up many more options on who you want to have as the beneficiary, also you can have more than one beneficiary on an account.
Portfolio drop down list allows you to choose the portfolio you wish these funds to be earmarked for. For example you may have a goal called “House Upgrade” or “Boat Upgrade” by choosing this portfolio it will use the funds from this account for that portfolio goal. The Add Portfolio button will allow you to add new portfios. To read more on this please click here.
Ownership section is where you cano identify who owns the assets in this particular account.
Once you have completed this screen you can hit “Save” which will refresh the screen which will save the information you have added and will show you a message that is has been saved successfully. You then can click the “Back” button, which will bring you back to the Asset and Liability screen showing you the new account which you added. You will notice that you now have a new account in which you can add the value to this account. You can enter in as many accounts you wish with this new feature.
- Expands all accounts
- Only expands that account
Another feature is the ability to set up your allocation for each of your assets. In the older version once you have completed your asset entry and you moved over to the allocation screen since these assets were entered in at a summery level the system did not know what the allocation was for these assets. Now you have the capability to set up the allocation. You will notice a + sign beside each account, what this does is expands the account down so you can edit each of the allocations. Once you expand it down you will notice another “Edit” link, when you click this “Edit” link it will bring up the Asset Information screen. Here is where you can set the allocation for each asset and set other information like ACB or Adjusted Cost Base of the holding.
TIP: When you see the multi colored pie chart beside any account on the screen, it means that the asset allocation has been modified from the default 100% Cash setting.
TIPS on Adjust Cost Base on Holdings:
- It is not too important to adjust the ACB on a personal residence but will be very important on non-registered holdings that will be subject to capital gains taxes. This is the same with an RRSP holding, it’s not important to enter an accurate ACB since taxation on RRSP’s is based on the full value when withdrawn, not on accrued gains in the account.
- When you are doing an Investment Policy Statement, it’s not mandatory that you enter the ACB’s on the various holdings, as Planit won’t use these in the IPS documents that are generated. However if you are planning on doing any life planning for your client, entering the ACB’s on non registered assets is very important as what you enter will be the starting point for the tracking of the ACB’s on the open portfolio going forwards. What this means is that the capital gains taxes will be triggered on withdrawals from the open portfolio using this ACB as the starting point.
Adding Detailed Assets
In this section we will focus on using the Detailed Asset entry method. Within the accounts you will see a link called “Add Asset”. To create a detailed asset to one of your accounts you would simply click this link.
Let’s first look at adding a “Personal Use Holding” to your Personal Use account. First you will need to expand your personal use account, then you can click the “Add Asset” link it will open what’s called the Product Selection screen. Here we can search for our product or holding that we want to put in this account.
The account we are working with is a Personal Use Account, the search process is made pretty easy for us as we can merely click on “Search”. The system knows that a personal use account can only hold products flagged as personal use holdings so when we click on “Search” it will only return these products.
You can then choose the one you want based on the type of holding I’m working on. In our example we are entering in a personal residence, so you would select that from the list of options.
When you click on the “Select” link it will open up a new screen where you can enter information about the asset or holding.
- The Company line identifies the company this product is associated with.
- The Market Value relates to the value of the holding. You'll see you can enter either the current market value of the asset or the number of units held. For personal use holdings you'll normally enter the market value since the unit price is set at a static one dollar per unit.
- The ACB isn't too important on the personal residence, but will be very important on non-registered holdings that will be subject to capital gains taxes.
- The Account Number is where you can enter an account number if there is one. There usually isn't any account number associated with personal holdings, so this can be left blank.
Here you can enter a loan number if one exists, the amount of the liability, the date the liability was incurred, and when to pay off the liability (upon the death of the client's, the spouse's, either death, second death, or both death).
You can also see a checkbox called "Insured". When you say a loan is insured, it should show up on the Insurance screen in a new field called “Insured Liability”. It should appear under the Client’s existing insurance or the spouse’s or both depending on the ownership.
Once you are satisfied with your entries, you can click on the save button which will take you back to the Detailed Accounts screen.
Adding Registered/Non-Registered Assets
Adding in Registered and Non-Registered is much the same as adding in “Personal Use”, lets go over an example. Again you would click the “Add Asset” link.
After clicking this link it will bring you to the Product Selection screen. You will notice that there are several ways to search for products. You can choose the Product Type, Asset Class or you can bring up a list of your favourites providing you have entered them under the “Favourite Products” to learn more about this please go to the Administration section of this manual. You also can search by Product Name, Company Name or by Product Code and typing it into the description. The best way to search for a product in the product master is by actual product code. For a mutual fund, that would be its actual fund code. For a stock that would be its ticker symbol.
- Enter product code into the Description field then select Product Code.
- Select a favourites list if desired, then click Search.
- Click Select to choose the product and redirect to the Detail Assets & Liabilities screen.
- Click Fund Details if you wish to view more information about the product.
Searching for a product by its code, if most or all of the code is known, is more efficient than the other options, but if the product code is not known it is possible to search for a product by its name (default) or the name of the company the product is affiliated with.
Upon clicking select the Detail Assets & Liabilities screen is displayed. Edit the description if needed and enter an account number if required. There is a choice here to enter either the market value of the holding or the number of units held. It is recommended that, if known, the number of units is entered. The unit price is updated in the system regularly, so if the number of units is selected, the system will keep the value current so the advisor does not have to manually update repeatedly. Regardless of selection, once the market value or number of units is entered, click calculate and the system will calculate the value of the choice that was not selected.
Because this is an RRSP holding, it’s not important to enter an accurate ACB since taxation on RRSP’s is based on the full value when withdrawn, not on accrued gains in the account. So it’s your choice whether you want to bother recording the ACB on registered accounts or not. There is also a section where you can identify any liabilities against this asset.
You will also notice the “Allocation Breakdown” this identifies how this particular product is classified relative to asset allocation. In this case the AGF Canadian Bond fund is classified as “Fixed Income”. Once we have completed all the details we can click on Save. Back at the Detailed Accounts Screen were we can expand our RRSP account and see our new holding under this account.
As many assets as required can be added to each account, just by clicking Add Asset.
Adding Stock Options Assets
NEW to version 5.3 you now have the ability to add in stock options to your client's accounts. Read more on this here.
Adding Business Assets
We made some changes in version 5.1 on how we treat Business holdings, one of which is that we introduced several new Business/Other Regulatory Accounts.
When adding a Business/Other account, you can define the appropriate type by using these new options. When you use the Business/Other account type, you also will be able to identify the disposition strategy for the holding that will in turn generate records automatically on the Pensions and Other Revenues screen.
The Disposition Strategy box only appears when it’s a Business/other type asset. It includes data fields for the following information:
- Target date for disposition of the asset
- Payout period (typically 1 year)
- A growth assumption you want to make for dispositions that take place over several years.
- Any Capital Gains Exemption available to offset taxes on the disposition of the asset.
- You’ll identify the marginal tax rate that would apply to any taxable gains. This is entered just so the report you can generate recognizes the taxes on the year by year projection.
- And to assist with the auto model process you can identify how the revenue stream will be impacted by a delay in the client’s retirement date. This is pertinent when the sale of the business is tied to the client’s retirement target date.
- Finally you’ll notice that you can define how the disposition strategy will be impacted by the client’s death or disability. You can retain the strategy as it is, change the strategy to “Sell Immediately” or even totally ignore the disposition on the death or disability of the client.
Once you have finished your entries, you can click on the “View Report” button and view a report that shows the year by year disposition projection. The convenience of this process is to have all the necessary records created for you in the Pensions and Other Revenues screen.
See to the right an example for ABC Manufacturing. The record for disposition in the Retirement scenario shows the asset being disposed of in 2018 for its value of $2.6 million. However the two records created for Death and disability show disposition in 2009 at the current value of $2,000,000. Also the appropriate taxable percentage is determined for each disposition scenario.
When adding disposition strategies for joint assets, create two Business/Other accounts, one owned by the client and the other by the spouse, and each containing the appropriate amount of funds. Each account should have it's own disposition strategy, providing the appropriate amount of money to either the client or spouse. This must be done in order to properly calculate capital gains taxes.
TIPS when adding investment assets:
- To enter a Mutual Fund you would go to the “Add asset to account” link beside the account you want to add the asset to, this will bring you to the Product Selection Screen. To get a listing of all “Mutual Funds”, select Mutual Funds from the Product Type drop down menu and select “Product Name” then hit search. A list of all Mutual Funds will appear.
- If you wish to search by a mutual fund company name you would do the same process except you would search by “Company Name” and record the company name in the “Search field”. If your client had an AIM fund and you did not know the “Product Code”, you would type AIM in the search field, and all the AIM mutual fund products would be shown on the screen for you to select your client’s asset.
- Searching by Product Code if known is much easier and if you follow the same steps you only need to type the ”Product Code” in the “Search Field”. The same can be done by searching for the fund name.
- The same process can be used for entering stocks except your “Product Type” would be “Stocks”.
- You can also search by “Class” by selecting the appropriate asset class from the drop down box.
- Also you can create your own favourite product list and when you are searching you can just bring up your favourites. Please Note: Refer to the Administration section of this manual for complete instructions on how to create your favourites list.
- Once you have found the fund you want, select the fund and enter your asset information on the detailed asset screen.
- When you cannot find the product within the search engine, we do have a list of generic products within all asset classes that you may use to substitute. To search for these generic products, choose the “Generic Products” from the favourites list drop down menu. This will bring up the entire generic product list. You also can use the “Add Custom Product” when you cannot find the fund you are looking for. For information on how to use this please read on.
When you click “Add asset to account” one of your accounts, it brings up the Product Selection screen, however you will see a button called “Add Custom”. When you click the “Add Custom” button, it will bring the screen where you can enter details of the product with the ability to set the custom asset allocation for the product. This will allow advisors to enter off book holdings using a single product where they can identify the allocation of the account as opposed to having to enter multiple detailed holdings for the account.
Debt Consolidation Calculator
Planit now has a “Debt Consolidation Calculator” that allows advisors to provide advice and identify the benefits of doing consolidation of debt for a client. If you have any loans entered in on the Assets and Liabilities screen this Debt Consolidation Calculator button will appear and you can link all of the loan information to the caluculator.
After you click this button a screen will appear where you can identify which loans and mortgages you want to bring over to the Debt Consolidation Calculator. After doing so you then can click the Debt Consolidation Calculator button once again.
To read more on the Debt Consolidation Calculator please click here
How to View Your Detailed Assets within your Detailed Accounts
Once you have completed your asset entry you may view all of these assets from the Detailed Accounts screen. You will see that we have expanded down the “Joint Open” account and it shows that in this account the client holds four different holdings. You will notice a – sign beside this account this means that the account has been expanded and the accounts with the + sign have not been expanded. You can expand individual accounts or you may also use the “+” link button beside the accounts to expand all accounts.
You also have the ability to change the view of your accounts by changing the option in the drop down list under “View By”.
- Managed will sort the view by what is managed and what is non-managed.
- Account Types will sort the view by account types.
- Ownership will sort by owners
- Subtotals view shows a summary view of the subtotals for both the client and spouse.
Please Note: You will also notice you have access to two PDF reports from the Assets and Liabilities, they are the Holding Statement and the Networth Statement.
Here are some more help pages concerning the Assets and Liabilites:
Employee Stock Options
Debt Consolidation Calculator