by Steven I. Levey, CPA/PFS

CPA financial planners are often asked to provide financial planning advice in various areas, including stock options, asset allocation/investment strategies, retirement plan accumulation and distribution strategies and charitable trust alternatives. Basic analysis software can help provide answers and, in addition to educating, it can be used to "sell" an investment concept.

Many practitioners prefer stand-alone software modules, while others favor comprehensive integrated programs. Here are some stand-alone tools, as well as some integrated products that can be added to your "tool kit."

Stock Options Risk Analyzer V2001.01
Brentmark Software Inc.

Stock Options Risk Analyzer takes the volatility of the company stock and risk tolerance of the client into consideration to assess the risk-reward trade-offs in the development of strategies for exercise and sale. The program features a system that uses a patent pending Beyond Monte Carlo algorithm that is up to 100 times faster than Monte Carlo simulations.

Graphically organized with a four-step process, input is well laid out and easy to follow. Click on Step 1 and Client data, Goals, Tax, Growth and Stock options tabs appear.

The goals strategy allows for immediate needs alternatives of cash needed now or exercise/sell options now. The planner can select yes or no for diversification and choose a conservative, moderate or aggressive risk tolerance.

The tax tab provides for a simulated income tax return including a section for AMT. The growth tab provides the input for evaluation of the stock under option vs. a diversified portfolio. It has inputs for stock symbol, stock price, dividend rate and stock classification.

The stock classification determines the mean and standard deviation. Final data entered includes the risk free rate and the borrower's cost of funds to exercise the option.

If there is any question on the correct input, glide the mouse over the blank and an explanation appears below the blank input. The stock options tab allows options to input according to grant number, ISO/NSO, number of options, grant date, expiry date, grant price, options exercised and shares held.

A further click on Step 2 can show vested and and/or non-vested options, bargain element, intrinsic value and Black-Scholes Option pricing model. Step 3 allows the planner to specify which types of shares and the number of shares to sell now or determine when to sell later.

Assumptions that are available for selection includes last and hold, exercise and sell, exercise last and sell, exercise last and hold and exercise now and hold. Strategies include net after tax confidence percentage, cash-less exercise and no AMT.

After entering everything, there are three boxes to choose from, View optimum vs. risk, tax details and cash flow. Optimum vs. risk demonstrates confidence level with suggestions for exercise now, sell now or hold for one year with levels for conservative, moderate or aggressive.

Tax details reveal the ordinary tax, the AMT and the marginal tax with options. Cash flow shows the tax costs and the cash needed or provided as a result of the exercise. Step 4 features four graphs with adjustment options including diversify strategies, assets vs. time, risk level and probability distribution.

The Excel-like bar graphs readily change when different input values are entered. The help section is quite useful and web assistance is available, as well.

Pension Distributions Calculator V5.04
Brentmark Software Inc.

Pension Distributions Calculator is a useful tool that is designed to calculate IRC Section 72(t) pre-59-1/2 distributions and (age 70-1/2 minimum required distributions).

Click on the 59-1/2 tab and input appears for starting year balance, expected plan growth, distribution frequency (annual, semi-annual, quarterly or monthly), distribute at end of period, joint or single life expectancy, owner's and beneficiary's birth date, distribution method (annuity factor, amortization, minimum distributions), reasonable interest rate and annuity table used. Two tabs on the right-age 59-1/2 and comparison show the results of the distribution method selected, as well as the other two methods available.

MRD calculations are accomplished by input on first year of analysis, type of plan (normal, Roth or less than 5 percent owner), account balance, expected plan growth, if there is a designated beneficiary, owner's and beneficiary's birth date and if the beneficiary is a spouse. There are also inputs for dates of death and inheritance of the account.
The reports are well illustrated and are presented by age, account balance, life expectancy, distribution, cumulative distribution and plan contribution.

The plan contribution feature is great as pre-59-1/2 distributions can be shown along with pre-59-1/2 annual contributions. There are plan contribution and distribution tabs, which produce well-illustrated and colorful graphs. When the print reports icon is pressed, the planner can choose which reports to present and even save them for spreadsheet and text formats.

StockOpter V2.52
Net Worth Strategies Inc.

StockOpter is a sophisticated program requiring Microsoft Excel to run its extensive spreadsheets. This new version allows planners to input and model 15-year performances of multiple stocks, indexes or custom data.
It also has the visual tools to demonstrate the importance of a well-diversified portfolio. One-day training classes can also be purchased at various locations.

Organized using excel templates, there are tabs for assumptions, base case (which is carried through all subsequent cases to avoid multiple entry), other cases (variations of the base case), TPV chart, ATCF chart, all cases, single case, to do summary, case summary, ISO/NSO details, Inventory and price indices. The assumptions tab reveals a detailed worksheet with client name, detailed form 1040 salary, income, itemized deductions and AMT information by year.

Base Case lists the options for exercise and hold by ISO or NSO, date of grant, grant expiration date, number of unvested options and various vesting schedules of vested and unvested options. Each case starts with the estimated fair market value of the stock. Scrolling further down reveals a fully detailed tax calculation including ordinary taxes, AMT, capital gain taxes, tax carryforwards including AMT credit and capital loss carryforwards and a simulated investment account.

Gross cash flow from option activity, as well as incremental taxes from option activity, is well illustrated and easy to follow. Additional lines of interest are taxes prior to option activity and interest charged on negative balance (cost of funding options).

Other cases can show a level exercise and sell template with the same data. TPV (total portfolio value), ATCF (after tax cash flow), single case and all cases are shown graphically. The to-do schedule has pull-down menus to demonstrate how many shares and what kinds of options to sell in various years and combinations.

The case summary presents a 15-year scenario laying out after tax cash flow and portfolio value in both exercise ASAP and level exercise and hold approaches. ISO/NSO details list the vesting options and a timetable for using pull down menus for level exercise and sell or exercise ASAP and hold.

Pop-up wizards are available to enter data more easily than searching through the spreadsheet. Entries can can include name/ID of ISO, date of grant, grant expiration date, number of unexercised options and available AMT adjustment before the sale. Fifteen years of grant schedules can also be entered using a wizard.
An Excel tool bar is always present for customization of the program. A tour guide also helps first-time users navigate around the program.

Blueprint V.5.8.0 InvestmentView V.8.9
Thomson Financial/

Blueprint is an asset allocation client presentation system that must be used in combination with Investment View to take advantage of up-to-date databases. It begins with seven buttons including client information, questionnaire, summary, allocation, charts, tables and disclosures.

Click on client information and proceed to client portfolio. The client portfolio button reveals seven asset classifications including capital preservation, income, growth and income, high yield, aggressive growth and international. A specific name and amount of the investment can be entered with ease.

Push the questionnaire button and an eight-part questionnaire with the first question, "What do I most want to accomplish?" appears. Answer choices include preserve asset value, generate high current income, achieve asset growth with moderate current income, achieve strong asset growth with nominal income and achieve maximum asset appreciation.

When a choice is made, the next question pops up. Other questions include comfort with investment performance ranges, age of investor, time horizon of investor, duration of withdrawals from the account, percentage of current income related to the account needs to generate, number of months in cash reserves and the investor's outlook for the economic climate.

The summary button reveals the questionnaire score, which can range from conservative income to aggressive growth. The allocation button demonstrates circle graphs of the portfolio overview and asset class components. The portfolio overview shows the client's existing portfolio and a recommended portfolio based on the questionnaire. The asset class components show the portfolio and its related index.

The charts section has five  tabs and graphs including portfolio growth, asset class growth, holding periods volatility, calendar year returns and risk/reward. The portfolio growth shows the ending value of $10,000 invested and growing over a five-year period.

Asset growth shows the ending value of $10,000 invested broken down by asset classes. Holding period volatility shows the range of returns over a 15-year duration. Calendar year returns show the year by year 15-year growth of the portfolio.

Risk/reward shows the classic Wiesenberger chart plotting out historical risk to reward with the option to select a period from one to 15 years. The tables section shows the same statistics in numerical form instead of graphic form.

Real performance numbers allow the user to custom-build a client portfolio and demonstrate key investment strategies including risk/reward tradeoff and, portfolio re-balancing. To complete the process, the disclosures tab presents a report showing definitions, methodology and basis of the recommendations. The second page ends up being an investment policy statement that can be sign and dated by the client.

InvestmentView, formerly HySales, can to sort and filter over 200 data items to find the most suitable investment choices for clients. Databases are available for purchase on monthly or quarterly basis include open-end mutual funds, exchange traded funds, variable annuities, variable life, closed-end funds and indexes.

Data history is provided for each security from inception to current. The program is organized into four key concepts; spreadsheet views, hypothetical view, scatter chart view and profile view.

For spreadsheet view, click on the spreadsheet icon and there are options for quick sort in alphabetical order or reverse; search for th item by security name, Committee on Uniform Securities Identifucation Procedures numbering or ticker. A filter icon allows the user to sort securities according to user criteria, such as finding all items that 10-year averages were greater than 10 percent.

Other filter criteria that are revealed include investment companies, fees, up to 20 years of returns and MPT statistics. The results can be stored, re-loaded and re-sorted.

A locate column icon allows users to zero-in on any column without scrolling endlessly. Exporting of data to Excel is easily accomplished by clicking on the spreadsheet tab, then selecting export spreadsheet, an selecting tab delimited or comma separated values.

Once the hypothetical view is selected the user can select the securities to illustrate by highlighting them and moving them to a selected securities list.

There are three hypothetical illustration scenarios available including single, comparison and portfolio. These settings can be further customized to show an investment amount, starting date, taxes and reinvestment options. In addition to a table, beautiful color graphs include growth of the security, addition of principal, income & capital gains, with a pie, bar, line or mountain chart format.

The Scatter Chart View displays the previously filtered securities. Mutual funds are yellow circles, variable annuities are green circles, variable products are purple circles and indexes are blue circles. If the user selects an index, a blue-dotted crosshair runs through it. The current security selected is indicated with a red triangle and the other selected securities are outlined by red squares.

The view can be adjusted from three to 20 years. Legends on the chart show the typical left-side rate of return-reward and right-side risk-standard deviation.

Once the chart is determined, additional indexes and securities can be inserted for comparison and evaluation. Checking a label box clearly labels the squares and circles by name. The chart also has guides to make it NASD compliant (click on a police helmet icon) and it will say compliant on the lower right corner.

Profile View is internal x-ray types look at any security according to the Wiesenberger Report Page, Peer Group Page, Benchmark Page and Analysis Page. The Wiesenberger Report Page shows total returns, NAV, load-adjusted results if applicable, growth of $10,000 from 1985 to present, yearly total returns, and top investment holdings.

Scrolling down reveals MPT statistics, portfolio composition, sector weightings, total return, percentage of rank within category, fund description and fees. The Peer Group Page demonstrates NAV Total Returns and Yearly Returns in a graphic format displaying the security, the comparative index and the median. Statistics displayed include 5th and 95th percentile, median, number of funds, rank and quartile.

Reports can be run by selecting the report icon and choosing latest price, high-low, standardized returns, rolling returns and others. Calculators add tools for retirement planning, tuition planning, tax deferred accumulation, tax-free equivalent yield and present/future value illustrations.

The tuition-planning module allows the planner to select the actual college, which in turn shows the latest actual cost. The current age of the child, as well as the number of years of schools, inflation rate and investment rate, determine either a lump sum or monthly amount for college funding.

NumberCruncher V2001.12 Charitable Gift Planner V2002.0
Leimberg & LeClair Inc.

Steve Leimberg's NumberCruncher is a master tool kit that includes many estate planning and financial planning calculators, including QPRTs, GRATs, charitable trusts, private annuities, SCINs, retirement planning and college funding.

Many of the calculators provide a brief overview to illustrate a concept instead of a comprehensive compliance tool, which is exactly what a planner needs at times. Push the radio button on Estate Planning Tools and a matrix appears showing Valuation, Tools of Estate Planning, Trusts, Charitable, Estate Planning Techniques, Taxes, Retirement and Present/Future Value.

Under Valuation, calculators are available to determine capitalization of income, book value, goodwill, special use, key employee and financial ratios. As you glide your cursor over the category, a definition pops up explaining the calculation.

Input screens are well laid out and easy to use and allow the results to be shown graphically and numerically. Clicking on a topic pop-up its related calculator. For instance, the Tools of Estate Planning provides calculators for the Inclusion portion of GRATs (grantor retained unitrusts) and GRUTs (grantor retained annuity trusts) that are includable at death, self-canceling installment notes, generation skipping transfer taxes and GSTT-total cost of transfer. Trusts include QPRTs (qualified personal residence trusts), GRATs and GRUTs, IDIT (intentionally defective grantor trusts), dynasty and split interest, where one party recieves a remainder interest and the other receives a life income interest.

Charitable calculators include CRUTs (charitable remainder unitrusts), charitable remainder annuity trusts, charitable lead annuity trusts, CLUTs (charitable lead unitrusts) and Table 1 tax savings from naming a charity the beneficiary of your group life insurance.

Estate Planning Techniques incorporate IRC Section 303-Stock Redemption, 2057-50 percent business owner exclusion, and 6166-four year deferral and  10-year pay-out calculations. The taxes section has estate tax, bypass trust, marital deduction optimization, individual and corporate income tax calculators.

Under Retirement, a compelling calculation can be presented to show the erosion of an IRA after estate taxes and income taxes, as well as pre-59-1/2, lump sum and age 70-1/2 distribution options.

The financial planning button reveals Investment, Inflation, Real Estate, Insurance, Net Worth, Financial Goals and Budgeting headings. Under Investment, the planner can select stock evaluation, a comprehensive bond calculator and IRR (internal rate of return).

The Inflation sector boasts a college-funding calculator, lump sum required for an increasing annuity and contributions required to reach a goal. Click on the Real Estate section and there is access to amortization schedules, break-even and mortgage payment calculators.

The Insurance tab has a calculator to compute the rate of return on life insurance, net-cost and clear benefit of life insurance and a business buyout analyzer.

The Net Worth section has calculators for Social Security present value and future value. Education, retirement and other accumulation calculators can be found in the Financial Goals section. Cash flow and after-tax returns can be found in the budgeting sector. There are many more calculators we have not listed that round out this program.

Steve Leimberg's Charitable Gift Planner is a more comprehensive package that incorporates CRATs, CRUTs, Pooled Income Funds, CLATs, CLUTs, Charitable Gift Annuities, QPRTs, GRATs, GRUTS and general estate calculators with automatic help screens and sample input to provide authoritative calculations.

For example, a click on the Pooled Income Funds reveals an input screen for transfer date, value of property, highest three years rate of returns, age of donors, number of lives, cost basis, type of charity (0 percent, 30 percent or 50 percent) and capital gains rate.

A separate section for income tax assumptions allows for gross income, itemized deductions, exemptions and even inflation rate. Results are instantly shown below, including a summary of the inputs, tabs for before and after implementation, a graph showing the results and a section for the planner to input notes.

The other tools incorporated show similar screens, which also include IRC Section provisions for the exhaustion of funds, factors, reversion and economic cash flows. Downloads of the latest applicable federal rates are a click away. A report module allows the user to select reports to print including input, graphs, summary, IRS compliance and customization with planner and client names.

Vendor Information

Stock Options Risk Analyzer V2001.01
Brentmark Software Inc.
3505 Lake Lynda Drive, Suite 212
Orlando, Fla. 32817
(800) 879-6665
Price: Individual $695 call or e-mail for additional users and network version.

Pension Distributions Calculator V5.04
Brentmark Software Inc.
3505 Lake Lynda Drive, Suite 212
Orlando, Fla. 32817
(800) 879-6665
Price: $149.

StockOpter V2.52
Net Worth Strategies Inc.
960 South Disk Drive, Suite B
Bend, Ore. 97702
(541) 383-3899
Price: $795.

Blueprint V.5.8.0 InvestmentView V.8.9
Thomson Financial/ Wiesenberger
1455 Research Blvd.
Rockville, Md. 20850
(888) 371-4575
Price: Individual $689 to $1,089, depending on modules used.

NumberCruncher V2001.12/Charitable Gift Planner V2002.0
Leimberg & LeClair Inc.
144 West Eagle Road
Havertown, Pa. 19083
(610) 924-0515
Price: $395.00-Number Cruncher/-Charitable Gift Planner, $349.

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