Data Entry: Glide path

Key Takeaways

  • How to enable a glide path for a client
  • Understand how to add, change, or remove a glide path

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What is a Glide Path?

Glide paths are used to transition invested assets from high exposure to lower exposure allocations over time. Specifically, glide paths identify the percentage of a portfolio invested in equity, fixed income, and cash asset classes at a given year on the path. This enables you, as their advisor, to have a guide to transitioning a client's investment portfolio from more aggressive to more conservative, over time.

Glide paths can be applied to a financial plan by opening the client, selecting the Gear Icon > Settings > Methodology > Allocation Method > Enable Glide Path. Once selected the glide path can also be adjusted within any proposed plan through the Retirement > Analysis > Action Items > Strategies area.

Note: To apply your favorite allocation method settings to all new clients, visit the Advisor Portal > Gear Icon > Account > Client Presets area.


The two charts here illustrate the "default" glide path in RightCapital. The first graph indicates the risk exposure shift in the glide path allocation over time, from higher risk (more aggressive) to lower risk (more conservative). The "risk exposure" values are illustrative, as the actual risk exposure is determined by the specific holdings in the portfolio. The second graph illustrates the asset class allocation over time.

RightCapital provides the ability to adjust a client's asset allocation through a glide path framework that assumes the investment allocation will be shifted to a more conservative allocation over time. The equity allocation will generally be decreased over time whereas the fixed income and cash allocation will generally be increased over time. The glide path will affect all investments except for variable annuity investments, variable annuities are not impacted by the glide path.

Transitioning Invested Assets over time

To transition a client's invested assets over time, open the client plan and select Gear Icon > Settings > Methodology > Allocation Method> Enable glide path. Here, advisors can choose between three separate options:

  1. Same asset allocation for all years: When using the default setting the client's specified asset allocation, entered in the Profile > Net Worth area, will remain constant throughout the life of the plan.

  2. Pre and post-retirement asset allocation models: This setting allows advisors to specify a pre-retirement and post-retirement asset allocation model to project invested assets into the future. If this setting is used, the ‘Asset Allocation’ selection in the Retirement > Analysis > Action Items will be used up until retirement and the ‘Retirement Allocation’ selection will be used post-retirement. New asset allocation models can be created in the Advisor Portal > Models Tab > Portfolios area to be used in all client plans.

  3. Enable Glide Path: If a glide path is enabled, the client's investment allocation will slowly migrate to the glide path allocation over the specified number of years. A second dropdown menu will then appear under the allocation method to determine which glide path will be used. Options include the Default glide path, or creating your own custom glide path(s). Details on the Default glide path can be found at the bottom of the page. Once a glide path is selected, determine how quickly the allocation shifts from the current allocation to the glide path allocation by changing the grading schedule. This can be a duration anywhere from 1 to 40 years.

    If '1-year grading' is selected, the client's allocation will automatically shift to the glide path allocation in year 2 of the projection. For any other grading schedule, the client's allocation will shift proportionally over the duration of the grading schedule, from the selected allocation (as indicated in the Retirement Analysis action items) to the glide path allocation indicated.

Glide Path example

If the grading schedule is 10 years, in year 2 of the projection, the allocation will be 9/10 of their selected allocation and 1/10 of the glide path allocation; after 10 years the allocation will be 100% glide path allocation.

The transition of equity, fixed income and cash within a client's portfolio can be visualized within the Investment > Allocation Path module.

Creating Custom Glide Paths

To create a custom glide path, navigate to Advisor Portal > Models > Glide Path:

Select Add Glide Path to add a new glide path. Name the glide path in the box on the right and adjust allocation percentage in each year of the glide path (update the Equity / Bond / Cash splits for each year).

Scroll down to the bottom of the page and click Save to preserve the new glide path.

What do the "years" represent?

The years reflect the period until retirement. Positive numbers are before retirement (e.g. Year 15 reflects 15 years before retirement) and negative numbers are after retirement (e.g. Year -5 reflects 5 years after retirement).

Details on the Default Glide Path

The Default glide path is derived based on the average glide path from some of the largest target retirement date funds including Fidelity, Vanguard, T. Rowe Price, Principal, American Funds, and Schwab. Below is the default glide path used.

Baseline
Yr to retirementEquityFixed IncomeCash
4590.00%10.00%0.00%
4490.00%10.00%0.00%
4390.00%10.00%0.00%
4290.00%10.00%0.00%
4190.00%10.00%0.00%
4090.00%10.00%0.00%
3990.00%10.00%0.00%
3890.00%10.00%0.00%
3790.00%10.00%0.00%
3690.00%10.00%0.00%
3590.00%10.00%0.00%
3490.00%10.00%0.00%
3390.00%10.00%0.00%
3290.00%10.00%0.00%
3190.00%10.00%0.00%
3090.00%10.00%0.00%
2989.00%11.00%0.00%
2888.00%12.00%0.00%
2787.00%13.00%0.00%
2686.00%14.00%0.00%
2585.00%15.00%0.00%
2484.00%16.00%0.00%
2383.00%17.00%0.00%
2282.00%18.00%0.00%
2181.00%19.00%0.00%
2080.00%20.00%0.00%
1979.00%20.80%0.20%
1878.00%21.60%0.40%
1777.00%22.40%0.60%
1676.00%23.20%0.80%
1575.00%24.00%1.00%
1474.00%24.80%1.20%
1373.00%25.60%1.40%
1272.00%26.40%1.60%
1171.00%27.20%1.80%
1070.00%28.00%2.00%
968.00%29.20%2.80%
866.00%30.40%3.60%
764.00%31.60%4.40%
662.00%32.80%5.20%
560.00%34.00%6.00%
458.00%35.20%6.80%
356.00%36.40%7.60%
254.00%37.60%8.40%
152.00%38.80%9.20%
050.00%40.00%10.00%
-148.50%41.00%10.50%
-247.00%42.00%11.00%
-345.50%43.00%11.50%
-444.00%44.00%12.00%
-542.50%45.00%12.50%
-641.00%46.00%13.00%
-739.50%47.00%13.50%
-838.00%48.00%14.00%
-936.50%49.00%14.50%
-1035.00%50.00%15.00%
-1133.50%50.50%16.00%
-1232.00%51.00%17.00%
-1330.50%51.50%18.00%
-1429.00%52.00%19.00%
-1527.50%52.50%20.00%
-1626.00%53.00%21.00%
-1724.50%53.50%22.00%
-1823.00%54.00%23.00%
-1921.50%54.50%24.00%
-2020.00%55.00%25.00%
-2120.00%55.00%25.00%
-2220.00%55.00%25.00%
-2320.00%55.00%25.00%
-2420.00%55.00%25.00%
-2520.00%55.00%25.00%
-2620.00%55.00%25.00%
-2720.00%55.00%25.00%
-2820.00%55.00%25.00%
-2920.00%55.00%25.00%
-3020.00%55.00%25.00%
-3120.00%55.00%25.00%
-3220.00%55.00%25.00%
-3320.00%55.00%25.00%
-3420.00%55.00%25.00%