Data Entry: Individual Return Assumptions
RightCapital is designed to achieve financial planning, done just right. You are always in control of the advising philosophy and the underlying assumptions involved. You have complete control over each and every client's individual return assumptions, providing a platform for world-class, personally tailored advising.
Looking for global return assumptions?
To make changes that affect all clients, read the article on global asset return assumptions.
Accessing Individual Return Assumptions
To access a client's individual settings, open a client's financial plan > select the Gear Icon > select Settings > select Return Assumptions. Here advisors can choose to use global assumptions or enter customized assumptions by changing the dropdown menu in the upper right corner of the return assumptions tab.
When customizing individual return assumptions users can adjust the percentage of interest, dividend, and capital gains which add up to the total return figure for each asset class. The new rates of return will only be applied to the client whose settings are adjusted.
Default Return Assumptions
Below are the default return assumptions based on historical index return data that you can choose to reference as you are setting your return assumptions. These assumptions reflect a geometric return calculated from the return data indicated.
For equity asset classes, RightCapital provides assumptions based on the last 50 years of return data. For indices that do not have 50 years of data, RightCapital provides data back to the earliest date that the index is available.
For fixed income data RightCapital provides assumptions based on the last 20 years of data (as many of these indices do not have 50 years of data).
Please review the data below or use your own historical data to set your return assumptions.
Option to use Forward Looking Return Assumptions
Many financial institutions provide forward looking return assumptions. Below is summary information from JP Morgan's Long Term Capital Market Assumptions. You can review the detailed JP Morgan report here ↗️. There are also other financial institutions that provide long term capital market assumptions.
To utilize a forward looking assumption for a specific client plan, select the Gear Icon > select Settings > select Return Assumptions. Change the dropdown menu in the upper right corner of the return assumptions tab to "Customized Assumptions" and alter the data fields as needed. Although the forward looking assumptions do not specify breakdowns of interest, dividend, and capital gain, other advisors have found success adjusting the capital gain data for equities and interest return data for fixed income.
Determining the Rate of Return Used in a Plan
The rate of return is driven by the Proposed asset allocation in the Retirement Analysis action items. That can be set to the current allocation or any of the asset allocation models. You can see the rate of return for the current allocation as well as any of the models on the Investment > Asset Allocation screen:
For additional considerations when adjusting individual return assumptions, please review the global asset return assumptions article.
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For additional assistance regarding asset return assumptions in RightCapital please contact Support.