Return Scenarios - RightCapital Help Center

Return scenarios are RightCapital's way of giving you granular control over sequence of return within your client plans. By utilizing return scenarios, you can view and analyze each client plan within the context of virtually any possible market scenario.

Return scenarios can be seen and customized for use in the Advisor Portal > Models > Scenarios tab. Once entered within the advisor portal, return scenarios can be used in each client plan. Return scenarios can be selected in numerous tabs within the Retirement Analysis, and can be optionally enabled within the Cash Flows.

Default Return Scenarios

RightCapital includes four default return scenarios, which are pre-built into every advisor account. By clicking on the name of each scenario, the exact values of each asset category in each year are displayed:

Bad decade followed by slow growth:

A bad decade of volatile performance, leveling off to reflect slow growth for the remainder of the scenario.

Years 1-10 of the scenario are modeled after the S&P 500 index (equity) and Bloomberg Aggregate Bond Index (fixed income) from the year 2000 through 2009.
Years 11+ reflect 2% equity, 1% fixed income, and 0.25% cash returns (slow growth)

Fed adversed scenario followed by modest growth

A four year hypothetical recession, leveling off to reflect modest growth for the remainder of the scenario.

Years 1-4 of the scenario are loosely modeled after the type of stress tests released by the Federal Reserve each year, to test the solvency of large financial institutions.
Years 11+ reflect 4% equity, 2% fixed income, and 0.5% cash returns (modest growth)

Strong growth scenario

A good decade of mostly positive performance, leveling off to reflect strong growth for the remainder of the scenario.

Years 1-10 of the scenario are modeled to reflect positive market performance with fluctuating year-to-year returns. This is an original scenario developed by RightCapital.
Years 11+ reflect 8% equity, 4% fixed income, and 1% cash returns (strong growth)

Flat 0% return

Eliminates equity, fixed income, and cash returns for the duration of the scenario.

Adding New Return Scenarios

In addition to the default return scenarios, you can also create your own custom scenarios within the Models > Scenarios tab. To create a new scenario, click Add Scenario on the left. After being created, the new scenario can be renamed by clicking the pencil and paper icon next to the name:

After adding the new scenario, use the detailed schedule on the right to adjust the Equity, Fixed Income, and Cash returns for all 50 years of the scenario. Scroll down to the bottom of the page and click Save to preserve the new scenario.

What happens after year 50?

After a scenario has projected returns for all 50 years, asset growth will continue at the rates specified in the final year of the scenario chart.

Quick Fill

When creating a custom return scenario, the Quick Fill button allows advisors to populate or clear information much more easily.

Interpolate will automatically populate all 0% inputs between beginning and ending values listed. This feature saves time and helps to populate values more quickly.
Clear all will reset all return scenario inputs to 0%.

Re-order Return Scenarios

When viewing the list of your return scenarios, RightCapital allows you to change the order they are displayed. Within the list of scenarios on the left, you can click on the title of one of the scenarios, and then drag it to the desired location.

Delete Return Scenarios

Custom return scenarios can be deleted by hovering your mouse over a particular scenario, and then clicking the 'x' icon that appears to the right:

Where to Use Return Scenarios

Return scenarios are able to be applied in several places within a client plan:

When comparing two plans in the Retirement > Analysis > Comparisons tab
When analyzing retirement details for a proposal, in the Retirement > Analysis > Retirement Details tab
When curating a stock plan proposal in the "..." More Menu > Stock Plans > Analysis tab

Optionally, return scenarios can be turned on within the Retirement > Cash Flows, by navigating to the Gear Icon > Settings > Methodology page, and checking the 'Allow display of scenario-specific cash flows' setting:

Pro Tip

Use custom scenarios to illustrate sequence of return risk. Set up one scenario with a big drop in year 1 and consistent returns thereafter, and set up a second scenario with the same returns but a drop in year 10 instead of year 1. You can show your client how it impacts their projection.