Hartzman's Wells Fargo Whistleblower Item: INTERNAL USE ONLY: Key Client Solutions Group | Envision®

Compound Interest Calculator

Inputs

Current Principal: $1,000,000

Annual Addition: $0

Years to grow: 30

Expected Rate of return: 7%

Compound interest time(s) annually: 1

Results

Future Value: $7,612,255

"Modeling a Return Discount Rate

Envision provides the flexibility
to model the effect of a Return Discount Rate on one’s assets
throughout their retirement.

If left at 0%, the Return Discount Rate

will not be displayed on any Envision report pages.

If you choose a Return Discount Rate >0%,

this assumption will be displayed on the Investment Plan Assumptions report page.

Before utilizing this additional feature there are several factors to consider.

Start by gaining a thorough understanding of how a Return Discount Rate
will impact your client’s Envision profile.

Inputs

Current Principal: $1,000,000

Annual Addition: $0

Years to grow: 30

Expected Rate of return: 4.5%,

reflecting what could be a document-able 2.5% annual expense

Compound interest time(s) annually: 1

Results

Future Value: $3,745,318

.

.

7% Future Value: $7,612,255

4.5% Future Value:  - $3,745,318

2.5% 30 Year Difference: $3,866,937

A great way to test this impact
is to create a test plan by copying their current profile.

This will allow you to model the potential impact
without altering the client’s existing plan.

Note: Adding a Return Discount Rate
directly reduces the returns every year in every simulation by the percentage entered.

If left at 0%, the Return Discount Rate

will not be displayed on any Envision report pages.

If you choose a Return Discount Rate >0%,

this assumption will be displayed on the Investment Plan Assumptions report page.

For example, including a discount rate of 1%
reduces each simulated return in every year by 1%.

The Return Discount Rate can be used to model an investment expense
in the Envision plan.

...Note: If you include an investment expense
it is applied to all assets included in the plan, both internal and external

When creating or editing an Envision profile,
you can determine if the inclusion of a Return Discount Rate is appropriate for your client.

Before making such a decision and informing the client,
you should carefully weigh the factors mentioned above with specific client needs
in order to deliver the most appropriate advice possible.
.
.
.
Including a Return Discount Rate

1. When creating or editing a plan in Envision, go to Step 1: Set Up/Edit Profile
or Step 4: Plan Results and click on the Assumptions Advanced Plan

2. Enter your desired Return Discount Rate.

The allowable range is 0% - 3%.

Note: If you include a Return Discount Rate
it is applied to all assets included in the plan, both internal and external

3. Click “Save” to continue creating the Envision Profile.

If left at 0%, the Return Discount Rate
will not be displayed on any Envision report pages.

If many Wells Fargo Envision plans presented and retained by clients

does not include the "Return Discount Rate", otherwise known as investment costs, 

then the investment costs were not included?

If you choose a Return Discount Rate >0%,
this assumption will be displayed on the Investment Plan Assumptions report page.

Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value
Wells Fargo Advisors, LLC, Member SIPC,
is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.
© 2011 Wells Fargo Advisors, LLC. All rights reserved. 0411-3582"
.
.

If some one's job is to do what is in the best interests of his clients

and they show them a 7% hypothetical number

after the money was invested with a 2.5% cost,

how can many investment plans not tell the actual "truth"

with Investment Advisors acting under the Securities Act of 1940?

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Which would you rather be presented with?

Which have been presented more than others?

Why would who prefer to present what?