How Impact Technologies removed all the mystery and created a way to start having fun
by P.E. Kelley, Managing EditorL&HA e-newsLink. e-mail to [email protected]
Be prepared to hear from all of your clients approaching eligibility for Social Security, because they will soon discover just how confusing the system can be. The election process for a married couple involves 81 different age combinations and seven distinct filing strategies, placing them in the daunting position of sifting through 567 different potential choices. One of them is the right choice, which will pay them the highest amount in the most efficient way, but finding it just might require the client having to do the math on each permutation. Or they could call you. If you choose correctly, you’ll be their advisor for life. If not, you may not ever hear from them again.
But wait. What if the client wants to consider different retirement scenarios, applying different criteria such as lifestyle options? How do you recalculate the equation to allow, for example, a spouse to retire at 67 instead of 66? Here again, the client is going to look to you for an answer, and it had better be the right one. Moreover, they are not going to want a full blown tutorial on the finer points of the Social Security System. All they are going to want to know is when should they file.
These are the scenarios that the developers at Impact Technologies considered when they wrote the software program Social Security Explorer (SSE), with an eye toward providing advisors with a simple but useful tool that their clients can use to determine their Social Security eligibility. Impact Technologies is a 30 year old hi-tech that has specialized in the financial services market.
Play with Social Security Explorer
The basic questionnaire within SSE asks only two things: current age and the social security benefit that would be paid at the client’s full retirement age. With that information, SSE processes all of those 567 possibilities, along with the attendant rules and regulations associated with them, and comes up with the desired number. The program necessarily avoids trying to educate either the client or the advisor as to how it is doing this, focusing simply on the job of calculation. “The calculations within the program are pretty much invisible,” said David Freitag, vice president of marketing for Impact Technologies. “All they want to know is when they should file, what strategy to use and how much they should expect to get over their lifetime.”
Industry research points to an innate understanding among consumers of just how important it is to correctly model their Social Security planning. More than 70 percent recognize that it simply has to be done right, and 50% said that if their advisor didn’t get it right, they’d look for a new advisor. After that decision is made, according to Freitag, the rest of the assets follow. “You cannot perform good income distribution planning for your client without a critical understanding of the role Social Security plays,” he said.
The target market for SSE is the 55 to 65 year old who hasn’t yet filed for Social Security. What the principals at Impact Technologies realized was that for this demographic, the potential existed in developing a tool to sift through what is a near-impossible mountain of data to find the client’s correct filing status. Even with a degree in advanced math, which one of them held, it is no easy task. Moreover, they knew that the end-users did not really want to know how SSE would arrive at the ‘magic number,’ only that it had to be the correct one. What they came up with is a program with a remarkably simple functionality, one that spares the end-user becoming involved with the weighty algorithms at work.
What they began hearing in the market was SSE being described as, well, fun. “Everyone that we show Social Security Explorer to wants to plug in their own data,” said Freitag. “They’re telling us it is like a board game, only you’re playing with real people and real money.” And that is an important distinction for advisors. Their clients, who have accumulated money with ‘lots of commas’ do not want to know about the math within the program and do not want to have to sort through reams of data and calculations. What people want to know, he said, is “how much will I get, when should I file and how sure am I that I’m getting the most.”