Planning for the future can be tough, but what does a family do if they need to spend more than they earn? Kidbrooke has released a new report on accident insurance: would my savings suffice?.
Financial planning has typically been reserved for high-income consumers, with financial advisors catering to people seeking early retirements or buying a new vacation home.
However, everyone needs to assess whether their finances can sustain their lifestyle. Kidbrooke aims to ensure everyone is able to accurately plan for their future and help advisors spend their time more efficiently.
Its new case study reflects a Swedish family that struggled to receive adequate help from local wealth management service providers.
In the family, in addition to life-long social security payments, private insurance paid out a substantial lump sum when the person with special needs reached the age of 21, it said. These payouts, while unable to compensate for the loss of the quality of life, aim to reduce financial stress experienced by the patient and family.
Kidbrooke OutRank solution helped the family with the ?peace of mind knowing that their funds would last if they followed the strategy suggested by our technology.span>
While traditional methods of savings mean to spend less than you earn or have saved up, the plan for this family was to spend more than they earn by using the lump sum as a financial cushion. This meant plans needed to be made to ensure it lasted.
Kidbrooke explained that typical planning tools in the Swedish financial industry have several pitfalls. For example, personal finance is siloed, there is an assumption of a static average return of investments, and taxes and fees are not taken into consideration.
It said, ?Given these limitations, the financial industry struggled to provide the family with a viable answer regarding whether they have sufficient funds to maintain their lifestyle or build genuine trust with their customers. The reason is apparent; it is not possible to make a good plan if you do not consider all the aspects of the situation.span>
The OutRank solution overcomes these limitations. It considers the entire balance sheet and income statement for both now and the future. It also makes realistic forecasts for the future market developments, according to the institutions house views and expert estimates. It is also fast enough to enable the interactivity of visualisations and create pedagogical financial experiences, it claims.
Prior to working with Kidbrooke, the family had engaged a financial institution in Sweden, but things didn’t work out.
Kidbrooke said, ?The bank investment advice was not bad, but it did not help the family understand the full situation and develop a comprehensive strategy regarding the insurance payout. After receiving the advice, they did not find themselves closer to the decision on the proportions of spending and investing per month. Neither did they have a clear picture about reaching their goal of providing their child with a secure income until the statutory retirement age. Nor did it help them compare the benefits of investing a portion of the lump sum into real estate or if this was feasible.span>
By working with Kidrbooke, the family now has a clear plan that details an investment strategy and recommended levels of spending.
Read the full case study here.
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