Tips for creating scenarios (Cashflows & Goals step)

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Summary

In the Cashflows & Goals step (on the top menu), you can create scenarios. Once you are happy with the results of the first scenario, you can copy the scenario and do variations for comparison. Each scenario has the following sections:

Sub-stepWhat can be entered here (click links for more details)
Top section
  • Scenario name field - Give the scenario a descriptive name
  • Scenario notes - put notes about the scenario, such as how it is different from the another scenario
  • Scenario description (for customer) - notes about the modelling and results that you would like included the the results documents.
  • Analysis years - choose how many years you want to do the analysis for. For more, see How to set the number of years for analysis
  • Duplicate the scenario so you can run another scenario for comparison. For more see How to make another scenario for comparison
Cash flowsAt the Cash flows sub-step, you can enter details for:
Review Assets & Loans

At the Review assets & loans sub-step, you can set options for the items you entered at the Current situation > Assets and loans step (e.g. sell existing property) and also add new directly owned items. (e.g. invest in shares/managed fund).

For more information, see the page for the relevant item:

Cash reserve

At the Cash reserve sub-step, you can set a Cash reserve goal to keep aside funds for emergencies.

Retirement planning

At the Retirement planning sub-step, you can:

  • Set the retirement age/date
  • Set options for super contributions and pensions

For more information, see Retirement planning goal (super contributions and pensions)

Review super funds & SMSFs

At the Review super funds sub-step, you can:

  • Set options for existing super funds and SMSFs
  • Add new super funds or a new SMSF

For more information see Superannuation and SMSF (Self-Managed Super Fund)

Review insurance

At the Review insurance sub-step, you can:

  • choose when to close existing insurance
  • add new insurance.

For more information, see Insurance

Review TrustsAt the Review trusts sub-step, you can add instructions for our analysts when you submit the case to the Optimo Financial SDS.

Add extra scenarios

See How to make another scenario for comparison.

Tips for creating scenarios

For more information on the specific options within scenarios see:

  • The help text in Pathfinder - most fields have help text giving more information.
  • The Websolve options section on the pages listed on Entering Data in Pathfinder
Give scenarios helpful names
  • By default, the first scenario's name will be 'Scenario 1'. However, it is better to rename your first scenario to be more descriptive (e.g. Buy home, Buy home and shares, Retire 60, Retire 65). When you copy a scenario, '(1)' will be automatically appended to its name
  • It is best to rename a scenario before clicking the Start solve button- if you edit the scenario name after you have results, the results will no longer be visisble and you will need to click the Start solve button again.
  • You can also add more information in the Scenario notes box, including notes on the results once you've reviewed them.

Try the robot button 

For many actions and goals, you will see the robot icon 

If you choose the robot icon, the option will be optimised within the given assumptions, legislation, and details of the case. This button is ideal for anything where you don't have a personal preference or are unsure what to do, because it will give you an idea of feasible values, which you can then adjust (higher or lower). However, you should also be aware that it may not take into account all your circumstances or appropriate risk, so you should check the results to make sure they are appropriate. If you don't like the results, you can choose a different option from the robot, and try again.

Set up your first scenario with care

If you set up your first scenario well, then running extra scenarios will be easier. If you're not sure where to start you can try one of these approaches:

  • Choose the robot icon for everything you don't have a strong preference for - Once you've added the cash flows and future goals and set strong preferences (e.g. keeping the family home, if selling it is not an option), choose the robot icon for everything else you're not sure about. This will give you a result that you can review and adjust, as appropriate.
  • Run a "Cash flows" or "As Is" or "Do nothing" scenario - This is useful if you want a general idea cash flows or would like a base case to improve on. For more see How to run a 'surplus cash' scenario
Run more scenarios for comparison

Running another scenario lets you:

  • Explore different goals. e.g. compare the projected outcomes of retiring earlier vs later
  • Compare the projected outcomes of different strategies. e.g. the difference in total wealth if making higher or lower voluntary super contributions
  • Use different assumptions to weigh up risk and return. e.g. run the same scenario with higher interest rates or a lower-risk investment profile
  • You can make as many scenarios as you need, however, note that:
    • It is recommended that at the Compare step, you do not compare more than 6 scenarios at a time (if you have more tan 6 sceanrios, you can choose a subset to compare)
    • If you submit the case to the Optimo Financial SDS, the quote is partly determined by the number of scenarios you ask Optimo to do analysis for.

See How to make another scenario for comparison

Keep track of your scenarios

Some tips for keeping track of different scenarios are:

  • Put notes about the results in the Scenario notes box which is directly under the Scenario name field (at the Cash flows & Goals step)
  • When you are happy with a scenario, if you want to run another scenario make a copy of it and make changes to the copy - this allows you to keep copies of the different results as well.
  • If you are confident that a particular scenario is not useful, you can delete it with the Delete scenario button (on the top right of the scenario in the Cash flows & Goals step)

Strategy Development Service (SDS) options

If the case includes complex analysis, it cannot be done with the websolve and the case needs to be submitted to the SDS. You can give instructions for what should be done for each scenario at the Cash flows & Goals step in the Scenario notes box.

 For more information on what can be covered in the SDS, see the sections called Wesolve options and Strategy Development Service (SDS) options on these pages:


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