Finke, Toland to Launch Retirement Income Visualization Platform

The retirement experts Michael Finke and Tamiko Toland announced Tuesday the launch of a new income planning platform called IncomePath, designed to give financial advisors and their clients a better way to visualize the choices they can make to build an income stream that fits one's desired lifestyle in retirement.

By clarifying how investment volatility and an unknown lifespan affect potential spending, IncomePath seeks to allow a client to select "the right combination" of investment risk, portfolio withdrawals and annuity income, the duo told ThinkAdvisor.

To this end, IncomePath uses a goals-based analytical process that considers spending flexibility and other factors to help users visualize how risk affects possible lifestyle paths, according to Finke and Toland. They emphasized that the new tool should be highly complementary to existing planning software — not a replacement for an advisor's core planning approach.

Starting in the next few months, the platform will initially be offered to individual financial professionals on a subscription basis. Enterprise integrations are also expected.

Finke, who is a professor at the American College of Financial Services, is serving in the role of co-founder and chief strategist for IncomePath, while Toland, who left TIAA in the fall of 2023 to create her own independent consulting practice, will guide the new company as CEO.

The pair explained that IncomePath is built on the latest research and thinking about retirement income, going beyond rules of thumb and applying sophisticated planning concepts within an easy-to-use platform. The nuts and bolts of the planning tool, and the thinking behind it, are detailed in a white paper the pair published alongside their announcement.

"Most planning software focuses on failure," Finke said, "However, failure isn't a realistic way to plan since it ignores our ability to adjust spending in response to uncertainty. What people really need is a better way to understand the choices they can make to build an income that fits the way they want to live."

Toland echoed that perspective, noting that IncomePath's visualizations can help an individual see how good or bad luck in the markets — and the use of financial products that transfer risk — could shape their retirement.

She stressed that the planning framework is not just about showing clients when they need to limit their spending; it will also show many clients that they could afford to spend more without jeopardizing legacy goals.

"We want to help consumers to make a personal decision about how much lifetime income they want, if any, through a simple planning experience," Toland said. "We want to move the conversation away from failure rates associated with the hotly debated 4% rule and focus on lifestyles that use more realistic spending that is better suited to match a client's goals."

Finke pointed out that the name of the new tool, as well as some of the core thinking behind it's approach to visualizing different "retirement income outcomes," actually came from an article he wrote for ThinkAdvisor in 2019 featuring the Nobel Prize-winning economist Bill Sharpe.

"I went to Sharpe's home for the interview, and he showed me a new program he was working on to simulate variable-annuity income streams," Finke recalled. "He was using a random return generator and programming based on annuity contract features, and he was simulating what happens to income when market returns rise and fall during retirement.

"The computer program spit out a series of squiggly lines that represent possible income paths. … I think the term 'income paths' appears four or five times in that article," he explained.

What was so eye-opening, Finke said, was to see how the outcome lines were all over the place. Some income paths spike early in retirement and result in a high income that decreases gradually over time with inflation. Some fall flat early in retirement, presumably leaving the simulated retirees with a disappointing lifestyle with fewer vacations and fancy dinners.

"The approach is all about visualizing the trade-offs that all retirees face when turning their nest egg into a lifestyle in retirement," Finke explained. Everyone wants a high and stable income in retirement, but they can't have both. "They can either have an income that's low and stable, or an income that's risky, unstable and possibly higher."

Pictured: Michael Finke, left, and Tamiko Toland