Arcwise is a new type of financial planning and investment advisory platform that focuses not on investment risk but on solvency, an Arcwise term that represents what you will make, save, and spend over your entire life in today’s dollars. Because a major shock can upend your finances, Arcwise uses simple math to design plans and investment portfolios that protect your financial future and ensure positive solvency. We make no predictions about the markets. Instead, we help you predict your future.
No other online platform offers anywhere near the level of customization necessary to offer smart, powerful, money-saving financial planning advice. And no other platform recognizes that life is complex. As humans, we make costly mistakes, we place our values above our financial interests, and we adapt to our means. Arcwise encourages you to discover how life choices, financial tradeoffs, and market movements impact your solvency. Play with Arcwise, develop financial intuition, and make well-informed decisions.
Arcwise is so comprehensive that we really ought to say that it creates life plans, not financial plans. Arcwise helps you discover your financial future, make smart decisions, reduce financial planning risk, and save money. It can do so much because it uses very different mathematics than other financial planners and advisers.
Discover your financial future. Arcwise is the only financial adviser that translates every component of your financial plan into a cash flow profile so that you can see how much you will make and spend. What’s more, such cash flow projections allow you to understand how each of your short-, mid-, and long-term financial goals affects your total solvency.
Make smart financial decisions. How do you weigh different financial scenarios? Say, whether to make employer-matched 401(k) contributions or pay down student loans? Whether to save for retirement or give tax-free gifts to your kids? Or even whether to get a 15-year or 30-year mortgage? Arcwise helps you choose between these tradeoffs by giving you the information you need to understand how each will impact your solvency.
Reduce financial planning risk. Investment risk is not the same as financial planning risk. Arcwise reduces financial planning risk, the chance that you run out of money and either need to work longer, adjust planned spending downward, or go to family, friends or the government for financial assistance. We ensure that your solvency remains above zero in nearly all investment and economic environments.
Save money. Arcwise charges a flat fee that falls way below what an average customer would pay any one of our competitors. We invest your money directly in Treasury bonds so that you avoid fund management fees, and we recommend stock Exchange Traded Funds (ETFs) that carry the lowest management fees available. What you pay hardly compares with the taxes we help you save, however. Our comprehensive tax planning process seeks to reduce your income taxes, your capital gains taxes, and your estate taxes. No other robo-adviser provides such customized tax efficiency services.
Our approach to investing ensures that you avoid common investment traps:
Don’t take stupid investment risks. Gold, commodities, foreign exchange, Bitcoin, and other exotic instruments do not guarantee any long-term reward. Arcwise strongly discourages investors from purchasing these assets. Many investment advisers, serving the false god of diversification, wrongly encourage their clients to reserve part of their portfolios for commodities and foreign currency.
Don’t sell stocks in a down market. Arcwise helps you purchase Treasuries to cover your projected spending needs so that you can sell bonds, not stocks, if you need cash in a down market. Bonds almost always perform well when the stock market drops precipitously, all the more reason to sell them, not your return-seeking stocks when you need your money.
Don’t underinvest. Many investors don’t feel fully confident in their or their adviser’s ability to mitigate financial planning risk, so they hold too much cash and too many short-term bonds and CDs. Such low-yielding products drag down investment returns. We’re pros at managing financial planning risk, and our asset allocations help you stay fully invested and prepared to meet your future spending needs.
Don’t buy bonds with the wrong maturity dates. Treasury bonds’ yields typically increase the farther their maturity dates fall in the future. Buy bonds that are too short, that have maturity dates that are too soon, and you might miss out on return. Load up on bonds that are too long, whose maturity dates are, say, nearly 30 years from now, and you might take too much interest rate risk. Arcwise guides you to those bonds with the yields and the risks that you need to achieve investment return and realize your financial plan.
Don’t pay unnecessary taxes on investment returns. Should you buy shares in companies that pay fat dividends, or in those that regularly repurchase stock? Should you contribute to an ordinary IRA, a SEP IRA, a Keogh, a 401(k), a 403(b), a 457(b), a 529, a Coverdell ESA, or an HSA? And when should you park assets in a revocable trust instead of an irrevocable trust? Ever think about buying insurance to mitigate investment and estate taxes? It’s a headache just to learn what this number and word salad means. Arcwise makes tax simple.
Don’t pay fees that you don’t need to. Retail investors typically pay advisory fees to investment advisers, management fees to fund managers, and trading fees to broker- dealers. As your financial planner and investment adviser, Arcwise charges fees that fall far below what you would likely pay any another adviser. We cut out passive bond fund managers so that you don't have to pay management fees on those assets that secure your financial future. And we rarely suggest that you buy and sell securities, keeping your trading fees to a minimum.
Solvency is like net worth, but adjusted for how much you plan to make, spend, and save throughout your life. Imagine that you have negative net worth because of your many loans, but you used your debt to get a degree that will ensure income gains. You likely have positive solvency despite your negative net worth.
Likewise you might be very asset rich upon retirement, but plan to spend lavishly on healthcare and travel. If selling your house, investments, and other assets will not generate enough cash to cover your planned retirement spending, you have negative solvency. Solvency measures your future financial conditions today, allowing you to get on top of your money before it’s gone.
No doubt, solvency is a far more useful and comprehensive measure of financial health than net worth. Unlike net worth, however, it requires more than just arithmetic to compute. Arcwise makes calculating your solvency an easy and insightful process, one that helps you articulate a sound vision for your financial future.
Though you may have positive solvency, Treasury bond yields (interest rates) may increase or decrease and impact your financial health. Required bonds, required funding, or required fixed income represents the amount that you must invest in Treasury bonds to immunize your solvency against moderately adverse movements in interest rates.
Imagine that you are about to retire and expect to earn an income on your investments of 3%. If interest rates decline to 2% before you purchase all of your required bonds, you have lost the chance to earn an extra 1% per year. Arcwise ensures that you never miss out on such additional return if you are fully solvent.
Arcwise does not overburden you with bonds when it seeks to eliminate your exposure to changing interest rates. Contrary to conventional wisdom, you do not need to buy enough bonds and CDs so that you can live off their coupons and interest payments. It is better to buy fewer bonds, selling them over time to raise cash while collecting interest payments. When done right, such redemptions ensure that you meet your future spending objectives while reserving money for return-seeking assets.
Let’s be completely clear. Risk is risk. Risk is not return.
At Arcwise we think about risk as the likelihood that you are unable to meet future spending objectives, that you have to sell investments at a loss in a down market, or that you have to turn to family and friends for financial assistance. Arcwise strives to minimize, if not completely eliminate such financial planning risk.
All others define risk as investment return volatility, the standard deviation of investment returns. However there is no clear link between financial health and asset volatility. No other robo-adviser or online financial planner will sufficiently customize your asset allocation and your financial plan to reasonably guarantee that you always meet future spending objectives.
Expected investment return volatility is an output of our asset allocation process, not an input. If you want to take more equity market risk, reduce planned spending, especially spending long in the future. Arcwise will then suggest you buy more (risky) stocks and fewer (safer) bonds. If you want to buy more bonds, simply dial up your anticipated future spending.