Why You Need The Big Picture

  1. The Big Picture app is an eye-opening web-based application for wealth and retirement planning. It allows financial advisors to build the retirement portfolio of their choice, instantly back-test it over hundreds of historical investment periods, and impress clients with personalized perspectives on questions like:

    Based on history...

    • Shortfall Risk: How likely am I to run out of money?
    • Safe Withdrawal Rates: How much can I sustainably spend in retirement?
    • Asset Allocation: Would altering the composition of my portfolio improve my odds?

    Endless "what if" scenarios can be explored—each an opportunity for client engagement. "What if spending were raised, or lowered?", "What if retirement lasted a few years longer?", "What if these asset classes were chosen over these?" And so on.

    The app's slick, single-page interface requires a minimum of clicks. As inputs are toggled, results are updated fluidly. No clutter or tedious data entry—and no bored clients.

  2. The Big Picture app shows how much a retiree needed in retirement savings, and how much could safely be withdrawn, not only in average market conditions, but in every market condition that retirees have ever faced. It shows how your client's nest egg would have fared if retirement had begun on January 1, 19261935, on February 1, 19261935, and so on throughout history. You see the full spectrum of historical outcomes for a given strategy.

    Would your client's retirement strategy have survived the Great Depression, hyperflation, and 1970s stagflation? If so, it may well survive whatever misfortune arises between now and the end of retirement. Or would that strategy have produced a shortfall, even in the stock market boom of the 80s and 90s? If so, it may fall short in the years ahead, too.

    The Big Picture app functions on the basis of rolling periods. Because our historical data are monthly in frequency, and span many decades, the Big Picture app covers hundreds of rolling periods. In this way, the app allows you to select an investment horizon, and judge the performance of your chosen portfolio over every same-duration horizon that has ever transpired. Other tools focus on historical performance over a single period, often of relatively short duration, or using a single long-term average. The difference in statistical meaningfulness is crucial.

  3. The Big Picture allows you test, based on history, how best to consider allocating capital. And not just between Bonds and Stocks, but a wide range of major asset classes, including Small-Cap Stocks, Mid-Cap Stocks, International Stocks, and T-Bills, to name just a few. The below table highlights the differences in historical success rates between two portfolios.

    Portfolio A Portfolio B
    Asset allocation
    • 60% Bonds
    • 40% U.S. Large Cap Stocks
    • 50% Bonds
    • 5% T-Bills
    • 5% Small-Cap Stocks
    • 10% International Stocks
    • 30% U.S. Large Cap Stocks
    Historical Success Rate at a 4.0 percent Withdrawal Rate 94% 100%
    Safe Withdrawal Rate* 3.8% 4.1%
    *Data starting 19261935.
    *The maximum withdrawal rate that would have guaranteed solvency over the full course of a 30-year retirement, in all 30-year periods for which data exist (starting 19261935).

    The difference in outcomes—and the implications for retirement planning—could not be clearer.

  4. One of the app's most powerful qualities is its utility in virtually any client context. The app has three modalities: In Retirement, Saving for Retirement, and Principles of Investing. It is thus useful for both current and future retirees, as well as younger investors who are seeking to accumulate wealth.