At Moneytree, we’ve built a reputation for offering financial planning tools that advisors can trust, thanks largely to the backbone of our platform: the calculation engine.
But what exactly is a calculation engine, and why does ours stand out in such a competitive industry?
What is a calculation engine?
In its simplest form, a calculation engine is a core component of software used to run complex financial calculations. These engines process a range of data — including income, assets, liabilities, tax scenarios, and more — to generate projections that help financial advisors and their clients make confident decisions about their future.
There’s no single industry-wide definition, but within financial services, a calculation engine typically refers to a software framework that automates intricate financial modeling and simulations. It’s designed to be fast, scalable, and transparent, capable of processing vast amounts of financial data with precision and consistency.
As Alex Long, Product Specialist at Moneytree, puts it:
“A calculation engine is a means for us to run financial calculations quickly and efficiently while also being easy to maintain and build upon.”
This ability to adapt and evolve over time is crucial, especially in an industry where tax laws and planning strategies are always changing.
How Moneytree’s calculation engine works
Moneytree’s calculation engine supports two models: goals-based and cash-flow-based financial planning.
Moneytree offers two solutions: Essential and Elite. The goals-based model is available on both plans, while the cash-flow-based model is exclusive to the Elite plan, enabling advisors to serve a wider range of clients.
Both calculation engines are highly respected in the financial planning software industry, each serving a unique function. Let’s dive in for a closer look at each.
Goal-based financial planning
The goals-based model is designed for individuals who are in the accumulation phase of their financial journey — typically, clients who are working and focused on building wealth for retirement.
Key characteristics of a goals-based model:
- Focus on savings goals: Rather than analyzing every dollar earned or spent, goals-based financial planning zeroes in on how much the client is saving and whether those savings are sufficient for a successful retirement.
- Simplified pre-retirement assumptions: It deliberately ignores standard incomes (like earned income) and expenses (like groceries or utility bills) prior to retirement, assuming those basic needs are being met.
- Effective tax rates: Moneytree’s goals-based financial plan uses simplified effective tax rates, either calculated from the client’s current income or manually entered by the advisor. Additionally, different tax rates are used for ordinary income and capital gains.
- Reinvestment and withdrawals: Any special income (e.g., sale of stock, rental income) is reinvested based on user-defined surplus allocation. Special expenses (like a home purchase or education costs) trigger asset withdrawals according to a custom withdrawal order.
Goals-based financial planning software is ideal for answering questions like:
- “Am I saving enough to retire comfortably?”
- “What’s the best way to structure my investment strategy now?”
Cash-flow-based financial planning & Moneytree Elite
For clients at or near retirement, where income sources are less stable and every financial decision matters, a cash-flow-based model, like the one available in Moneytree Elite, offers a more granular approach.
Key characteristics of a cash-flow-based model:
- Detailed cash flow accounting: It considers every single income and expense item — whether the client is still working or fully retired.
- Tax precision: Moneytree’s cash-flow-based model, as demonstrated in Elite, uses detailed federal tax calculations for the Alternative Minimum Tax, Social Security, Medicare, and more, and that apply to ordinary income, capital gains and other sources of income.
- Smart asset management: It automatically reinvests any surplus and withdraws from assets as needed to meet cash flow shortfalls, both before and after retirement.
- Dynamic planning: No assumptions are made. A cash-flow-based model provides a transparent, line-by-line breakdown of how a client’s wealth changes year over year, with detailed tracking of asset accumulation and spending/withdrawals.
Moneytree Elite, or a cash-flow-based model, is ideal for answering questions like:
- “Can I afford to retire now?”
- “Will my assets cover my expenses for the next 30 years?”
Why Moneytree’s calculation engine is so accurate
There’s a reason Moneytree has earned a reputation for reliability in the financial planning industry. Here’s what sets us apart:
Transparent calculations
Unlike competitors whose engines function almost as “black boxes,” Moneytree doesn’t hide how results are calculated. Advisors and clients can trace every projection back to the data that informed it.
Easy to maintain and update
Because our calculation engine is modular and well-structured, updates — whether due to regulatory changes or new planning strategies — are easy to implement without disrupting the advisor’s workflow.
Detail-oriented design
From accurate tax forecasting to flexible cash flow assumptions, Moneytree’s engine accounts for the kinds of financial nuance that other platforms often overlook.
Rapid yet thorough reporting
Advisors need answers — fast. Moneytree delivers detailed, ready-to-use reports that don’t sacrifice depth for speed. Whether you’re using the goals-based model for high-level strategy or the cash-flow-based model in Elite for in-depth retirement scenarios, the output is both fast and trustworthy.
Designed for advisors, built for trust
Moneytree’s goal has always been to support financial advisors with tools that help them serve their clients with confidence. We believe that wealth management software for financial advisors should not only be powerful and intuitive but also grounded in transparent, repeatable, and accurate financial logic.
Whether you’re helping a young professional build their retirement nest egg with a goals-based plan or guiding a retiree through detailed drawdown strategies with a cash-flow-based model as detailed in Moneytree Elite, you can count on Moneytree’s calculation engine to provide the clarity and precision your clients deserve.
Ready to see how Moneytree can enhance your financial planning process? Contact us today to learn more about how our powerful tools can help you better serve your clients.
