What does the Optimize button within Compare Goals do?
The Optimization algorithm in Advizr attempts to set the additional savings amounts for each goal to amounts that get all goals as close to on track as possible
Within Compare Goals you will see the Optimize button. This button runs an optimization algorithm based on the client's current variables as set in the What Ifs section for each goal.
The Optimization algorithm in Advizr attempts to set the additional savings amounts for each goal to amounts that get all goals as close to on track as possible, given the cash flow that is available monthly for the client. (Available cash flow takes the client's income and reduces it by their listed Expenses, taxes, and current goal contributions, then makes it a monthly number.)
The algorithm is based on three primary factors: the length of time between the start of the plan and the goal’s target date (the further out the goal, the less funding it might need right away), the dollar amount difference between the balance earmarked towards the goal today and the goal target amount (the closer a client is to their goal target dollar amount, the less funding they might need right away), and a hard-coded weighting for the retirement goal, which is weighted four times more heavily than any other goal.