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How often is Quicken investment advice updated?

KnnNike

Does anyone have any idea about how often Quicken investment advice is updated? Two specific things I've noticed/been thinking about recently have led me to ask this bigger-picture question:

- The allocations recommendations in the Quicken software appear to be the same largely from year to year. There doesn't appear to be any changes in expected risk or return, for example, based on stock market behavior since I started using Quicken in 2014. I'm concerned that maybe Quicken bought a set of model portfolios and the data behind them from the Newport Group back in the early 2000s, and they've been static ever since.

- I've been spending some time on the investing.quicken.com site, and some of the same questions get raised in my mind. For example, the site has two "expert" investors which detail different investment strategies. One based on Warren Buffet, and one based on dividend-yielding blue chips. However, the reported performance information for these strategies dates all the way back to 2001!

I see a lot of comments and criticisms on this site about Quicken's investment tools, such as how they're limited in their consideration of asset classes. I'm fine with that, so long as the options that are in the software reflect (relatively current) market conditions. However, if my "expected return" of 7% was calculated based on a portfolio allocation from 10+ years ago, that is concerning. Does anyone have any insight here?

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Comments

q_lurker

Overall, I suspect your assessment is accurate. I don't think the 'models' are updated at all. I would suggest that they were originally determined on really long term considerations (30-50 years) that large cap stocks offer this return and that risk, muni bonds something different, foreign something else. Variations that have occurred in the 2014 - 2017 time period would not significantly alter those long term evaluations

unknown

Personally, I wouldn't use Quicken or any associated Quicken add on or online product to help me make a financial decision, aside from telling me how much money I have available to invest in something.

You'll need to do your own research...or hire a financial advisor to help you with those decisions. The certified financial advisor will do all the research for you.

I find more usefulness in Motley Fool than I do in Quicken. And that's not saying much.

Vetta

It would never occur to me to use Quicken for financial advice. It's an accounting program, not a financial planner. I would go with a service that suggests a total portfolio, like Morningstar or Dividendstocksrock.com

KnnNike

The only thing I really kind of give any reliance to within Quicken under the category of "financial advice" would be the model portfolio allocations. Are you (all) saying that you think these are worthless?

Vetta

Worthless is too strong a word, so no. I assumed you were looking for a detailed portfolio that you could copy, hence the two I suggested above. All model portfolios are just general guidelines; there are no guarantees.

q_lurker

The only thing I really kind of give any reliance to within Quicken under the category of "financial advice" would be the model portfolio allocations. Are you (all) saying that you think these are worthless?

Are you (all) saying that you think these are worthless?

I would not say worthless, but the model allocations are limited - mostly by the breadth of the assets classes. I do have a target allocation set up, and I do on occasion check it, but it does not hold great importance for me. If I see I am way off target, I might ask myself why and where and sometimes I find that Quicken has gotten a hold of some bad data.

I have chosen to operate with some individualized security types (US Equities, Int'l Equities, US Mutual, Bond Fund, etc.) rather than the default "Stock", "Mutual Fund". That makes a little more work for me, but I can get more helpful information about my portfolio or parts thereof.

KnnNike

Overall, I suspect your assessment is accurate. I don't think the 'models' are updated at all. I would suggest that they were originally determined on really long term considerations (30-50 years) that large cap stocks offer this return and that risk, muni bonds something different, foreign something else. Variations that have occurred in the 2014 - 2017 time period would not significantly alter those long term evaluations

But my concern is not strictly about 2014-2017. If the data to support expected returns, risks, and portfolio allocations dates from even earlier (say 2001, or 2004, which is when I found the first news of the Newport Group's models being integrated into Quicken), then it would've missed over a decade of stock market activity, including the crash of '08. That's a lot more of an issue than the past 3 years.

KnnNike

Worthless is too strong a word, so no. I assumed you were looking for a detailed portfolio that you could copy, hence the two I suggested above. All model portfolios are just general guidelines; there are no guarantees.

Fair enough. i wouldn't say that I stick to these religiously (for example, in place of the 2% recommended bonds I have 2% "other" filled out with REITs), but I don't like the idea of these recommendations potentially being based on 15- or 20-year old data.

Jim_Harman

Another point: Be very cautious about accepting at face value the asset class information that Quicken downloads for mutual funds. You may want to compare the downloaded data to Morningstar's data, for example, and set the allocations manually.

unknown

Worthless is too strong a word, so no. I assumed you were looking for a detailed portfolio that you could copy, hence the two I suggested above. All model portfolios are just general guidelines; there are no guarantees.

It's like when I'm presented with a new investment proposition and my financial planner gives me historical data dating back to the 1950's. Really? Like I'm interested in going that far back...AND having that data included in the average returns?

I don't think so.

q_lurker

KnnNike wrote:

... but I don't like the idea of these recommendations potentially being based on 15- or 20-year old data.

Consider this perspective - if someone looked at 5 year performance of 'stocks' beginning every year from say 1921 on (1921-1925, 1922-1926, 1923-1927, ... 1948-1952, ...) and spotted a solid trend that 'stocks' consistently returned X%, would the 2002-2006, 2003-2007, 2012-2016 etc. additional data change such conclusions? "Probably not" is the basis for not being too concerned that the data has not been updated. Pretty much all such studies I have seen support the concept that long term performance reverts to the mean. If you answer "Maybe", then you are going to need to see the data extended.

That is not to say the current data is not meaningful. It might suggest the current markets are overvalued or undervalued. It might suggest current risk is higher or lower than those long-term trends.

Now the kicker is: The Newport Group didn't subscribe to that approach. Instead they make references to "unbiased expected returns", "an implied approach", and "premium build-up approach" to justify their forward looking projections. Lacking details on their approach, the Quicken user lacks the ability to question anyone about those approaches and get meaningful answers. (I suppose one could drop notes to the Newport Group, but color me skeptical about getting answers.)

I would still speculate that since The Newport Group is 'competing' against those historical-based models, one might answer my question above the same way. If one believes the performance reverts to the mean, one might believe the NG model would also be broadly static. Likewise, if one believes more recent data might alter the mean regression, one might similarly expect the NG approaches to vary with more recent data. Supporting that latter perspective is their own statement: "unbiased expected return on fixed income (equal to today's yields)." Today's yields on fixed income investments are nowhere near where they were in the '80s or in 2000. Yet, I also see their Domestic Bonds class forecast 2% return which is really not too inaccurate (IMO).

@KnnNike, you are skeptical, I don't believe you can get definitive answers, and as such I suggest you not place much credibility in the models presented.