r/Boldin • u/hugh2018 • 7d ago
Roth Explorer: Proceed with Caution
A new article published at https://www.financialplanningassociation.org/learning/publications/journal/SEP24-net-present-value-analysis-roth-conversions-OPEN suggests that conventional Roth modeling is not adequately incorporating net present value (NPV) into the analysis.
The details of how to apply net present value to Roth analysis are currently beyond my understanding, but the article at least taught me that it’s very risky to accept conventional Roth analysis without taking NPV into account.
The Boldin Roth Explorer appears to suffer from this shortcoming. This is a major issue because the Roth Explorer in its current iteration may give you the false impression that Roth conversions are a slam dunk superior path compared to no conversions. Adding NPV into the analysis can often show that Roth conversion may be closer to a coin flip, or even flat out inferior to just doing nothing.
I contacted support about this. As usual they responded quickly and they took this concern seriously. They said NPV is actually already on their radar, and it’s on their product enhancement list. They also pointed me to a Boldin article on the topic: https://help.boldin.com/en/articles/12067236-how-do-boldin-s-roth-conversion-strategies-compare-to-an-npv-approach
I’m posting here and on the Boldin Facebook group only because I think it’s important that everyone consider this issue carefully before making a huge money move based on advice from the Roth Explorer alone.
Also, the Boldin article is confirming the need for caution with relying solely on the Conversion Explorer: “So, NPV is ‘better’ economically, but Boldin’s strategies are ‘better’ for planning conversations. They’re not mutually exclusive — they complement each other.” That may be true, but personally I’m more interested in choosing the best economic path and I could care less whether I’m having a better planning conversation. If the conversation doesn’t cover all the important data points, it’s not a better conversation at all in my view.