Software Review: Financial Planning Segments


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Professional financial planning may have started with the life insurance industry, but it isn't staying there. What began as a more organized approach to selling insurance products has evolved in just a few decades into a robust and highly competitive marketplace in which banks, insurance firms, independent wealth management firms, accounting firms, and law firms expand their sales and management programs. Certainly, accountants and insurance agents are still the core of the financial planning industry. Accountants carry the lead among small businesses and their owners, while insurance agents remain the primary financial advisors for individual consumers. But these two groups face challenges as never before from investment groups and trust departments of banking institutions, particularly those that are developing hybrid investment/insurance securities products.

Driving this competition are three trends.

1.The emergence of a clear "food chain" within the wealth management industry. The industry is now segmented into the mass affluent ($100,000 to $1 million to invest), emerging affluent ($1 million to $5 million to invest), high-net-worth ($5 million to $20 million to invest), and ultra-high-net-worth (more than $20 million to invest) clients, each with differing needs, expectations, and product delivery systems. Products and strategies for the mass affluent client group, which will outpace all other segments in terms of annual growth rate in assets, are very different from the asset modeling and estate planning needs of the ultra-high-net-worth client group.

Partner Insights

2. Explosive growth. There are 80 million households in the category of the mass affluent, growing rapidly toward 130 million. While growth is less impressive at the higher levels, both globally and in the U.S., the amount of cash and real estate under management at the higher levels is more significant. Even at the mass affluent level, the numbers are nothing to dismiss-$15 trillion already under management, growing to $25 trillion by the end of the year, according to a study by Celent Communications.

3.Collaborative tools are becoming more critical. While the industry has not moved online entirely, there is a growing need for clients to be able to access their financial information on a 24/7 basis, and greater demand for the investors to take a more active role in the management of their own portfolios. This is accompanied by a shift in the way in which wealth management is packaged and marketed, as product-centric strategies give way to relationship management strategies.

Overall, the market for professional financial planning tools and hardware is growing at about a 5 percent compound annual growth rate this year and for the near future, increasing to $2.7 billion by the end of the year, with spending on online wealth management technologies projected to be $1.2 billion, according to Celent Communications.

This year's review of professional financial management software includes six packages that represent the strongest products for each of the segments in the wealth management industry.

AdvisorPlatform 3.5

AdvisorPlatform is a Web-based system designed to enhance the client/advisor relationship through financial planning and services. Now in its fifth year, AdvisorPlatform has done an excellent job of capturing the advantages of an online service, effectively melding the functions of service, client collaboration, financial planning and portfolio management into an accessible, well-designed Internet service.

Aimed at advisors who work with high-net-worth and mass affluent clients, the service allows for segregated accounts, integrated financial planning, a "Vault" for storage of key documents, customized reporting, and an alert/alarm system for changes in financial condition. This platform is combined with AdvisorServices (consulting, marketing, and recruiting services), and Corporate Advantage for advisors serving corporations, to round out the eMoney Advisor offerings.

Input of client data is achieved through a Fact Finder system that queries the client on family, property, investments, businesses, insurance, income, expenses, savings, retirement goals, risk tolerance, and debt instruments, as well as questions related to business and estate issues. This data is used by a Planning Center that addresses trusts, partnerships, disability needs, education, effects of inflation, life expectancy, and taxable versus deferred investment vehicles. The site then generates comprehensive reports including asset allocation, investment performance, stock options, cash flow, net worth analysis, estate observation, gifting analysis, and comparative analysis. All of the reports are customizable and transportable to Microsoft Word.

Each accounting firm is given its own, branded system on the eMoney server. Integrated seamlessly with the accounting firm's own corporate Web site or intranet, this branded financial planning site keeps constant track of the client's asset base and updates account information in real time. Asset allocation views for individual, aggregated, taxable, and tax-deferred allocations allow the accountant to make more effective tax and growth recommendations.

The latest upgrade to AdvisorPlatform, early in 2004, brought several enhancements to the service. These included the ability to simulate the sale or purchase of one or more assets; the ability to develop, compare, and save multiple proposed plans for each client; the addition of new "what if" scenarios for premature spouse death and a rise in inflation; and a frequent flyer awards manager section.

Because it is so highly customized, pricing varies with each enterprise. List price for a single advisor is $1,500 per seat license and $400 per client seat. Enterprise buys, depending upon the number of seats and clients, can be as low as $1,250 per seat license and $250 per client seat. This cost includes basic technology set up and training; initial marketing materials, and 20MB of storage for the online document vault. The AdvisorPlatform can also be purchased as a monthly subscription for $299 per month with a three-month minimum.

eMoney AdvisorPlatform remains one of the most powerful financial planning systems available, offering both advanced features and easy navigation. Its Web orientation makes the program more flexible and accessible than PC-based solutions, and its emphasis on the client relationship builds a solid foundation for enhanced wealth management revenues for the firm.

AdvisorPlatform 3.5
eMoney Advisor
Conshohocken, Pa.
(888) 362-8482
Price: Single advisor, $1,500 per seat license; $400 per client seat.

MasterPlan 2004

MasterPlan 2004 continues to demonstrate the kind of stability and maturity you would expect in a product that has been helping advisors to the mass affluent and emerging-affluent segments of the market for more than 20 years.

Built on the Borland database engine, MasterPlan combines a system of "Fact Finders" data intake sheets in Microsoft Word with a robust database to provide clients with a projection of all personal economic figures significant for financial planning for 99 years or to life expectancy. By design, the program is geared toward analysis rather than sales of financial products. Its core strengths lean toward a lifetime planning horizon, flexibility in user-editable reports, and an unlimited number of user-defined and pre-defined assets and liabilities.

Little has changed in the software since last year, but that is to be expected in a mature product, and assists the financial advisor by reducing uncertainty and the learning curve for each year. Since 2003, the primary change in MasterPlan has been to update the tax laws and tables for 2004 data; expansion of the online research center to more than 3,000 pages of documentation; and modest expansions of the Web conferencing capabilities from the MasterPlan Web site.

MasterPlan's 12 functional areas of analysis include analysis of retirement needs, education funding, real estate, cash flow, capital needs, disability needs, along with estate and trust planning, business valuation, asset allocation, tax planning, budgeting, and what-if scenarios. The inclusion of a what-if scenario function easily handles buying, selling, and re-financing assets. In addition, the software has strong tax planning capabilities-calculating for each year of a projection whether the tax was table tax or AMT. This is helpful in calculating where the unescalated AMT threshold looms, according to the plan's CPI assumptions.

The report engine is also highly flexible. The reports can be a summary only, a graphical presentation, or an all-text presentation for clients who want to get directly to the nuts and bolts of the plan. And all of the reports can be exported to Word for additional flexibility in the presentation of client data.

MasterPlan has always been highly valued for its utilitarian approach and a presentation style that favors client service over sales. Priced favorably at the mid-range of the market, it provides strong and functional planning capabilities in a package that is easy to manage.

MasterPlan 2004
MasterPlan Financial Software
Vacaville, Calif.
(707) 451-8985
Price: $745, stand-alone version; $500, one year of support.

NaviPlan 9.0b

EISI is the exception to the rule that financial planning software changes only incrementally from year to year. In this year alone, the company has substantially strengthened its flagship NaviPlan brand while moving online and aggressively securing its place in the mid-market of firms with one to 100 professionals.

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