The Challenge of Financial Planning


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Three serious challenges are coming to the financial planning industry, and while none of them reflect poorly on the otherwise excellent software and ASP offerings, they portend serious problems that financial planners will have to manage in the coming year. The first of these is, of course, data security. With data theft and hacker attacks on the increase, it is no longer sufficient to collect and retain personal financial information without taking substantial steps to protect that information. Only eMoney is presenting documentation to address this issue today, but by this time next year, such statements will be standard.

Another trend is the loss of pensions by clients. With the massive number of companies that are folding their pension programs-and the even greater number that are looking to put the pension funds to work in ways that may put them at risk-clients may need to begin planning for a retirement in which their pension benefits will not exist.

Finally, there is the issue of identity theft. Beyond the security of the data and servers used in financial planning, there are problems with clients who use unsecured Wi-Fi systems to interface with online wealth management programs. Or who leave their passwords on a slip of paper in their wallets. The simple truth is that anonymity is no longer enough to ensure that data will remain secure, and clients will look to their planners and software companies to provide better personal security.

Partner Insights

All of these challenges lie within the scope of the financial planning programs we review for 2006. This is a class of software that continues to improve with every generation, so the challenges of security and loss will fall to the planners, not their planning tools, to correct.

AdvisorPlatform 4.0

AdvisorPlatform, a Web-based wealth management and goal-planning system, is designed to enhance the client/advisor relationship through financial planning and services. Built around a Client Financial Home Page and 24/7 access to plans and aggregated financial information, AdvisorPlatform does an effective job of melding the functions of service, client collaboration, financial planning, and portfolio management.

The application has undergone two significant upgrades since last year. The incremental upgrade to Version 3.5 streamlined the system by combining and enhancing elements of the Web site (including the Fact Finder data input module) and strengthening other core modules. Version 3.5 also added new and stronger what-if scenarios, along with the ability to develop, store, and compare multiple planning scenarios.

Version 4.0, which debuted this spring, aimed at building greater versatility and flexibility into the system. For clients who do not require a comprehensive financial plan, a goal planning system provides customized plans to achieve specific goals such as education or planned major expenditures. Also new to the system is an expanded explanation of the security systems that provide physical and cyber-security for transactions, plans, and data.

The Client Financial Home Page not only provides access to the plans and data, but also allows clients to monitor their financial status with daily balance updates from anywhere at any time. Advisors and clients also have access to an online "Vault" for storing all their important documents. Collaboration tools and role-based permissioning allow limited access to this information not only by the planner and client, but by "alliance partners" designated by the client, such as attorneys.

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

eMoney Advisor, a powerful financial planning system, offers advanced features with an attractive interface and easy navigation. Its Web orientation makes the program flexible, accessible, and its emphasis on the client relationship builds a solid foundation for enhanced wealth management revenues.

MasterPlan 2005

MasterPlan's chief strengths are its commitment to professional planners, its 16 years of experience, and its inherent stability. These combine in a format that offers a clear perspective of everything the client owns, owes, earns, spends, and pays in taxes for the current year, for every year until retirement, and to life expectancy.

Enhancements have focused on updated tax tables for the 2006 tax laws, the 2005 tax tables, expansion of the research materials, online calculators available from the MasterPlan Web site, and the addition of Web conferencing for technical support and sales.

Its organization and navigation style make MasterPlan more functional and faster than more complicated systems, including fast database searches and sorts, and the ability to more easily export client data and report elements into Word for advanced formatting. In addition, its focus on tax planning makes it of greater value to accountants serving tax clients.

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

The report engine and graphics generator are 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. Graphs may be selected directly from the Reports Menu, then customized.

MasterPlan is a program valued by accounting firms for its utilitarian approach and a presentation style that favors client service over sales.

Total Planning System

Money Tree Software's Total Planning System defines the modular approach to financial planning, offering a package of personal financial planning programs, data management, contact management tools, and integration with external programs.

The Total Planning System is built around an "Integrated Database and Input" method that saves time by eliminating duplicate data. The planner then selects the right reporting tool for each client engagement. All report systems include an easy-to-understand Monte Carlo simulation report.

Key features include a Quick Entry Wizard for quick and easy client data entry; Age Change Event Tables for modification of expenses, incomes, and other variables as needed; and third-party connectivity to import contact/asset information from Albridge Solutions, Outlook, and Money Tree's own Silver Financial Planner. It also has the ability to export data to Outlook and LaserApp.

The individual programs that comprise the TPS are Easy Money, designed to provide an overview of net worth, cash flow, estate taxes, asset projections, retirement projections, survivor insurance needs, income taxes, and asset allocation, all compiled into a report with appendices and 11 color graphs; Golden Years, a flexible program for retirement projections and analysis using actual IRS rate tables presented in a 60-page report; and Strategic Solutions, a series of specialized reports.

A valuable module offered separately is the Silver Financial Planner, a simplified planning tool that offers a wide range of scenarios. This application has options for multiple asset groups, varying rates of returns and differing tax rates. It features a Monte Carlo simulation report, along with retirement projections, survivor insurance needs, education funding, asset allocation, estate planning, and disability.

Another service, consumer-oriented Web products, is designed to allow the clients to enter their financial data to learn interactively about such basic concepts as risk tolerance, net worth, education funding, and retirement planning. The accounting firm's name, logo, and contact information is printed on a customized report. Off-the-shelf Web solutions are available in both English and Spanish, and offer entry-level branding at no extra cost or customized branding at an additional cost.

Money Tree Suite has a minimal learning curve, features fast results for the client, and covers most of the bases a financial planner needs. And the Money Tools module gives excellent back-office integration.

NaviPlan 10.0

NaviPlan offers a fully integrated design with easy-to-use analysis levels to allow planners to simply select the planning features that will most efficiently address each client case. As the client's planning needs evolve, advisors can promote the plan to the next level to access additional features. From basic goal-based concepts that are completed in minutes to comprehensive cash flow-based analysis, this software gives advisors the tools they need.

NaviPlan Standard Offline is a goal-based planning tool aimed at the individual professional or occasional planner who needs a quick system to assess progress toward retirement, education, and major purchase goals in order to determine whether existing savings plans can meet those goals. It also provides the basics of life, disability, and long-term care insurance, asset allocation, and estate planning analysis.

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