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The mission of financial planning has shifted to crisis response, protecting assets still in portfolios, shifting to more stable financial instruments such as bonds and blue-chip stocks, and seeking ways to recover from estates, retirements and education plans that have been devastated or even bankrupted by the sharp downturn of the current recession.
The tools do not change greatly in this environment, but the skills required of the accountant do in three ways: Clients will need to immediately re-assess their assumptions, paying particular attention to the management of risk and the narrowing of goal expectations. Accountants will need to become more aggressive in their planning skills, particularly vetting out financial instruments and monitoring the performance of those instruments in a market that brings almost daily revelations of new losses. Accountants will need to become more conservative in their fees, since the clients in need of the most attention and service are also likely to be those least likely to absorb higher fees for that expanded service.
The 2009 roundup of financial planning tools considers 10 software solutions, none of them newcomers to the industry but most having undergone substantial and well-received upgrades over the past year or two.
Cheshire Wealth Manager 2008
Cheshire Wealth Manager, a comprehensive planner with features for assessing and managing financial assets, offers a robust
Highly customizable, it allows accountants to add their own asset classes, using historical or expected returns; modify asset allocation over time to support portfolio changes in the future; set the order of asset liquidation at the account level, enabling multiple taxations to be spent simultaneously; model the purchase and/or sale of a major asset in the future; and generate advanced what-if analysis to illustrate changing multiple variables at once.
New features include the ability to import client data from Excel, Albridge and Schwab Portfolio Center; rebalance accounts to a new asset allocation in future years; set spending order by account with the option of spending multiple accounts simultaneously; customize reports with your company logo, colors and choice of fonts; and save printed reports using the .pdf file format.
Cheshire Wealth Manager allows the accountant to run a simple goal-based plan suitable for clients in their early to mid years of investing, as well as more complete plans for clients in their later years who need more advanced planning.
eMoney Advisor has built on an already impressive offering to create two strong financial planning packages in the same brand family but with different approaches to planning.
eMoney 360 Pro is a cash flow-based planning system that includes an Advanced Planning Tool, Retirement Income Tool, Investment Planning Tool, Needs Analysis Tool and Organization Manager. Emoney 360 concentrates on a specific financial analysis that is modular and goal based. Its needs analysis tool includes sections for accumulation analysis, annuity income, asset allocation, asset protection, business insurance, disability, education, long-term care, retirement and estate planning.
Both offer accountants an aggregated, comprehensive view of their clients' financial portfolios, as well as a secure online storage Vault, a Personal Client Financial Home Page and eMoney
eMoney Advisor is preparing to release version 6.0 of its Web-based wealth management systems in March. While past updates to the software have focused largely on expanding the system's technical capabilities, most of the focus of version 6.0 is on a simplified view and new tools. eMoney has also layered the system with best practice tips and more advanced functions based on input from financial advisors.
Though not inexpensive, the two packages from eMoney Advisor are replete with features and strong capabilities that may well make them a cost-effective choice for wealth managers and planners.
GainsKeeper is a Web-based financial tool designed to meet the complex tax reporting and portfolio analysis needs of professional and independent investors. The product arms investors with accurate cost basis, capital gain tax lot data, and trade decision tools that maximize after-tax returns.
It identifies, calculates, defers and reverses all wash sales; automatically adjusts for stock splits, mergers, spin-offs and other messy corporate actions; calculates capital gains throughout the year with automatic generation of Schedules D and D-1 for tax filing; and is compatible with the most popular tax preparation software products. In addition, GainsKeeper includes automated accounting and analytical tools to help investors become smarter about the impact of taxes on real investment returns.
GainsKeeper recently added enhanced functionality to automate the proper tax treatment of short sales. This is critical with the new cost basis reporting law-part of the financial market bailout legislation-that requires financial institutions to report adjusted basis information for securities to the IRS and taxpayers. Other recent enhancements include a short sale tax functionality that automates the proper tax treatment of short sales, including special holding period rules and wash sale rules. It also enhanced its customer support service in 2008, which entailed additional phone support for its Trader Level customers and a new library of tutorials.
Its strong tax reporting emphasis and support for short sales make GainsKeeper a powerful tool for accountants, enabling them to evaluate the tax impact of clients' trades before they place them, and help their clients identify trades that can improve their tax position.
MasterPlan, a financial planning package aimed at the professional planner, has a stated goal of covering everything a client owns, owes, earns, spends and pays in taxes for the current year, for every year until retirement, and to life expectancy.
The package'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. The inclusion of a scenario function easily handles buying, selling and re-financing of 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 primary change over last year is updates to the tax tables, though MasterPlan has in recent years seen the addition of an online research center for planners and has beefed up its capabilities in both risk analysis and tax planning.
Modest in both price and appearance, MasterPlan is nonetheless a very capable goals-based planning system that should be attractive to medium-sized planning firms whose clients need to focus on tax implications as well as goals and portfolios.
EISI has continued to do an excellent job of both enhancing the NaviPlan line of planning products and differentiating them. The line now includes NaviPlan Standard, NaviPlan Extended and online, Web-based toolkits under the NaviPlan Central brand.
NaviPlan Standard enables advisors to quickly explore what-if scenarios and build detailed plans, with a Financial Assessment pre-planning level that can be completed in five to seven minutes, and then promoted to any of three analysis levels in NaviPlan Standard. The three levels provide progressively detailed analysis of life, disability and long-term care insurance, asset allocation and estate planning.
NaviPlan Extended is a more sophisticated tool with two levels of intermediate and advanced cash flow-based planning options, geared for advisors who deal with the high and ultra-high-net worth markets. It provides a more comprehensive treatment of incomes, expenses, assets and liabilities, stock options and taxes.
NaviPlan Standard v11.2 includes a number of enhancements since v11.0. In the Web-based version, advisors can now leverage progress reporting features such as the Update Plan feature, the Plan Review Fact Finder, and the Progress report. Other significant enhancements include asset redemption, transfer, and creation strategies during retirement, protection planning scenarios, new cash flow indicators and an asset rebalancing option.
At a moderate price point, NaviPlan presents a strong and functional planning platform that easily scales from the fast assessment to the complex needs of the top 20 percent of planning professionals.
On the more technical side of financial planning is the development of the asset management portion of the plan. In this, Morningstar Principia offers the industry's most powerful research database, integrated with advanced screening and ranking tools to support virtually any planning scenario.
Though more typically associated with products for portfolio management, use of Principia as a planning tool can demonstrate expertise in plan implementation and recasting, and is particularly critical in an area in which daily monitoring of assets is a virtual requirement for planning professionals.