The term "financial planning" covers a lot of area. On the high end, it can mean managing millions of dollars in assets, and continuously analyzing the results, yields and needs to determine the best allocation of capital.Financial planning also refers to the accountant or tax preparer who sees or hears from a client once a year, and uses the annual tax preparation appointment as a way of offering planning advice as well.
Obviously, there are also a lot of practices that fall somewhere between these extremes.
Different practices and clients require that the planner employ different software tools. High-end and costly planning tools are often too complex for the planner to use comfortably, produce output reports that are too complex for the client to understand reasonably, and are too expensive for the planner to employ profitably. In many cases, the financial planning experience will be the client's first, and will have very specific directed goals, such as planning for retirement.
Fortunately, there are plenty of choices when it comes to financial planning software. The right choice in planning software can produce an affordable win-win situation. Your client receives advice that they can actually understand and use, and your practice saves time and effort, and impresses the client - an important factor in client retention.
To help you select an appropriate software tool, we looked at seven reasonably priced planning applications.
PENSION & ROTH IRA ANALYZER AND RETIREMENT INCOME NAVIGATOR
Most of the vendors included in this roundup produce an integrated product with the capability to perform a wide variety of planning-related tasks and calculations. Brentmark Software has always taken a slightly different tack, producing instead very targeted tools designed to do only specific types of planning computations.
The Pension & Roth IRA Analyzer is designed to allow you to see the effect of various strategies of taking different distributions from pension plans and traditional and Roth IRAs.
The software is not very glamorous-looking, and operates from a very busy central screen. A navigation panel along the left vertical side of the screen lets you home in on the type of calculation that you need to perform, and when you fill in the required data, a summary panel on the bottom of the screen presents the results.
Left-clicking on the mouse in this panel gives you a reports screen. The reports, like the interface, are not pretty, but they do a good job of presenting the information on alternatives in a way that makes sense not only to you as a planner, but to your client as well. In many cases, though, you will want to gussy the results up a bit before you present them to a client.
If a lot of your planning practice involves pension and IRA planning, this Brentmark application is a very powerful and affordable tool.
Another application in the Brentmark software planning toolkit, Retirement Income Navigator, takes a slightly different approach to planning out desired retirement income. With many retirement planning tools, the approach is to pick assets to maximize long-term growth and minimize the risk of having to sell an asset in a down market.
Retirement Income Navigator uses an investment methodology called defined-withdrawal strategy, developed by ISG Inc. ISG has its own planning tool called the Practice Navigator, based on an Excel spreadsheet, and has licensed the technique to Brentmark. A defined-withdrawal strategy seeks to minimize the risk of your client being forced to liquidate assets in a down market to maintain a steady income. It does this by trying to balance the asset allocation between long-term growth assets and shorter-term income-producing assets.
Defined-withdrawal strategies are an interesting approach, but how much reliance you want to place on the Retirement Income Navigator is going to depend on how convinced you are that ISG's approach is a viable one.
As with the other Brentmark tools, Retirement Income Navigator isn't particularly pretty, but it is easy to use and understand. Planners with an already-growing retirement planning practice might want to add this tool to their planning kit to provide an alternative investing strategy approach for their clients.
ZCALC TOOLBOX SUITE
Given its extensive calculation abilities, it's no wonder that Microsoft's Excel spreadsheet is used as the underlying computational engine for many applications. Fast-Tax's zCalc Toolbox Suite is an excellent example. Running the software, you wouldn't know that it is actually running Excel. The user interface looks nothing like Excel; it's clean and attractive, with clearly defined input areas. Installation was easy, though if you have an older version of Excel, such as Excel 97, you may have to upgrade it with Service Pack 2. The zCalc Toolbox won't run with versions of Excel older than Excel 97.
The Toolbox consists of several modules. The Function Library contains the actual calculation macros. There is also a set of PowerPoint presentations for clients that can be customized easily to reflect your practice. These presentations don't incorporate any of the data generated by the application; they're just generic sales and educational pitches.
ZCalc's emphasis is on tax and estate planning, but it also contains templates for other types of planning, such as charitable planning. These templates are unlocked, so that you can edit and customize them to reflect your individual practice. That makes customizing your reports pretty easy, especially if you are familiar with Excel templates and macros.
Some of the other products that are covered in this roundup are more comprehensive, covering many aspects of a financial planning practice. ZCalc is much more targeted, but if its strengths follow those areas in practice, it will be a welcome addition to your practice aides.
PROFILES+ FORECASTER 2.5
Last summer, Financial Profiles was purchased by Emerging Information Systems, the authors of NaviPlan. At the moment, they're being run as separate companies.
Profiles is available in several versions. Profiles+ Professional is a higher-end application, with models for basic planning, estate planning and financial vehicle sales. For planners with somewhat more basic needs, Profiles+ Forecaster, the edition we tested, is both affordable and easy to use. It consists of a number of needs-based modules that address planning for retirement, educational funding, survivor needs, long-term care and disability needs.
For those planners who have more complex needs, Financial Profiles provides an optional asset allocation module, Ibbotson Security Classifier, and access to Forefield's educational, sales and training content from its Web site. The software is available as a desktop application, as well as a version that can run on a Web server to provide hosted access when you or your staff are out of the office.
Installing and using Profiles+ Forecaster 2.5 is easy. Enter your firm specifics and your name, and you're ready to start processing clients. An attractive and simple-to-understand screen lets you pick which areas you want to plan for a particular client. You can choose one, several or all of the five areas. For each, you are taken step by step through the data that needs to be entered, at which point you can run the analyses and print out a report for your client.
The detail of this report is easy to control - just pick out the sections you want printed from a pick list, and a very nicely laid out report is generated. You can select which pages you want printed, but the text itself, other than relevant client data and calculations, is boilerplate and not editable.
Another excellent feature is the client questionnaire that can be printed out. It's very professional-looking, and hits all of the high points in organizing a client's approach to data collection.
Profiles+ Forecaster would be an excellent choice in a small financial planning practice, or in an accounting practice that's just venturing into formal financial planning.
TOTAL PLANNING SYSTEM
Money Tree has a number of financial planning products that are available as separate modules or as a combined system. Easy Money is a goal-based planning tool, used to determine a plan towards a specific goal, whether it be retirement needs, education financing or constructing asset allocations. Golden Years, as you might divine from its name, is focused on retirement planning, while Strategic Solutions is a toolkit used for less common analyses such as required minimum distribution strategies, lump-sum versus five-year distribution of IRAs, and other such questions.
These separate modules are organized under the Total Planning System central menu system, and are simple to access. Because the modules share a common design, there is little sense of moving between components, and data entered in one module can be used for analysis in other parts of the Total Planning System.
We did not find the Total Planning System difficult to install. Data entry is easy, and there is not much of a learning curve before you can expect to become productive. There is an option to install the Total Planning System as a Web-based server application, so it can be run remotely through the Internet. This is available as an optional download, and does require a bit more in the way of set-up, as Windows IIS (Internet Information Services) needs to be configured.
The Total Planning System produces comprehensive reports filled with attractive and easy-to-understand graphics. As with most of the other tools we looked at for this roundup, there is a very limited amount of editing and changing that you can perform on these reports, but most planners will not find this detrimental to effective use of the software.
If your practice is concentrated in one particular area, you can purchase the less expensive Silver edition, or individual modules, giving a planner the ability to add to the toolkit as needs require.
J&L RETIREMENT & FINANCIAL SOFTWARE PROFESSIONAL
While all financial planners would love to have a client base made up of clients with millions of dollars of assets, in the real world, there are many planners whose practices consist of much more modest clients. If you are not billing out many hundreds or thousands of dollars for your advice and plans, it's often hard to justify spending a lot of money on software tools, regardless of how helpful those tools might be.
J&L Software offers an affordable alternative in its Retirement & Financial Software Professional. For less than $160, you receive a basic set of financial planning tools that can perform a surprising number of financial planning computations. These include goal-based planning for retirement and educational needs, and even Monte Carlo simulation of proposed investments.
To be honest, for less than $160, you have to accept some compromises. The J&L software is not as polished as most of the other applications included in this roundup, though we did not find the software difficult to set up or use. There is not a large variety of reports available, and for those reports that are provided, only basic formatting of banners, watermarks and the like are available.
To be honest, even the "Professional" version is targeted more toward the individual investor, rather than a financial planning professional. That does not preclude a planner on a tight budget making good and profitable use of the software.
NAVIPLAN OFFLINE STANDARD
Emerging Information Systems, which recently purchased Financial Profiles, also markets the NaviPlan financial planning software. NaviPlan is available in several versions, including an online edition, as well as Standard and Extended offline editions. Priced at a very affordable $625, the Standard offline edition of NaviPlan provides a good comprehensive basic planning system for a practice with clients who have moderate planning needs.
NaviPlan is basically a goal-based system, and can address retirement issues, educational needs planning, major purchases such as a house or boat, disability or survivor needs, and insurance coverage requirements. Basic estate planning is included, as well as the ability to perform Monte Carlo analysis on asset allocations, though true asset allocation, with access to the Ibbotson Asset Allocation software, is an option, as is importing client data from Albridge Solutions.
Setting up NaviPlan is quick and easy, as is using the software. The screens are laid out logically, and data entry flows nicely. Tasks are logically deployed in a vertical task bar on the left side of the screen, and NaviPlan makes excellent use of drop-down entries. NaviPlan's reports are professional-looking and make nice use of graphics. They are, however, largely fixed in format, as is common with this type and class of software.
A nice feature with NaviPlan is that if your practice changes, and you need to include cash-based planning, such as the effect of income taxes, advanced estate planning, employee stock option planning and the like, you can upgrade to the Extended Edition and you'll already know how to use it.
Ted Needleman, a former editor of Accounting Technology, is a consultant and freelance writer based in Stony Point, N.Y.
Pension & Roth IRA Analyzer and Retirement Income Navigator
3505 Lake Lynda Dr.
Orlando, Fla. 32817
Pricing: Analyzer - $395; Navigator - $299.
ZCalc Toolbox Suite
2395 Midway Rd., Bldg. 1
Carrollton, Texas 75006
Financial Profiles Inc.
5421 Avenida Encinas
Carlsbad, Calif. 92008
Total Planning System
Money Tree Software
1600 SW Western Blvd., Ste. 110
Corvallis, Ore. 97333
J&L Retirement & Financial Software
240 East Church St.
Frederick, Md. 21701
Emerging Information Systems Inc.
500-330 St. Mary Ave.
Winnipeg, Manitoba R3C 3Z5
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