It's not just the Baby Boom generation that is heating up the markets for financial planning and wealth management. Across the industry, the software is getting tighter, more polished and more capable.Driving these changes are four basic trends:
* The need to serve a more diverse group of clients. Where the industry of a decade ago served the wealthy and the retired, it now must account for the needs of a generation that has done a generally poor job of preparing for retirement and beyond. These clients don't have much put away, and even less to spend on financial plans. So the need for basic analysis software is growing and may eventually become a greater market even than that for full-blown planning and wealth management software.
* The need for security. Many of the more popular financial planning programs are moving to the Web-based application service provider platform. This is in part because the Web offers more opportunities for collaboration and 24/7 access. But it is also due in large measure to the growing sense that the personal data of clients must be safeguarded at a level beyond the means of many small accounting firms. This entire class of software will, in the next few years, relocate to the Internet.
* Consolidation is underway. Thomson's Fast-Tax unit has been quietly buying up specific toolkits in basic analysis, and other major players won't be far behind. Likely targets for acquisition have to include Brentmark Software, with its myriad excellent tools, and J&L Software.
* The software is getting better. Almost every major packet on the market is in the process of a major upgrade - two in the past weeks alone. The interfaces are getting sharper and easier to navigate, the output is getting easier to understand, and the interfaces are taking on darker, more polished color schemes.
This review examines seven of the leading packages at the first step in financial planning, the basic analysis of the client's goals and financial condition. Other packages may take the process further - creating plans, selecting appropriate investments and tracking those investments. But these are where the process begins, and the seven presented represent the best of breed in the basic analysis category for 2006.
J&L Retirement & Financial Planning Software Professional
The J&L Retirement and Financial Planning Software Professional provides a simple set of basic analysis tools based on a linear, chronological set of financial events that interact with a set of accounts. The result is a highly functional program that scales well to the professional level.
240 East Church St.
Frederick, Md. 21701
Emerging Information Systems Inc.
500 - 330 St. Mary Avenue
Winnipeg, Manitoba R3C 3Z5
Pricing: One-year single-unit subscription - Standard Offline, $625; Extended Offline, $1,250; NaviPlan Central (ASP option), $995; Suite (includes Standard Offline and Extended Offline), $1,550.
* Profiles+ Forecaster
Financial Profiles Inc.
5421 Avenida Encinas
Carlsbad, Calif. 92008
Pricing: Desktop - $590; Web version - $740 (includes base price plus $30 one-time set up fee and $120 maintenance fee). Asset Allocation Option - $200.
* Pension & Roth IRA Analyzer
3505 Lake Lynda Dr., Ste. 212
Orlando, Fla. 32817-8327
(800) 879-6665 ext. 115
* Retirement Income Navigator
3505 Lake Lynda Dr., Ste. 212
Orlando, Fla. 32817-8327
(800) 879-6665 ext. 115
Pricing: $299 (includes six months of maintenance); annual maintenance - $59. Ten-user site license - $598; annual maintenance - $118.
* Total Planning System
Money Tree Software
1600 SW Western Blvd., Ste. 110
Corvallis, Ore. 97333-4086
Fast-Tax, a Thomson Business
2395 Midway Road, Bldg. 1
Carrollton, Texas 75006
Pricing: Single-user license - $395.00.
Dave McClure is the president of Kent Associates, in Alexandria, Va., an independent testing laboratory and evaluation service.
The basic functions of the program are geared toward an individual performing self-assessment and planning. More advanced features are added in the retirement planning version, including the ability to create up to five separate budgets, the ability to track the Internal Revenue Service basis, and implementation of college savings and early distribution programs established by the IRS. The Professional version scales even further with the addition of unlimited budgets, real estate investments, Monte Carlo simulations, historical return analysis, and enhanced flexibility in its graphics and presentation.Designed as a "broad-brush" analysis, the J&L software nonetheless handles a broad cross-section of financial planning chores, broken down chronologically so that the client can assess progress and events in every year of life.
The program can create a scenario based on mortgage, loan, credit card debt, withdrawal, deposit and transfer events. Each event has the option to be adjusted yearly for inflation or a separate yearly adjustment rate.
The analysis output is displayed in a text format that shows the yearly effects on up to 50 accounts, including investment, tax-free, retirement, asset and equity accounts. The output may also be presented with bar, line and pie graphs.
Version 11.0 of the J&L software was released in February of 2006, and represents a major upgrade in such areas as handling of reverse mortgages and periodic or lump-sum payments to mortgages.
Because of its unique timeline organization, the J&L Retirement & Financial Planning Software Professional is well suited to the needs of emergent Baby Boomer clients who are not engaged in formal financial planning for wealth accumulation. Its straight-forward style removes the intimidation often associated with the planning process, and provides the planning professional with an economical and practical toolkit for client service.
NaviPlan is software designed to help accountants and planners attract more clients, increase assets under management and sell more products and services. It is also the software package that most clearly reflects an understanding of the role of basic analysis and manages efficiently the differing levels of client needs.
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. A financial assessment can be completed in about five minutes, and then promoted to any of three analysis levels in NaviPlan Standard. The levels provide the basics of life, disability and long-term care insurance, asset allocation, and estate planning analysis. High-level net worth and cash flow information can be presented to the client using a new Financial Picture feature.
NaviPlan Extended Offline is a more detailed cash flow tool with a sophisticated tax engine. It extends the capabilities of NaviPlan Standard to provide a more comprehensive treatment of incomes, expenses, assets and liabilities, stock options, and taxes. Aimed at the upper 20 percent of professionals, this is an excellent package for practices that need more extensive tools and capabilities - particularly for practices focusing on wealth management rather than the creation of simple plans. Additional versions include the NaviPlan Suite, which combines the Standard Offline and Extended Offline products, and NaviPlan Central, an ASP hosted version aimed at mid-range planning companies.
Version 10 of NaviPlan represented a major enhancement of the product line, with a substantially improved interface and functionality. An update to this version, released as this review went to press, updates the tax tables for 2006 and provides for legislated changes to financial planning.
Because it focuses both on the client's level of needs and the practitioner's level of experience in basic analysis, NaviPlan remains the most flexible of the basic analysis packages. From simple goal-setting and what-if scenarios to stock option modeling and business planning, this is a well-crafted software solution worthy of strong consideration by accountants.
Financial Profiles already had a top-rated financial planning and analysis package in Profiles+ Professional, a comprehensive and cash-flow-driven solution with 14 modules for basic analysis, financial planning and sales - including estate planning.
For basic analysis, however, the company also offers a six-module, goals-based planning tool that is designed for advisors to use with the mass market. That tool, Profiles+ Forecaster, is available in a Web- based version that is fast, attractive and meets the requirements of clients with simple or moderate analysis needs. The Web-based version builds on Forecaster by offering more secure data storage and universal access to plans.
Profiles+ Forecaster is an analysis package that covers the key topics of college funding, retirement, asset allocation planning, asset distribution, disability, long-term care and death. Data entry is fast and simple, and the reports are skillfully designed to provide a fast, accurate snapshot of the client's financial health and options to achieve goals. Its interview-style design enables the professional to make a full client analysis in as little as 20 minutes, and the data can easily be imported into Profiles+ should a more extensive analysis be required.
Both Profiles+ Forecaster and Profiles+ Professional can be accessed over the Internet via the Profiles On Demand portal. Profiles On Demand provides secure, 24/7 access to the data, which is stored in encrypted format. In addition, the Web interface is well designed for speed, accuracy and navigation, which enhances its allure for the busy professional. The Web-based versions also offer enhanced case management, for more effective handling of multiple clients through the portal.
Profiles+ Forecaster is included in the more complete Profiles+ Professional, but stands effectively as a basic analysis package in its own right. The addition of the Web-based ASP version in Profiles On Demand only makes its benefits more substantial.
Overall, this is a Web application that demonstrates why the Internet is the future of accounting software.
Pension & Roth IRA Analyzer V. 2005.02
There is a Swiss Army knife of financial planning tools, and its name is Brentmark Software. This remarkable little company offers the most comprehensive array of specialized tools of anyone in the financial planning software business, from its flagship PFP Notebook to the Pension & Roth IRA Analyzer, estate planning tools, pension distributions planner, Kugler Estate Analyzer, Retirement Income Navigator, charitable financial planner, RetireNow, Estate Planning QuickView, Savings Bond Toolkit, IRS Factors calculator, pension distributions calculator, and minimum distributions calculator - plus a half-dozen informational Web sites.
The Pension & Roth IRA Analyzer manages virtually all aspects of pension distribution planning: minimum distributions, pre-59-1/2 distributions, Roth IRA conversions, spousal rollovers, income taxes, estate taxes, IRD calculations, life insurance, donee exclusion gifting, and more. It also handles the intricate analyses required for effective retirement planning, estate planning, income tax planning, Roth IRA management and modeling/reporting.
The program is used to evaluate various strategies (showing up to four alternatives at one time) of taking distributions from IRAs and qualified plans. It takes into account federal estate tax and income tax. The program handles the 2002 final regulations (as well as the 2001 proposed regulations and the pre-2001 rules) for required minimum distributions and pre-59-1/2 distributions. It also handles any possible combination of automatic refiguring of life expectancy and term certain for the plan's owner and beneficiary (spouse or not) under the old rules. The program handles pre-59-1/2 distributions, Roth IRA conversions, valuation of stretchout, and much more.
But don't expect the software to remain as it is. With its growing popularity as an analysis tool, it is currently undergoing a substantial development overhaul to simplify its navigation and add features that were requested by accountants and financial planners.
Simple, straightforward and useful, the Pension & Roth IRA Analzyer is a first-rate example of a targeted, well-crafted software application that serves its purpose better than more generic competitors. It, and the other offerings by Brentmark, are highly regarded and strongly recommended.
Retirement Income Navigator V. 2.01
Some people assume that managing money for income during retirement is simply a matter of selling investments as needed from a diversified portfolio. However, this is a strategy that can produce highly unpredictable results, because selling investments on a regular basis magnifies the effects of market variability.
The task of managing money for steady, dependable and long-term income while investing in financial markets that are anything but steady and dependable is the challenge tackled by the Retirement Income Navigator (formerly the Investment Scenario Generator) from Brentmark Software.
The Retirement Income Navigator uses a unique strategy known as the ISG Methodology, where stocks can always be held for the long-term if necessary, and income is guaranteed during the stock holding periods using "income ladders" (with income from U.S. Treasuries or annuities, for example). The software can simultaneously optimize both the amount of income and the asset allocation.
Like other popular Brentmark software titles, the Retirement Income Navigator is in a planned development stage for an updated version. Among the planned changes are the ability to build a list of categories such as "high-risk stock" and select the investment from a drop-down menu. Another enhancement will be the addition of a feature that helps you analyze the use of annuities to meet retirement income goals. Yet another will be the ability to direct the movement of money in a specific year without interfering with the ability to optimize.
Brentmark remains the leader in targeted, economical tools to meet specific financial planning analysis needs. The Retirement Income Navigator fills a gap in the market not generally addressed by competitors, and remains one of Brentmark's best software solutions.
Total Planning System
Money Tree Software's Total Planning System is designed as a "smart client" that utilizes the strongest benefits of desktop, networked and Internet applications. The result is a substantially improved system that handles planning from data input and basic analysis to contact management and client communication.
The Total Planning System provides the speed and performance of a desktop application, combined with the data storage and file-sharing capabilities of a network. A new Internet-based data collection system called Secure Online Planning Survey allows the client to securely enter data on a home computer, encrypting and e-mailing the results to the planner and automatically importing them into the TPS.
Key features of the TPS system 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, Microsoft Outlook and Silver Financial Planner; as well as the ability to export data to Microsoft Outlook and LaserApp, an application that uses the data to complete forms.
The individual programs that comprise the Total Planning System are Easy Money, designed to provide an overview of net worth, cash flow, estate taxes, asset projections, retirement projections, survivor insurance need, 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 Internal Revenue Service rate tables presented in a 60-page report; and Strategic Solutions, a series of specialized reports designed to meet the immediate and specific information needs of a client.
Also available is the Silver Financial Planner, a simplified planning tool that offers a wide range of "what-if" scenarios. Silver Financial Planner has options for multiple asset groups, varying rates of returns, differing tax rates and other variables. It features a Monte Carlo Simulation report, along with retirement projections, survivor insurance needs, education funding, asset allocation, estate planning, disability and more.
Total Planning System is designed as a complete financial planning toolkit that makes optimal use of the best features of desktop, networked and Internet applications. As a basic analysis package, these features sharply focus on providing a fast, accurate assessment of the client's position and goals.
The zCalc Tool Box is a set of spreadsheet-based models and calculators that analyze various tax and estate planning strategies. Tightly integrated with Microsoft Excel and PowerPoint, the set makes use of spreadsheet functions and templates to produce reports that are easy for the client to follow.
The zCalc Function Library is an add-in to Microsoft Excel that allows the financial planning professional to perform estate, retirement, charitable, financial and tax planning calculations inside a spreadsheet. It installs over 100 custom functions that work just like Excel's built-in functions.
The Tool Box templates are the same models and calculators contained in the zCalc Tool Box, but are provided as regular Excel spreadsheet files/templates. These templates are unlocked and fully editable so that they can be modified and customized with the calculation power of the zCalc Function Library and the presentation power of Excel.
The presentation portion of the program includes a series of Microsoft PowerPoint slide shows covering a variety of estate and charitable planning topics, including those strategies contained in the zCalc Tool Box. These slide shows can be used to present the firm's services to a wide variety of clients, trade groups or seminars. All slide shows are expertly formatted for a professional look and feel.
Developed in 1999, zCalc was acquired by Thomson Tax & Accounting last year as part of the company's efforts to expand on its existing analysis capabilities. TTA acquired Selden Integrated Systems' Visual Estate Planner and Estate Planner Plus for similar reasons in 2004, putting the company on a fast track to stake a larger position in the financial planning market. Both products are part of the Fast-Tax business unit.
Well-designed and easy to navigate, zCalc represents a fast and effective toolkit for the most basic and essential analysis functions. Its integration with Excel and PowerPoint makes it a strong contender for use in basic analysis, while the prospect of closer integration with the Fast-Tax family of tax products and with other planning tools makes it a program to watch in the next few years.
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