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Navigating The Matrix

A financial advisor we know recently left his big brokerage firm to go independent completely independent, as in setting up his own registered investment advisory firm. How is the technology search going? we asked him. It's kind of a baffler, he responded (Rep. is withholding his name until he settles a legal challenge from his brokerage.) Choosing software programs can be overwhelming or you can

A financial advisor we know recently left his big brokerage firm to go independent — completely independent, as in setting up his own registered investment advisory firm. How is the technology search going? we asked him. “It's kind of a baffler,” he responded (Rep. is withholding his name until he settles a legal challenge from his brokerage.) Choosing software programs can be overwhelming — or you can simply take what your custodian offers. If you're like most independent advisors we know, you do take your custodian's offering, and then buy any additional programs that you think might help you make money for your clients.

“[Investment] software can cost $1,000 to $2,000, so it seems expensive,” our newly liberated advisor says. “That's a lot until you realize that it's about a third of what small clients pay for your services.” In short, it's worth looking around. It's important: Financial planning involves data management of client and investment information, the calculation of portfolio performance, future projections and tax impacts by the boatload. With this inaugural article, we here at Registered Rep. intend to provide some suggestions and guidelines to help you decide which financial planning, data management, planning analysis and back-office programs will contribute the most to the efficiency of your practice.

We will address methods of evaluating and selecting financial software, and even name specific packages and websites. (Of course, the ultimate due-diligence responsibility is your own.) Future articles will be concerned with the cost analysis of software packages; types of financial-planning software, including client-relationship management (CRM) and portfolio management; specific packages of tools for things like retirement planning, pension analysis and transfer tax analysis; and integrated financial-practice software.

How To Choose

Obviously, you'll need to pick software that you can afford — and that you'll actually be able to use. (Sounds self-evident, but there are lots of advisors who think that a new, expensive and difficult program will automatically transform them into their ideal selves.) This process requires a major investment of not only dollars, but also staff time and energy. The highly personal nature of financial planning cries out for different solutions to the software question for different practices and client needs. Before you go software shopping for software or web-based services, you'd best review what you need it for. Again, d'uh. But you'd be surprised by how many advisors don't properly review their own technology needs. You should start by asking yourself the following questions:

  1. What services do you provide? And what are your plans for the future of your enterprise?

  2. What is your client base: middle market or substantially wealthy?

  3. What types of investments do your clients typically have? And what are their risk tolerances?

  4. What is your approach to planning: goal based, or working from a detailed cash-flow analysis?

  5. Who in your office will actually operate the software? Will your clients have to input data?

  6. Complete due diligence on the software to make sure it performs as advertised.

How To Find Solutions

For most advisors, picking software is no piece of cake. In some cases, you can simply let your custodian provide the solution: Fidelity's Registered Investment Advisor Group unit and Schwab Institutional, for example, provide solutions for RIAs at little or (in some cases) no charge, as long as you custody your clients assets with them, of course. For those who want to find their own solutions, here are some websites to get you started: ( offers a variety of resources to help select and implement software for a financial-planning practice, including text material, checklists and calculators. Click on “Tools and Checklists” under the “Resources” menu, and you will find links to a detailed financial planning-software checklist that will help you evaluate financial-planning and contact-management (CRM) software.

AdvisorTek also provides articles on the selection of portfolio-management and client care systems. One such article, “Selecting financial planning software: A Six Step Process” by Tony Valaitis, suggests that you should follow this six-step process:

  1. Define your clients' financial planning needs and objectives. (For example: What types of reports would best suit them?)

  2. Determine which software features would be most relevant to your needs and your work.

  3. Analyze and evaluate the software available.

  4. Pull the trigger: Choose a program.

  5. Install the software, paying attention to available upgrades and whether network configuration is required; design a training program for your users.

  6. Monitor and evaluate how well the software performs for you, and when you will need other or more powerful software.

Need help choosing financial-planning software? Again, AdvisorTek offers numerous articles such as one by John L. Olsen, titled “Financial Planning Software: Demystified,” which illuminates the ways in which different kinds of financial-planning software can be applied directly to your practice. Another article, “Why Do I Need A Consultant To Help Me Choose A Financial Planning Software Program?” helps you develop a list of questions to ask, and offers a method of scoring and weighting the capabilities of the software you are considering. And so on; you get the idea. Of course, with all of this information and detail, it can be easy to lose track of the reason you need great software in the first place. As Olsen reminds us in his article, “Financial planning programs … have allowed us to form an intimate relationship with our client's data, when what we need to do is form an intimate relationship with our clients.”

If you'd prefer to do your research on paper rather than on the Internet, here's another place to gather ideas: Chapter 36 of the book titled Tools & Techniques of Practice Management by David J. Drucker and Joel P. Bruckenstein (National Underwriter Co., 2004). Like AdvisorTek, it describes the different kinds of financial-planning software on the market and lists some key factors to consider in the software selection process.

Some Other Things To Think About

As you compare software packages and web-based services, here are some common components to evaluate in addition to their performance and direction:

Look and feel of program operation

Different programs present different appearances on the screen, and differing degrees of difficulty in following the program flow. As you evaluate the operation of programs, look for one that is comfortable for the person, or people, who'll be operating them.

Reports produced

Examine the reports produced by the program for the following factors:

  1. Sequence and clarity of the presentation of calculations;

  2. The way the computations you need are displayed;

  3. Use of graphics or flowcharts to illustrate the effects of any computations;

  4. Explanations of the flow and effect of the transactions being analyzed;

  5. Effective approaches to client communication.

Help System

We all would like to be able to install and run programs just out of the box, without spending time with written or onscreen study materials. Unfortunately, it doesn't usually work that way. You'll no doubt have to spend some time online doing tutorials. Just remind yourself that it is worth the investment of your time.


There is an increasing tendency to furnish documentation in the form of a PDF file, rather than in written form. PDF documentation may be printed out, or examined on screen. Two advantages of PDF documentation are that it can be skipped through easily on screen by means of bookmarks, and may be searched by keywords.

Types Of Financial-Planning Software

In the final analysis, assisting your clients in financial planning and portfolio management requires you to manage a great deal of financial data for each account while keeping track of the client's goals, and to illustrate possible investment, tax and retirement planning scenarios clearly for the client.

Some financial-planning programs integrate these various functions in a single package. Following is a short list of integrated programs which work through modular access to a single database:

Ias Interactive Advisory Software ( Financial planning, portfolio management and CRM are all bundled together in a single program. Each of the components of the program accesses a single database. The web-based software allows you and your clients to access portfolio data and programs over the Internet. Ias also offers customizable reporting, research tools and reports, financial- and estate-planning tools and a contact-management system.

eMoney Pro ( Cash-based planning for the creation of comprehensive plans. This service is focused on goal-based planning, with an overview of client assets and accounts. Both the client and the advisor have their own points of access, formatted as individual “home pages.” The service includes client document storage.

Advisors Assistant ( Client-management system software that includes portfolio management and insurance tracking. The program collates and displays client data, portfolio and insurance summaries on screen.

ThomsonONEAdvisor ( Tailored to the needs of independent advisors. This program's suite of tools integrates client and account data, and offers data management, financial planning and rebalancing, as well as facilities for comprehensive research and illustrations for presentation. Also included in the package are asset allocation, investor profiling, financial planning, and investment center modules that allow for Monte Carlo charting and analysis. Multiple goals can be planned for at one time.

Of course, this list of programs just scratches the surface. In future articles on financial advisory technology we will address, in more detail, such integrated software programs, as well as programs that specialize in tax and pension analysis.

The Bottom Line

Financial-planning software comes in a variety of shapes and sizes, and offers varying degrees of complexity. In planning the purchase of such software, you need to first examine exactly what you want it to accomplish with regards to your practice and clients. If you are lucky, you may be able to find everything you need in a single comprehensive and integrated package. More likely, you will need to find a way to make several different software packages work together to address different aspects of client data organization and financial planning. Software that makes numerical predictions based on certain growth assumptions, while not the path to certainty, allows you to consider various alternative investment plans and illustrate their results for clients. And that is, at least, a very good place to start.

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