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Financial Planning Tech Firm RightCapital Partners With Commonwealth

Commonwealth Financial Network’s choice to partner with the startup demonstrates there’s still room to innovate in financial planning software.

RightCapital is following the well-worn path many software companies do to find success: Exploit and innovate in areas where competing firms aren’t. And do so with a simple, straightforward user interface.

That’s partly what led the three-year-old financial planning application company to land a partnership with Massachusetts’s-based Commonwealth Financial Network as its enterprise planning solution. The firms officially made the joint announcement at Commonwealth’s annual conference in Austin, Texas, the second week of November, with Commonwealth highlighting RightCapital’s ability to bring in useful features around Medicare planning and student loans.

The announcement makes RightCapital the sixth financial planning program available to Commonwealth’s 1,800 advisors, alongside popular options like MoneyGuidePro and eMoney (the two each have roughly 30 percent market share among respondents of Wealth Management’s annual technology survey).

Darren Tedesco, managing principal of Innovation and Strategy at Commonwealth, said that the move to partner with RightCapital meshes well with the firm’s decade-long strategy of evolving the advisor platform, both internally and through third-party integrations, with the needs of its advisors. Currently, that means giving them access to more tools for financial planning.

Commonwealth’s technology platform, Client360°, has a long and well-established reputation for bringing a tight integration between its technology partners and that of the independent broker/dealer. That RightCapital integration is expected to provide seamless data flow between the two and enable Commonwealth advisors to more easily create financial plans through RightCapital’s interface and interactive planning features. 

“One of the huge advantages of switching our engine to RightCapital’s is that now the ‘lighter’ goal tracking that we offer in Client360° will be completely in sync with the more advanced RightCapital software, allowing both simpler plans and more comprehensive plans to offer the exact same results to advisors and their clients,” Tedesco wrote in an email.

The program brings unique functions around planning for tax-efficient retirement income withdrawal strategies, with Roth IRA conversions, and a Medicare module. Another part of Commonwealth’s decision to license RightCapital’s is that it incorporates both cash flow and goals-based planning into the app, whereas other goals-only engines don’t offer the cash-flow analysis, he said.

“When our advisors looked at RightCapital’s software, the feedback we got from them was that it was the most streamlined and comprehensive cash-flow planning system out there, with a modern interface to boot,” Tedesco wrote.

RightCapital CEO Shuang Chen told Wealthmanagement.com that his firm’s Medicare module allows advisors to review their clients’ Medicare decisions in multiple ways, starting with the client’s situation and preferences.

The advisor can review, within the application, the choices between taking Medicare and the option to add MediGap versus the Medicare Advantage plan. In addition, the software takes into account the implications of Medicare selection and filing from existing health plans such as COBRA, from post-retirement coverage or from the group plan of a spouse. The application also incorporates the client’s Social Security situation and its implications for Medicare enrollment selections and tax consequences.

Weighing and comparing the most tax-efficient overall withdrawal strategy and sequence is another area RightCapital reports it has optimized for taxable, tax-deferred and tax-free accounts.

“We also illustrate the Roth IRA conversion strategy which helps clients ‘fill up the tax bracket’ when a client has a lower tax bracket before their social security benefit and/or RMD starts,” Shuan wrote, “And this can be a very important component of a tax-efficient distribution strategy for a client,” he added.

RightCapital launched a tool in early August designed to help financial planners show their clients the best way to pay back student loans. The tool demonstrates the impact of different payment tactics for clients’ student loans, a particularly important differentiator for advisors serving clients who are “high earning, not rich yet.”

 

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