What's the best financial planning software?
It's not easy for an advisory firm or broker-dealer to get a non-biased answer to that question, even from consulting firms that analyze adviser technology.
A 90-page, $4,000 report from independent-research firm Aite Group LLC, “Evaluating Wealth Management Platforms: Financial Planning at the Core,” continues in the tradition of not clearly identifying one or several “bests,” but it does do a great job of reviewing most of the software in this area.
I was impressed by the refreshingly straightforward charts and graphics of the Aite report, which I would like to see emulated by rival analysis and consulting groups.
For example, Goal Definition Functionality and Goal Coverage is a simple table that could have come right out of Consumer Reports or PC Magazine.
Down the X axis, it lists the 11 software programs and applications studied.
Across the Y axis, it shows the 11 features related to goals (prioritization/importance, debt management and long-term care are three examples). A simple square indicates whether the feature is available (filled), partially available (half-filled) or not available (empty).
Several other feature tables, similarly formatted, populate the remainder of the document.
The lack of such feature tables was one criticism I had of a July report published by the Financial Planning Association in partnership with Actifi Inc. (it's free to FPA members, $495 for non-members; both reports were sponsored by TD Ameritrade Institutional).
That report compared 10 financial planning applications and was the second in a series of seven (the first was on customer relationship management) to be completed on a range of technology products.
Since the Aite report's intended audience is large financial services companies (the cost of the report is more than the technology budget of most planners and small RIAs), it makes for interesting reading because it illustrates some of the planning approaches wirehouses and banks may employ if a fiduciary standard is applied to registered reps.
“I really wanted to focus in on the mass-affluent opportunity and what would be the good software choices for a large percentage of a wirehouse adviser sales force,” said Sophie Schmitt, the report's author.
Given that focus, I was surprised by a few of the notable absences among the lineup of programs covered. One that leapt out was Money Tree Software, a product used by thousands of advisers, as well as Finance Logix and eMoney Advisor.
Ms. Schmitt said she lacked the scope to cover all the offerings in this initial report on the subject.
A second point that surprised me about Aite's report — which I applaud — is its global take on planning software.
For example, Ms. Schmitt in-cluded Finantix, a mainly European company (which has a new planning application for the iPad about which I recently wrote and raved), as well as Polaris Software Lab Ltd., which serves Asian markets, and Tata Consultancy Services Inc., which serves both Asia and Europe.
Since the United States is not the only country with a financial planning industry, there is a lot that can be learned and synergies shared from the approaches taken by technologists and advisory professionals beyond our borders.
I also favor the logical approach Aite took in categorically breaking down the products.
The first group is the pure-play financial planning providers. The popular MoneyGuidePro falls into this category.
That is followed by providers of financial planning solutions that integrate other wealth management capabilities. SunGard's WealthStation fits here.
Finally, there are providers of investment-management-based financial planning solutions, an example of which is the Thomson Reuters Financial Planning offering.
The last 42 pages of the report are given over to Vendor Profiles. These three- to four-page descriptions are broken into sections themselves, and perhaps the most interesting is the background on how each of the programs came to serve its market.
For instance, I was intrigued to read about Polaris Intellect Wealth FNA — a package used mostly in India that I had never heard of — and its 25-year history with Citibank's Global Consumer Banking group. Advisers working with thousands of clients have used its modular approach, which is likely to be seen here in the U.S. at a bank or insurance company sometime soon.
One disappointment with the report is its Awards section. Vendors cited are not given an actual award, but almost everyone is lauded for being good at something.
Nine of the 11 programs covered in the report are given this treatment, and while the provided explanations are plausible and rational, an even more critical analysis would be refreshing. I made the same comment about the FPA-Actifi report.
Consumer review publications are expected to take off the kid gloves when evaluating products, and on many occasions during my eight years at PC Magazine, those of us responsible for the ratings almost came to blows over crowning winners.
Despite their shortcomings, the Aite and FPA-Actifi reports are great indicators that innovation and competition in the financial planning software business is far from dead and could be heating up anew.
Visit the online version of this story for links to the previous stories and more information on the reports mentioned.
E-mail Davis D. Janowski at [email protected].
