Advisor Applications
Advisors and Technology Can Restore Trust edit
Monday, October 06, 2014 16:36

Which industry does the public rank among the least trustworthy? According to the 2014 Edelman Trust Barometer, the general public has fairly low confidence in the overall financial services industry, with a vote of only 48%. This figure decreases to 46% with regard more specifically to asset management. Yet, research by the CFA and Edelman shows that when selecting an investment professional, investors care most about whether they can trust him/her to act in their best interest. Achieving high returns was cited only half as often and fee amounts only one-fifth. However, for a long time, people believed that high returns were what mattered most to investors.

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In the coming years, the primary challenge for the financial services industry will be to enhance trust, which has been greatly shaken in the recent past. This challenge is significant given services are intangible and as a result difficult to differentiate from one provider to another. Thus, services can only be evaluated once they have been rendered. And as investment professionals provide a service whose future gains are difficult to predict, investors’ risk perception is magnified.

While the finance industry is having difficulty generating trust, the Trust Barometer shows that the general public trusts the technology industry more than any other, with a vote of 78%. According to Edelman, the tech sector has earned this trust by being a transparent, innovative and reliable steward of personal information.[1] Thus, the financial services industry can greatly benefit from incorporating technology into its services in order to make them more tangible to investors.
PwC also suggests that financial services companies can benefit from collaborating with proven technology companies since the general public places a high degree of trust in the latter. “Technology will play a key role in cost efficiency by 2020, providing stronger investor management and client relationship management capabilities,” reports PwC Asset Management 2020, while adding “technology is a necessary cost, reducing overall asset management costs to asset management firms, particularly when using outsourced technology solutions.” This trend is also seen within wealth management firms. With plans to outsource more of their technology infrastructure, they regard improving client relationship management software, portfolio management and investment advice tools as priorities for supporting advisors, according to the PwC Wealth Management Survey.
Having steadily built their credibility over the years, established technology firms who are working in close partnership understand the issues facing financial institutions. Their solid foundation allows them to reinvest a significant portion of their revenues into research and development, which are very important in an environment of constant innovation. “Only the providers offering the best technology, and those on a sufficient scale to keep investing in new developments, will survive.”[2]
Moreover, proven technology firms can help financial institutions align technology with their business growth priorities, quickly adapt to changing client demands, and comply with increasing regulatory requirements. Furthermore, today’s technology enables remote access to information, integration with third-party solutions for enriched data access and easy interface with corporate solutions. Advanced technology can increase the client experience, providing investors with a holistic view of their assets—a feature that is particularly important for high net worth investors.
A sophisticated technology will enhance the credibility of investment professionals by providing them with reliable tools that improve transparent and flexible business practices. This is very important, since credibility is one of the only quality-related criteria that can be evaluated before receiving a service.
Additionally, as the quest for differentiation and operational efficiency through technology continues, “the demand for a seamless, integrated, and tailored solution for each customer will drive technology for asset managers in the future. There will be an emergence of strategic technology activities, […].”[3] Hence, advanced technology tools will enable investment advisors not only to demonstrate their credibility, but also their value in offering personalized advice and solutions.
Financial services companies can carve out a competitive advantage through their client relationships as service brand perception is influenced by the quality of a company’s relationships, services and reputation. According to PwC, “Going forward, trust, reputation and brand will all play a greater role in client propositions and client perceptions of value”.[4] A brand assures customers of consistent quality services, which is extremely important when offerings are based on experience and trust, as in the financial services industry. It is therefore crucial that companies providing financial services build a trusted brand.
How, then, can the financial services industry restore investor trust? Without a doubt, it must call on proven technology providers. Financial advisors must also take on a bigger role because they are the ones who establish trusting relationships, create lasting connections and support the industry.
The value of financial advisors is priceless. They make a difference in investors’ lives, they empower them to achieve true financial independence, and with every interaction with their clients they build trust.


One-Trick Apps Are A Key Cause Of The Disruption Revolutionizing Financial Advisor Software; Plus, How To Delete Backgrounds From Photos Easily edit
Tuesday, May 06, 2014 15:31

Tags: advisor industry people | advisor technology | financial planning software

What does the disruption being visited on the financial advice software business have to do with removing background images from photos? Plenty, as it turns out.

Recently, I searched the Web for an easy way to delete a background from a head shot photo and came across Clipping Magic, which makes removing an image background as simple as drawing two lines and clicking once. Instead of Adobe Photoshop, I’m now paying $3 a month for a Clipping Magic account, and I used the app with Fritz Meyer's head shot below. Point is, Clipping Magic is contributing to the disruption of the graphics software business in the same way that the financial advisor software business is being disrupted by one-trick apps.  

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To call these one-trick apps is unfair. They can pack heavy-horsepower. David Zolt’s retirement software, which uses Excel to simplify a highly complex calculation created by an actuarial professional with 25 years of experience in designing retirement plans, is a one-trick app. It does one thing great.
The Apple marketing slogan of five years ago today means there’s an app for everything, even the most complex financial calculations and algorithms and now they’re developed by thoughtful professionals with serious skills and an entrepreneurial spirit.
I love the way the American economic system is empowering people like Zolt, Alex Murguia, Robert Keebler and other thought leaders to create new software solving personal financial planning problems. These people are translating their life’s work into an app or series of apps, these highly skilled individuals whose names are their brands. They design simple software heretofore only big software companies had the intellectual capital and tech skill to produce.
These one-trick apps help advisors do one thing great but are easier than working on a big financial planning software system larded with features you don’t need. They are like Clipping Magic to financial advisors.
Over the next few years, we’ll see the business of providing software to financial advice professionals continue to be disrupted by entrepreneurial thought leaders. Software for financial advice professionals is a niche business and these one-trick apps are going to chip away at the user base of the big software companies.
The one-trick apps are going to do more and more of the work for financial advisors in the years ahead, and they are well suited for the financial advice business, which is so fragmented. If the right combination of $3 a month apps does everything a financial advisor needs, guys like Zolt, Keebler, and Murguia are going to disrupt your desktop.  


Orion Now Offering TRX As Part Of Its Solution! edit
Friday, March 28, 2014 00:12

Tags: advisor technology | automation | Portfolio Management Software | productivity | rebalancing | tax efficient investing | Tax-efficient investing | technology

As the financial advisory business is becoming more complex and competitive, advisors are looking for ways to create scale, enhance service and improve profitability.
Accordingly, technology can play a key role in making this happen.  One very exciting development is the movement by industry technology leaders to work together to create new solutions for advisors.  A great example of that is the new joint venture between Orion Advisor Services and Total Rebalance Expert (TRX).

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Per the recent announcement ( TRX will now be included as part of Orion's portfolio accounting package. TRX has long been integrated with Orion, so why is this news so exciting? It is exciting because now, for this first time, advisors can get a best-of-breed complete technology solution combining the largest privately held portfolio accounting and rebalancing solutions. 
The combined end-to-end solution provides advisors with multi-custodian, tax efficient portfolio management, the ability to report on and manage all clients' assets, full back office services, and more. 
Industry consultant Tim Welsh, President of Nexus Strategy stated, "The Orion/TRX partnership is a landmark deal in the industry as two leading, independent firms come together to create a new technology platform to make advisors' lives easier and provide a scalable platform for growth."
No longer will advisors be beholden to "all in one" bundled solutions from a single provider. The TRX/Orion partnership allows advisors to take advantage of TRX's top tax efficient rebalancing as part of the Orion solution; however both TRX and Orion will remain open architecture. Both companies will continue to support and enhance existing integrations. 
Eric Clarke, President of Orion Advisor Services, explained "Both of our firm’s cultures have the belief that advisors provide ultimate validation on innovation. The feedback we received was so strong about this integration, that we would have been crazy not to move this opportunity forward." He further emphasized "Our ownership structure allows us to collectively put our advisors first, not next quarter's earnings targets."
Simply put, this new offering gives advisors best-of-breed choice for portfolio accounting, reporting and tax-efficient rebalancing, and is a shining example of how the industry benefits when leading technology firms work together.
Post-Monte Carlo Planning: A Modern Platform For Managing An RIA With A Revolutionary Planning App Based On Safe Savings Rates edit
Monday, March 10, 2014 17:39

Tags: financial planning software | retirement income | retirement planning

inStream Wealth Solutions allows practitioners to advise clients based on a new approach to retirement planning, a methodology based on safe savings and withdrawal rates. But don’t think of inStream as merely a financial planning app.

In addition to enabling a modernized approach to retirement planning, inStream provides an RIA with a practice management system. It integrates alerts into its financial planning app, along with business intelligence (BI) data, a document management system, mind maps, online collaboration tools for teams, and features supporting other core functions for managing internal information at an RIA.

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(Across the bottom of the video, colorful text boxes indicate the topic discussed in each section of the video, allowing you to quickly scan.) 


“Current systems have been in somewhat of a homeostasis from a goal-based Monte Carlo approach,” says Alex Murguia, the founder and CEO of inStream Solutions. “Really it was just a matter of time until…. And you’re beginning to see a signaling of new types of planning that are beyond cash-flow, beyond, frankly, goals-based Monte Carlo, that have to do with safe savings rates. This will lead to sustainable withdrawal rate planning that we’ll have coming out soon.”

“This is the foundation for all of that,” says Murguia, who built a successful RIA in McLean, Virginia before starting inStream in 2010. “But the time is right for this approach and we’re very proud to be the first ones to release this in this manner.


Post-Monte-Carlo Financial Planning. Research on safe retirement savings and withdrawal rates has fundamentally changed retirement planning. Meanwhile, demographics are driving financial professionals to craft plans for clients based on safe withdrawal rate assumptions and safe savings rates. 
Murguia says financial planning software is about to enter a “post-Monte-Carlo period.” inStream supports this new approach to financial planning based on safe saving and withdrawals rates. To answer the crucial question in financial planning — will I outlive my money? — inStream applies a methodology that the current generation of planning apps does not now support.
“The safe savings rate is, one could argue, a more effective planning tool to guide someone in retirement because, for someone who is 20 or 30 years away from retirement, it’s very tough for them to say that two years into retirement they will want to buy a boat,” says Murguia, who with his wife’s uncle took McLean Asset Management from $30 million AUM 12 years ago to $600 million AUM today. “A better approach in advising them is by saying that saving at least 13% of your income has allowed people to spend a specific amount in retirement for the rest of their lives.”
Not Just A Planning App. Don’t think of inStream as just a financial planning software. Yes, it does a very capable job of planning based on safe savings rates and sustainable withdrawals as well as using Monte-Carlo/goals-based planning, but inStream’s loaded with additional features for running an RIA.
Business Intelligence (BI). BI is a popular software category in enterprise applications used by corporate managers, but no software aimed at financial advisors has ever offered extensive BI reports to managers at RIAs. inStream is improving the desktop used by practitioners and managers at RIAs by displaying business intelligence data about your practice in its dashboard for advisors. For instance, you’ll get snapshots reminding you that most of your clients do not have financial plans that are trackable. In addition to providing metrics on client engagement and other data based on your clients’ profiles, inStream feeds crowdsourced information about your practice versus other users. For instance, you can see that 15% of your plans are out of tolerance, while other advisors using inStream average 10% — and area where you need to improve your service.
Document Management. Instream allows you to store documents to a secure encrypted server and tag them for keywords. So you can tag all tax documents with terms like “1099” or “1040” and they will be indexed and searchable for those terms.
Alerts. A heads up at the moment of need for a client. Prioritizes what advisors need to do day to day. Tells you when a client’s plan is out of tolerance. Generate alerts when clients are not achieving a specific goal or not tracking against a calculator.  “These are not the same kind of alerts you get from a CRM system, telling you to call someone or attend a meeting,” says Murguia. “These alerts are generate off each client’s financial plan.”
Mind Maps. The beauty of a mind map is that it organizes ideas. Using the mind map to show a client his financial profile allows an advisor to illustrate how elements of a plan are connected.


Document Management. Integrated document management. You can tag any document. Murguia says documents will be indexed and tagged automatically for keywords by the end of 2014.

Niche Analytics. See that 80% of clients are women or carpenters and discover new niches as well as to measure your depth of penetration in a particular niche. What’s the average
Alerts For Teams. You can set alerts for teams working on the same client and apply an establish workflow sequence across a team to create processes specific to different service levels. So you can segment clients and apply a set or workflows and processes that go along with a subset of clients. 
Previous coverage of inStream:
I first wrote about inStream in March 2012, and progress has been slow. Apart from a follow-up in January 2013, I did not write about inStream for many months because the code powering the system was being rewritten. Murguia realized that the first iteration of his app was not strong enough to be used by enterprises and he re-coded the system so that it could be rolled out by a corporate RIA with hundreds of reps as well as custodians, institutions and independent advisors. According to Murguia, inStream went from a free app to costing $1,200 a year in January 2014. As early as August 2014, when the rest of the platform is completed, the cost of the app will rise to $2,400 annually, he says.


CFP Who Was A Consulting Actuary Taught Himself Programming And His New Software Is Simple, Effective, And Adds A New Twist To Finding A Safe Retirement Withdrawal Rate edit
Thursday, December 19, 2013 16:50

Tags: advisor industry people | retirement income | retirement planning

David Zolt, who spent over 25 years as a consulting actuary working on defined benefit plans for some of the world’s largest companies before becoming a Certified Financial Planning practitioner, is about to shake up the market for retirement planning software for financial advice professionals. He’s selling a spreadsheet for $99 ($79 annually thereafter) that vastly simplifies retirement income planning.


Apart from the remarkable value his software provides practitioners, Zolt’s venture is emblematic of a fundamental shift in technology used by financial advisors.


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The Retirement Planner By RetireSoft

Zolt turned retirement income planning on its head to come up with a new way to solve the math problem of finding a retiree’s safe withdrawal rate. “It’s a paradigm shift,” says Zolt, 58. 

Zolt says traditional financial planning software apps approach retirement income planning by starting with a retirement age assumption and then telling you whether you’re spending too much or too little. The retirement age is a fixed target in traditional retirement planning software.
Zolt’s software solves the math problem that is retirement income in a different way. By solving for the safe retirement withdrawal rate instead of starting with a specific target rate of withdrawal, Zolt has done something seemingly simple that adds an important twist in the retirement planning process.   
“Retirement planning is an equation with about seven variables: portfolio size, portfolio return, savings, living expenses including taxes, years to retirement, and withdrawal rate,” says Zolt. “To solve the problem, you need to fix or assume certain variables in order to solve for other variables.”
“This is where the science becomes art, and where my approach is new and novel,” Zolt adds. “I have chosen to make the number of years to retirement the variable and solve for the withdrawal rate. The result is a simple demonstration that clients can easily follow and, in turn, buy into, which is a key component in client relationships.”
Above is a screenshot of the most complicated spreadsheet in The Retirement Planner. By changing the one of the variables of the retirement income planning equation, advisors can instantly tweak “what if” scenarios. It’s dead simple. Zolt has done all the math and programmed the spreadsheet himself. He’s locked it down so you can’t see the code without hacking it hard.
Take a look at the 7½-minute video demo that Zolt gave me of the app and tell me what you think. It looks like this is a really simple, low cost way for advisors to work on a retirement case on the fly with a client.
Zolt will be speaking in detail about his new approach on Friday, Feb. 7 at 4 p.m. at a webinar that is free to A4A members ($60) and that will be eligible for professional education credit
Zolt Is Emblematic Of A Big Change In Financial Advisor Technology
Zolt is just the guy you want to calculate safe withdrawal rates for retirees. He’s an Associate of the Society of Actuaries and a member of the American Academy of Actuaries and he’s also an Enrolled Agent. For 25 years he worked as a consultant at Coopers & Lybrand, Foster Higgins, and Buck Consultants, and he became a team leader managing small groups of retirement plan consultants who billed out at $600 an hour.
In 2004, he was downsized and retired as a consulting actuary to start a financial planning practice in Westlake, Ohio. He can retire but he thinks retirement math is fun and loves keeping busy with financial planning.
Zolt says he works on a retainer basis for 18 clients and does projects as needed for another 12. Zolt says has not taken a new client for a year. That’s because he’s been busy working on the software.
In January 2013, Zolt authored an article published in The Journal of Financial Planning about how the 4% safe withdrawal rate relied on as a rule of thumb by many practitioners could actually be stretched to 6% with some minor tweaks without increasing the risk of running out of money. He then did some public speaking explaining the article, and practitioners asked him how they could implement his ideas. That got him thinking and led to him to his upside-down approach to solving the safe-withdrawal rate problem.
With just 12 official office-hours a week, Zolt spent the summer of 2013 learning Visual Basic for Applications (VB), which allows you to write code for Excel spreadsheets, by taking tutorials and doing research online. While Zolt had previously written Excel macros with 10 or 15 lines of code, the VB code powering his spreadsheet contains about 1000 lines of code, he says. He hired a consultant show him how to lock down the code so nobody can see it unless they pay him $99 for the year and $79 annually thereafter.  
By the end of last summer, Zolt had introduced The Retirement Planner app to members of the Alliance of Cambridge Advisors (ACA), a group of fee-only financial planners who share a practice methodology and other ideas, a group that Zolt raves about. Some ACA advisors became beta testers and 25 are now using the spreadsheet, which is up to version 1.2.
“I had a second Retirement Planning meeting with a client recently,” according to a testimonial on RetireSoft’s website from an ACA advisor. “At the first meeting, we went over their retirement picture using (the ACA Retirement Analyzer) and MoneyGuidePro. This time I used your Retirement Planner, and they loved it!!! They gushed about how user friendly it was, and how clear the results were. Thank you very much!!”
Zolt says he is “having a blast.”  That’s because he’s a math-murderer. He kills this stuff. When he was four-years old, he says, his parents would play a game with him where they would give him a date in history and he would tell them what day of the week it fell on. “For me I am a financial planner and come home from my job and play with spreadsheets,” says Zolt. “This is what I do to unwind.”
Software for financial advice professionals can now be coded by people who are not professional programmers but who learn a bit of programming to do it themselves, or who learn enough about how to code to not get snookered by programmers they hire. It is spawning new professional apps that are simple and inexpensive and built to do one thing well.
What Manish Malhotra is doing with Income Discovery, David Zolt is doing with RetireSoft, and other individuals with a big idea are doing elsewhere could  be disruptive to large software vendors and alter the technology choices for financial planning practitioners. It has become so easy for a one-man operation to build software for a small targeted group of financial advisors and sell it at a fraction of the price of apps from traditional professional software companies with 10, 20 or 30 employees or more. That’s going to continue to make financial planning and investment advising a very fragmented field and allow for advisors to differentiate themselves based on the way they practice.


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