In the world of technology, change is the only constant. As 2002 winds down, now is the time to start planning your firm's technology budget for 2003, if you haven't already done so. Here's a look at some new and/or improved products worthy of your attention. Interactive Advisory Software (IAS) Financial planning firms rely on three critical pieces of software to generate most of their revenues: customer relationship management (CRM) software, financial planning software and portfolio management/reporting software. Interactive Advisory Software (IAS), from Optima Technologies Inc. (www.optima-tech.com), is an innovative new program that attempts to deliver this Holy Trinity of financial planning software in one tightly integrated package. The program traces its roots back to IFS, an integrated DOS program that a small group of diehard firms were still using until the recent introduction of IAS. IAS is a Web-based application. Advisors can either host the program on a server in-house or outsource the hosting to Optima. (The actual hosting is done through a relationship with IMS, a Connecticut-based company.) In either case, the only software an end-user will need to access the program is a Web browser. This means that advisors work from virtually any location that has a computer and Internet access. It also makes it possible for advisors to grant clients online access to documents and reports, should they choose to do so. The in-house option will set you back $11,250 initially, plus $3,750 maintenance after the first year; and that's just the cost of the software for up to five users. You'll also need to purchase a server and pay someone to maintain it. Outsourcing the hosting chores to Optima isn't cheap either ($458 per month for one user, $1,032 per month for three users, $1,371 per month for five users), but it may be the better deal because firms won't incur the cost of purchasing and maintaining a server. Furthermore, Optima also will handle the daily portfolio downloads and follow up with a daily reconciliation report. While I haven't yet tested the software, I did recently receive an in-depth orientation from David Grace, the IAS product manager. My impressions were generally favorable. I was particularly impressed with the CRM capabilities of the program. This did not come as a surprise, since CRM is Optima's specialty. IAS is built upon a powerful relational database, so information can be stored, grouped and sorted in almost any way your firm desires. A series of tasks can be mapped to client accounts or to staff personnel, automating workflows. IAS can be integrated with a scanning system, so client documents can be linked to client records. Of course, you get all of the other functionality one would expect from a high-end CRM program, such as notes, calendar, mail merge, etc. Since this program is web based, the initial screen view is highly customizable. In addition to details from within the program, the home page can display information from and links to other Web sites. The portfolio management system also looked impressive at first glance. Hotlinks allow users to effortlessly drill down to the level of detail that they need. The program appears to have strong sorting and reporting capabilities. It can track investment policies and alert you if a client's portfolio varies from targeted asset allocations. For financial planning, IAS uses a detailed cash-flow model. All cash flows can be coded to a specific line item on an income tax form, which saves significant time for those who offer tax preparation services. From what we saw, IAS appears to be able to perform almost every financial planning function an advisor would typically want, with the exception of employee stock option planning (it can track them, but not plan with them). The current version lacks Monte Carlo capabilities, by the program should incorporate them by the first quarter of next year, according to Grace. In spite of my favorable first impressions, I do have some reservations about enthusiastically recommending IAS at this point, particularly with regard to the financial planning aspects of the program. For one thing, it may be overkill for some planners. Detail-oriented firms that do in-depth cash-flow analysis and tax planning will find much to like here, but those working the lower end of the semi-affluent market probably do not need all of this program's capabilities. Philosophically, many firms are moving away from detailed cash-flow analysis and more towards goal-based planning, which clients can more easily grasp. While IAS possesses the capability to run what-ifs, other programs do it quicker and better. From a business point of view, I suspect that many advisors will be hesitant to purchase the three programs most critical to their business in one package from a relatively unknown company without some assurance that the company has staying power and that support for the program will continue indefinitely. The predecessor of IAS, IFS, was essentially in limbo for roughly 10 years. I suspect potential purchasers will want some assurance that the same fate will not befall IAS. According to Grace, Optima is a small, 10-year-old company with Fortune 100 clients that has been profitable since inception, but IAS is a new line of business for them. Cost is another factor. Although the cost of IAS may roughly equal the current retail price of a top-notch CMS, portfolio management and financial program, many firms are paying substantially less than that due to grandfathering and/or discounts. The costs we cited above don't include additional fees that may be incurred to convert data into IAS, not to mention any potential future cost that may be incurred getting data out. The introduction of IAS not only proves that truly integrated software for advisors is technologically possible; it also provides another sorely needed portfolio management software alternative. It's too early to tell whether IAS will be able to attract the critical mass of users necessary to insure a commercial success, but Optima and product manager Grace deserve credit for putting together the first highly integrated, Web based platform for advisors. eWebPortfolio eWebPortfolio (www.ewebportfolio.com) is a Web-based portfolio management and accounting solution. The only software requirement is Microsoft Internet Explorer 6.0. Like other application-service providers (ASP), eWeb-Portfolio relieves advisors of tedious and expensive hardware/software installation and maintenance chores. It also performs back-office functions, such as downloads, reconciliations and pricing. Trading capabilities are built into the system, so all portfolio tasks can be performed from one location, and the impact of trades (and pending trades) can be viewed immediately. Since all the information is housed on eWebPortfolio servers, advisors can authorize clients to view reports if they wish. eWebPorfolio's modeling function allows advisors to set up model portfolios and then effortlessly synchronize a second portfolio to the first with a mouse click. Total portfolios can be synchronized, or the software can be instructed to allocate cash only to bring the portfolio as closely into alignment as possible. The resulting report contains numerous hot links, so advisors can review the results and easily make manual adjustments as needed before processing any trades. The fixed-income section tracks CUSIP's, coupons, maturities, ratings, par value, cost basis, price, yield to maturity and duration. Cash-flow and projected maturity reports help manage the portfolio. A wide variety of reports are available. They include accrual reports, commission details, realized/unrealized gains/losses, portfolio summaries, tax-lot details, top 10 holdings and security contribution to performance. Performance reports are AMIR compliant, of course. To help with compliance, the program can generate SEC-compliant 13f filings. All that is required of the user is a beginning date and an end date. Portfolios are marked to market an hour after the market close each trading day. The downloads take place overnight, as do adjustments for corporate actions. Advisors receive a daily e-mail report that contains daily trading activity, portfolio performance updates, portfolio snapshots, cash reports and an accrued income report. Perhaps the most appealing thing about eWebPortfolio is the pricing. With prices starting at $2,500 for one custodial interface, eWebPortfolio is an affordable solution for smaller firms. Pricing for larger firms is equally attractive, starting at $400 per month for unlimited access and multiple custodians with no per-seat charge. Of course, your greatest savings is likely to result from reduced staffing needs, since eWebPortfolio will handle the back-office work. Before you throw down this magazine and rush to contact eWebPortfolio, a few cautions are in order. As of late September, interfaces for Schwab, Waterhouse and Fidelity were not yet in place, although the company indicated that producing them is a priority. I also think the program's interface, while powerful, could use a little polishing. Reports, though numerous, are not as plentiful as some other programs provide. (They can be exported for further editing, however.) As with IAS, I consider eWeb-Portfolio to be a new, promising product worth following; but implementation entails the same new-company risk. While it is not quite ready for prime time yet, eWebPortfolio could prove to be a low-cost alternative to Advent and Centerpiece in the not-too- distant future. AdvisorSites BackOffice 4.0, FANS, ACES and FASERS AdvisorSites, a leader in the field of Web design and hosting, and written content for independent financial advisors, recently launched enhancements and additions to their service offering. BackOffice 4.0 represents a significant enhancement for those currently using AdvisorSites as their Web hosting service. The new WYSIWYG (What You See Is What You Get) editor makes creating new Web pages, or reformatting old pages, a much simpler process. The interface, which resembles a pared down version of MS Word, allows users to format paragraphs, change fonts, create bulleted or numbered lists, insert tables, insert links, and spell check from one toolbar, among other things. If you prefer to work from within MS Word, you can create pages there and then cut and paste them into the editor. The new version also grants users more control over the way AdvisorSites- supplied content is displayed. BackOffice 4.0 now includes an image library. Stock photos are filed by subject (Wall Street, Retirement, Abstract, etc.), so they can be viewed and uploaded with minimal fuss. FANS, an e-mail list server available for $500 per year, automates e-mail communications with clients and prospects. The service produces customized, privately labeled e-mail newsletters with teasers and links to an advisor's current Web content. The service also includes a weekly market wrap-up, so you can send a nice mix of general financial planning information and market news. Subscribers to AdvisorProducts newsletter service have access to additional free content that can be used in conjunction with FANS at no additional cost. Andy Gluck, president of AdvisorSites, is particularly proud of this service, proclaiming it "the most important Internet marketing tool ever developed for independent financial advisors." AdvisorSites Compliance Engine Snapshot (ACES) is another new add-on; and at $150 per year, it is a bargain. ACES allows advisors to take a "snapshot" of their site whenever changes are made and to store a compressed version locally (on a CD-ROM, for example) for compliance purposes. According to AdvisorSites, roughly 85% of Internet users will find your site through a search engine, so improving your search-engine ranking can reap big rewards. Financial Advisor Search Engine Ranking Service (FASERS) optimizes your Web pages, registers and updates your site monthly with more than 75,000 search engines/directories and manually submits your site to top search portals. Each month, you receive a report, which tracks your rankings and confirms your registrations. The cost of this service is $400. It comes as no surprise to us that AdvisorSites continues to win over demanding advisors in this tough market niche. BackOffice 4.0 increases functionality and improves usability. FANS, ACES and FASERS are value-added, reasonably priced service additions. The firm continues to garner high marks for its industry knowledge, service and reliability. If I were looking to improve my visibility on the Web, AdvisorSites would be my first stop. WealthMaster Version 4.8.3 WealthMaster (www.wealthtec.com) is a financial planning program that doesn't get much press. The likely reason is that it packs more power than the typical planner needs. This program is designed to handle complicated planning techniques. If you have clients who plan to transfer pre-IPO property to grantor retained annuity trusts (GRATs), or if you would like to model the benefits of a GRAT versus those of an installment sale to a defective grantor trust, this MS Excel-based program is for you. Of course, it can also perform more mundane tasks, like integrated cash-flow, income tax, retirement and estate liquidity analyses up to 80 years in duration. The latest version includes improvements in the following areas: Monte Carlo capabilities, input screens, graphs, the way tax laws are applied to planning scenarios and education funding, among others. WealthMaster is not for everyone, but for those highly skilled advisors who target the high end of the market, it is a solid choice. Joel P. Bruckenstein, CFP is co-author of the book Virtual Office Tools for the High-Margin Practice: How Client-Centered Financial Advisers Can Cut Paperwork, Overhead, and Wasted Hours (see www.virtualofficetools.net <http://www.virtualofficetools.net> for ordering information).