Software providers enhance existing products and add new ones.

StatementOne, a company that has made a name for itself offering financial data consolidation and Web-based portfolio reporting at the enterprise level, recently began offering a similar service to independent registered investment advisors. The firm has already signed up a number of independent RIA firms with asset bases ranging from $25 million to more than $1 billion. Although it says the new products aren't aimed directly at Advent or Charles Schwab & Co.'s Centerpiece, they certainly compete against those two market leaders.

Christopher A. Schmutz, vice president of new business and product development at StatementOne, says that entry into the RIA market was driven by demand. "We had independent RIAs calling us on a daily basis asking about our services, so we decided to develop a product for them," he says.

StatementOne offers a total outsource solution. The firm downloads data from custodians, cleanses it, reconciles it and posts it to a Web site where it can be accessed by the advisor. From the Web site, advisors can run a variety of performance reports, group accounts in various ways (taxable accounts, non-taxable accounts, households, etc.), and grant permission for clients to access reports over the Web. Daily time-weighted rates of return can be generated for individual accounts, or any combination of accounts, and the service offers individual tax-lot accounting. Fee-based billing capabilities will be added early next year.

After recently participating in a Web-based tour of the StatementOne application, I was impressed by its capabilities and usability. While some additional reporting capabilities would be nice, most advisors will be well served by what is currently available. The recently upgraded client reports are both informative and visually pleasing.

The firm claims that the accuracy of its data currently exceeds 99%, in line with most major competitors. They expect that further enhancements to their proprietary data validation system, which should be in place by the time you read this, will increase accuracy to better than 99.9%.

Annual subscriptions are priced on a sliding scale of assets under management; the larger the account, the smaller the annual percentage. There is a minimum annual subscription fee of $20,000, putting the service out of the reach of some smaller firms. In addition, there is an installation fee, which typically runs about $10,000 and covers data collection, Web site construction and training. Conversion of historical data, if required, is currently available for Centerpiece, Advent and dbCAMS formats, with more on the way. StatementOne charges a one-time fee of $3,000 to convert a single database.

For a nominal additional fee, StatementOne users can integrate their clients' data with NaviPlan, a leading financial planning package, and Morningstar Workstation, the data/analytic/planning tool from Morningstar Inc. According to Schmutz, the firm intends to extend data integration to additional research, analytic and CRM programs in the near future.

With the current lack of portfolio management and reporting tools from which to choose, RIAs are likely to welcome StatementOne enthusiastically.

Financial Profiles

Many readers are undoubtedly familiar with Financial Profiles Inc. The company has been serving financial professionals since the advent of modern financial planning more than 30 years ago, and they currently claim to serve at least 165 corporate clients with more than 100,000 licensed seats, making them one of the largest financial planning software providers in the industry.

On September 23, the company announced the release of Profiles+ Professional 7.0, the latest iteration of its flagship comprehensive financial planning software. Although I haven't put this new version through a thorough evaluation, my initial impressions are generally favorable. Not only does the new version improve some existing features, it also adds additional capabilities that were conspicuously absent in previous releases.

Probably the most important and overdue addition to Profiles is the ability to apply probability analysis to client goals. Monte Carlo analysis has been a staple in almost every other major financial planning package for some time now. Most practitioners I talk with find it valuable as both an analytical tool and a client counseling tool.

Rather than try to re-invent the wheel, Financial Profiles wisely decided to build their Monte Carlo module upon the basic version of the Ibbotson Wealth Forecasting Engine (IWFE). According to the Ibbotson Associates web site:

"The basic version of the IWFE uses the mean, standard deviation and correlation of the desired asset classes as inputs. From these parameters supplied by the user, hundreds of future return and wealth paths are generated. Users may also enter savings and withdrawals from both taxable and tax-deferred portfolios, and the returns are used to generate hundreds of different wealth paths."

The good news for Profiles users is that they now can avail themselves of a decent Monte Carlo engine supplied by a highly regarded firm. The bad news is that the Monte Carlo implementation, while a step in the right direction, needs further work, and there is an additional cost to use it. According to company spokesperson Adam Dorfman, the typical licensee will pay between $250 and $295 for the Monte Carlo module.

Another feature conspicuously absent from previous versions of Financial Profiles + Professional was the ability to include employee stock options in the financial planning process. Version 7.0 for the first time offers planners the ability to enter, track and, to some extent, plan for nonqualified employee stock options. However, the program does not offer similar capabilities for Incentive Stock Options (ISO), so the "stock option module" will disappoint many.

The new Fixed Income Security link looks very promising. With one click, planners are taken to a Web site run by Fixed Income Securities LLC. Here, advisors can fill in an investment profile and receive a recommended model portfolio tailored to the client's needs and based upon current market data. The site generates a limited number of nicely designed reports, which can be labeled (with advisor and client names, etc.) and printed. While those with expertise in the fixed-income area will find this link fairly basic, generalists looking at individual bonds as an alternative to bond funds will find this a useful tool. Hopefully, the capabilities of this link will be expanded in future versions.

Manual asset classification is another welcome addition. Rather than accepting the default asset classifications from Ibbotson, which rely on return-based style analysis, users now can classify assets as they see fit, adding additional flexibility to the planning process.

A number of existing features have received noteworthy upgrades. Previous versions of Profiles allowed the advisor the ability to designate liquidation order of assets, but the functionality was built into the main Asset/liability section, making for a busy interface. The new version includes a more intuitive "Liquidation Order" section.

Some weaknesses with regard to college planning have been addressed, with 529 College Savings Plans, Coverdell Education Accounts, and UTMA/UGMA accounts added to the account type drop-down menu. Some of the output pages have been upgraded in this area as well. Version 7.0 significantly improves control over future cash flows when operating in the "Tax Sensitive" mode. Individual start and stop dates can be assigned to each cash flow if desired.

Financial Profiles generally has not been regarded recently as a leading innovator in the field of financial planning software, but the company is blazing a trail in one important area: bilingual planning. Spanish language output has been available as an add-on (at an additional cost) to recent U.S. versions of Profiles +, and that module has been fully updated to mirror 7.0's improved output.

Quite frankly, it is difficult to fathom why other software developers are not following Profile's lead. The United States is now home to the fifth-largest Spanish speaking population in the world, and Hispanics are the fastest-growing ethnic minority in the United States. In some regions of the country (South Florida, California, New York and Texas, for example), the ability to produce Spanish language reports is already a business necessity; look for demand to grow dramatically over the next five to ten years.

Financial Profiles + Professional 7.0 looks to be an evolutionary move in the right direction. While this version's enhancements are insufficient to lure users of competing products into the Financial Profiles camp, current Profiles+ users will welcome the upgrade warmly.

Profiles+ Matrix

In June, Financial Profiles Inc., announced the purchase of StatiaFX Inc., a Portland, Ore.-based provider of data acquisition, consolidation and wealth management technology solutions. Like Statement One, Financial Profiles Inc. apparently senses a demand for additional data consolidation and portfolio reporting products, and the firm intends to offer their customers such an alternative through their new product, Profiles + Matrix.

Profiles + Matrix, built by the StatiaFX team, will offer another outsourced financial data consolidation and portfolio reporting solution. At its most basic level, Matrix will enable current Profiles + Professional and Profiles + Forecaster users to seamlessly access and upload client portfolio data housed on a Web server from within their Profiles+ financial planning application, alleviating the need for manual data entry. Once entered, the advisor will be able to update market pricing simply by connecting to the Web service. This basic connectivity-only service will be available on an enterprise basis for as little as $250 per user, per year.

For an additional fee of $90 per year, plus $4 per client, per year (for enterprise users), advisors can offer their clients online account access and account aggregation services. The full Matrix package, which costs an additional $450 per year ($790 in total), includes consolidated portfolio reporting, market data, asset allocation tools and portfolio analytics.

At initial release the Matrix will not offer true portfolio reporting at the transaction level, but the second release, scheduled for early next year, will. When transactional reporting becomes available, it is likely that Matrix will be marketed to smaller, independent RIAs as a "lite," low-cost data consolidation and reporting solution retailing for under $1,500 annually. At that time, it could generate a great deal of interest from the financial planning community at large. For now, however, Matrix will be of interest only to users of Financial Profiles financial planning products.

AdvisorProducts

AdvisorProducts Inc., the firm founded in 1996 by veteran financial journalist Andrew Gluck, is best known for the high-quality Web sites the firm creates and maintains for independent financial advisors, as well as the well-written client newsletters they offer. Recently, the firm has expanded its scope to include other products and services designed to help advisors communicate more effectively with clients and prospects.

Last month, the firm completed a major overhaul of the AdvisorProducts Web site. The new site both displays the full line-up of products available from the firm and empowers advisors to order many of them online for the first time.

If you are interested in building a coherent, unified brand for your financial advisory business, this Web site should be your first stop. Here, do-it-yourselfers can design and order everything from business cards, stationery and trifold brochures to promotional items like coffee mugs and golf balls. The process is very user friendly and, in the case of printed materials, highly customizable. Of course, those who require assistance can still reach a design consultant by phone or e-mail.

One service offered at the site, AdvisorSites Conferencing, deserves special mention. AdvisorSites Conferencing empowers advisors to hold an unlimited number of meetings with clients or prospects over the Web. "I don't understand why more advisors aren't using this technology," says Gluck. "It can really give your business a productivity boost, and our prices are only about one-fifth of what WebEx and PlaceWare are charging."

For a one-time fee of $300, AdvisorProducts will create a customized, branded "lobby" where your visitors can register for their conferences, and they will create a button on your Web site that links to the lobby. Conferencing fees start at $70 per month for five simultaneous users. (By contrast PlaceWare conferencing, which in fairness offers some additional functionality, charges $375 for a five-seat license).

While it is impossible to discuss every product and service available on this site, it is fair to say that the AdvisorProducts Web site now offers one-stop shopping for all an advisor's client communication needs. It is well worth a visit to www.AdvisorProducts.com.

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 for ordering information.)