The new version will take a dramatic step by offering CRM capabilities.

Morningstar Workstation 1.0 is a competent investment analysis tool, a Principia for the Web, if you will. The new version of Workstation Morningstar will soon release has enough new features to be an entirely different breed of software.

From a macro standpoint, 1.0 provides Morningstar's research and analysis for the various security types it monitors. What the new version does that's such a dramatic departure is to let the user manage the process of providing this information to his clients. In other words, Workstation has CRM (customer relationship management) capabilities.

Just remember Workstation is still in beta form and not yet market-ready. Nevertheless, let's sneak an advance peek at the good, the bad and the ugly.

The Home Page

Workstation 2.0 features an entirely new interface that takes better advantage of the Web environment. As a result, navigation and usability are greatly enhanced. All of the pages in Workstation now have tabs along the left side for navigation. The home page divides into three vertical sections-two narrow columns flanking a wide middle column-all of which reveal summary information about the advisor's client base and clients' portfolio holdings. On the left is a "Quick Start" section including Alerts, Activities, a link to new Clients and Prospects, and a "Practice Summary" section totaling the advisor's clients, prospects and assets under management.

The middle section includes Recent Clients and Prospects, Top Securities, Alerts and Appointments. In the first two sections, the client and securities listings are hyperlinks that, when clicked on, allow the user to drill down into the detail of his recent clients and their primary holdings. Alerts highlight changes to holdings of which the advisor needs to be aware, such as manager changes. Appointments are self-explanatory, and a testament to the fact that Workstation contains CRM capabilities, more of which we'll look at shortly.

The right column shows the user a Market Barometer in style-box format, recent changes in the major stock indices and a Morningstar Analysis section listing recently used funds. All in all, this home page has a clean look and becomes an integral part of the program's navigation system.

But here are a few nits:

The Morningstar Market Barometer looks great, but some users may question its utility beyond its aesthetics. If the Morningstar indices reflected in the style box gain wider acceptance, this feature should gain in popularity.

The right column doesn't but probably should include things like interest rates and commodity indicators.

Not all new analyst reports need to be listed. A report that simply repeats the conclusions drawn in a prior report might be suppressed in favor of new reports with new findings, such as upgrades, downgrades or other recommendation changes.

In fact, what might be really helpful would be to empower the user with some level of customization. For example, he might be allowed to choose those funds for which he particularly wants to see new analyst reports, or he might be given the option of replacing that section entirely with news feeds or something else.

Navigation

On the left of every page is a navigation bar-a vertical row of tabs labeled with page names. For example, if one clicks down to a single client level within Workstation, he will find left-side tabs such as Accounts, Alerts, Contacts and Reports. If he drills further to the Account level, he will find tabs such as Investment Details and X-Ray. Within the X-Ray section, he's given horizontal tabs across the top of the page: Asset Allocation, Stock Sectors, World Regions and Top 10 Holdings.

Navigation, in other words, is easy and intuitive. There is more information in the new Workstation than there was in 1.0, and it's easier to get to.

Portfolio X-Ray

Once the user navigates to the X-Ray area mentioned above, he has at his fingertips the Morningstar data he's used to. The Asset Allocation tab gives him multiple style boxes for different asset classes; the Stock Sectors tab breaks down the equity portion of his portfolios as to industry sector, comparing his breakouts to a benchmark; the World Regions tab works similarly, but substitutes country for industry representation; and the Top 10 Holdings tab does just that-isolates a list of top 10 holdings so the advisor can pay particular attention to the securities that may represent the vast majority of his clients' money.

Is there anything new here? From a micro standpoint, just a few things (see below). From a macro standpoint there's lots. The improvements in Workstation aren't so much in the area of newer and better analytical data, but in how the program allows you to use the data. Since client portfolio data are entered by account, a portfolio x-ray can be performed on an account-by-account basis, or by consolidating more than one account. For example, if the client has a 401(k) and an IRA, while his spouse has a taxable investment account, each will appear as a separate line item with a checkbox next to it. Checking more than one box allows the user to x-ray a consolidated portfolio.

New CRM Features

What Morningstar says is new about Workstation-a kind of summary of what we've said thus far-is that it enhances the advisor's "wealth planning functionality." Some of the new features that make this true are Workstation's CRM ability to characterize clients with new information fields, its more robust reporting features and its ability to manage new business contacts.

New Client Information

Users can now collect and use information about clients' goals, asset allocation preferences, goals as they relate to specific client accounts, asset allocation preferences as they relate to specific goals, tax profiles, risk profiles and reporting requirements.

Advisors now can choose from five methods to establish an asset allocation for their clients' portfolios. They include: Best Fit for Goals, Model Asset Allocation, Best for Client's Risk Tolerance, Efficient Frontier, or a manually constructed asset allocation based on criteria the advisor selects. Once the asset allocation methodology is determined, Workstation's tools enable the advisor to build the portfolio.

New Reporting Features

Workstation now allows the user to take any of the program's almost infinite number of reports and package it, send it and track it. Suppose you create a customized report called Investment Recommendations Report. You can personalize it with your name and the client's name while including just those sections your client needs, such as Current Portfolio, Proposed Portfolio, Investment Strategy Analysis and Implementation Plan.

Next, you can convert the report to an Adobe PDF format and e-mail it to your client from within Workstation. Workstation then allows you to save a history of the date and time this e-mail was sent and what was attached to it. If your client calls back two weeks later with a question on the report, you can rapidly retrieve your copy.

The same capabilities of Workstation for managing contacts with existing clients can be applied to prospects, making Workstation a capable business-building tool. Prospects could be given "quickie" portfolio analyses, for example, and those plus other communications could be tracked using Workstation's CRM features.

New Analytical Features

Workstation's fund comparison capabilities also are worth mentioning. Suppose you identify a particular mutual fund that would be perfect for a client's portfolio, but the fund is closed. You can now have Workstation find other funds with similar characteristics. You can then pick a fund from the resulting list and have Workstation compare it side-by-side with other funds on the list. You might use this tool to show a prospect examples of how you would restructure his or her existing portfolio.

Beta Issues

Remembering that what I was shown by David Harrell, Morningstar's product development manager, was a beta version of Workstation, here are some additional features I'd like to see:

Wizards or Prompts. Since new users of any software often jump right in without reading instructions first, it might be useful if Morningstar were to provide some wizards to guide the new user in configuring Workstation to meet his individual needs. For example, the user may be confused about using the research alert vs. the customer alert features. An alert wizard, or perhaps some context-sensitive help, could solve this type of problem.

Alerts. The mutual fund alerts are a valuable feature, but perhaps they could be expanded upon. For example, I'd like to see an alert for major style box shifts that occur within a mutual fund.

Snapshot changes. The layout of Workstation's Snapshots, a familiar Morningstar convention providing a fund overview, could be re-ordered for greater functionality. For example, some advisors might want to see year-to-date returns displayed more prominently since this is the type of information clients often call asking for. Either revising the Snapshot layout or, better yet, allowing the user to configure his own version the way that he wants it, would be an improvement.

Rolling Return Graphs. I've always liked Morningstar's Rolling Return Graphs-those graphs that display the best and worst returns of a portfolio for different historical time periods. It's not apparent if they are included in this version of Workstation; if they are, they must be buried deep within. If Morningstar is not planning to include them, they should reconsider; if they are including them, these graphs should be featured more prominently.

Risk Profile changes. It's commendable that Morningstar has included a risk profiling capability within Workstation, but the feature employs only a handful of risk questions that may not be robust enough to give accurate results. The company might consider partnering with an established risk-profiling provider, like the ProQuest software folks in Sydney, Australia, (www.risk-profiling.com) to make this feature more robust.

In conclusion, the very few issues we've raised may be addressed by the time you see a fully functional version of the new Workstation. All in all, this is a significant upgrade-an altogether new and improved program, actually. And best yet, its price hasn't changed: $425 per month (paid by credit card) or $5,000 for an annual subscription.

David J. Drucker, MBA, CFP ([email protected]), a fee-only financial advisor since 1981, is editor of the Virtual Office News monthly newsletter, and co-author of the book Virtual Office Tools for a High-Margin Practice (Bloomberg Press, 2002), both available at www.virtualofficetools.net.