Where is the planning in financial planning? One financial software company says it's largely missing and that they have the key to bringing it back.

Financial advisors create “plans” for clients’ futures, but the plans are little more than recommendations for current asset allocations, says Dan DiBartolomeo, president of Boston-based Northfield Investment Systems.

“We think that is really inefficient because it implies that the portfolio would be rebalanced from time to time,” DiBartolomeo says. “While that’s sometimes a necessary thing, it’s also a costly thing for private investors.”

DiBartolomeo and his portfolio strategy and analytics firm have created WealthBalancer, a tool for financial advisors that attempts to project clients’ financial decisions across their entire lives.

The tool anticipates upcoming events within a household’s financial life—a student graduation, retirement, the birth of a child—to illustrate how an investor’s portfolio allocations may have to change over time.

“Your typical wealth management client is taxable,” DiBartolomeo says. “Their ability to bear risk changes over time. ... We know life cycles change—that’s the conceptual basis of target date funds. Technology is taking that to a higher level. We’re not just thinking about someone’s retirement date anymore.”

Most allocation is currently done either in an ad-hoc manner or through Harry Markowitz’s Modern Portfolio Theory, explains DiBartolomeo.

“The Markowitz concept for allocation needed updating,” DiBartolomeo says. “The original concept was no taxes, no transaction costs, everyone has uniform preferences for risk and return. That’s a laboratory environment that doesn’t carry over to the real world, but we believe there are analytical solutions to these issues.”

Traditional portfolio rebalancing is done with the assumption that conditions do not change between the time investment and portfolio analyses are conducted and when trades are made to reallocate assets, which could cause costly mistakes for investors, says DiBartolomeo.

While WealthBalancer’s heavy use of client questionnaires may seem rudimentary to most advisors, it uses a technique called the Analytic Hierarchy Process to synthesize allocations out of a client’s answers.