In my first review of PieTech's MoneyGuidePro over a decade ago, I was impressed by how smart yet easy to use the application was. This new cloud-based version seeks to get back to the simplicity of the original while adding functionality. For the most part, MGP: G3 succeeds. It is a better and smarter and more intuitive financial planning application than the previous version.

There are at least eight new features and eight major enhancements to the application. There's also a great deal of functionality hidden below the surface that can be leveraged to create financial plans that are better aligned with client needs.
Perhaps the best way to understand the magnitude of the changes that MoneyGuide has undergone is to walk through the creation of a quick and simple retirement plan.

Generally speaking, financial planners deal with affluent Americans. Historically, the cost of producing comprehensive financial plans is high and the public perception is that financial planning is only for the rich. As an industry, we have not done a good job of refuting this perception.

Less wealthy Americans often have less complicated financial lives, so they could benefit from a less comprehensive approach to planning. Recently, a number of applications have been created to specifically address this less complex demographic, but comprehensive planning applications have struggled in this regard. For example, with MGP: G2, a well-trained user could create a simple retirement plan for a prospect or a mass-affluent client, but the methodology for doing so was not readily apparent. In MGP: G3, creating such a plan is quick and simple. Bob Curtis, president of PIEtech Inc., created a basic retirement plan for me in four minutes.

To create a basic retirement plan, I first created a new client by entering the names, gender and birth dates of the couple. I then provided employment status, employment income and noninvestment "other income," if any, for each. In addition, I provided state of residence and citizenship information.

Next, I used "Auto Retirement Goal." This new feature, with a single mouse click, automatically creates a retirement goal based on a set of pre-programmed instructions. By default, the application takes current household income, subtracts federal and state income taxes, FICA and Medicare taxes. It then subtracts an additional 14% assumed savings rate to arrive at the assumed cash needed to maintain the current lifestyle. This sum is allocated into two goals: 80% to an annual basic living expense need and 20% to an extra living expense want. The "need" is a proxy for comfortable baseline living expenses; the "want" is a proxy for all of the extra lifestyle expenses one would enter in the full planning mode.

Resources at the clients' disposal to fund retirement are added next. The first is retirement income. The application automatically estimates Social Security payments assuming both partners retire at their full retirement ages. You can drill down and modify the calculation in various ways, but for a quick plan we stick with the defaults. Other income (pension, annuity income, royalties, etc.), if any, is then added.

Investment assets come next. Enter an extra savings amount and a willingness to increase saving. The default is 5% of income with a high willingness to do so. In version G2, I'd be required to spend time entering all of a client's assets, but another new G3 feature, the "Summary Total Only" screen, allows me to bypass this and enter totals only for employer retirement accounts, IRAs, taxable accounts and the like. The downside of this approach is that the reports cannot provide a current breakdown of holding for comparison to your recommendations, but it saves time. If necessary holding and asset class details can be entered, the improved interface still saves more time than the previous version.

The advisor can now add other assets (e.g., a house or a business). I choose to add the couple's $350,000 house to the plan. To my knowledge, the new MGP: G3 approach to other assets is new and unique. The traditional approach assigns a current value to the asset, assigns a growth rate to the asset, specifies when the asset will be sold, and brings the cash into the portfolio at the specified time. The MGP: G3 approach more accurately reflects reality.

First, it includes a "net cash amount" worksheet to better determine the future cash flow. It calculates the future cash value and then helps estimate any debts to pay off, sales expenses and taxes due to arrive at a net amount. You can accept the application defaults, or modify them to your needs. Another new feature is the ability to classify an "other asset" as a "special asset." If you choose this option, rather than assigning a single terminal value to the house, you create a low, expected and high value. In this mode, the application will still use the expected value in calculations, but it will give you the ability to run a separate stress test later on special assets to see the potential impact on an overall plan.