Education planning should be a relatively straightforward process, but anyone who has been through it knows that it is anything but simple and straightforward. General purpose financial planning software usually limits its scope to a family's personal resources, that is, to its current assets and projected cash flows.

Some of the better programs even allow you to model the various tax deductions or credits available to clients who qualify. Beyond the general purpose financial planning programs, there are niche products or services that cover everything from evaluating 529 plans to securing financial aid packages. The one thing that's been lacking, however, is a comprehensive application that examines the four pillars of education planning (college selection, financial aid, tax aid and a family's personal resources) in order to determine an optimal strategy. This void is about to be filled with the launch of YBS (Your Best Strategy) from Stratagee (www.Stratagee.com).

Troy Onink is the chairman and CEO of Stratagee. Onink and his colleagues are leading authorities in the area of college funding, college admissions, financial planning and software development. Onink is a contributor to Forbes, where he writes a blog called College Crossroads. He has also contributed articles to Private Wealth magazine, Financial Advisor magazine and myStockOptions.com.

In addition, Onink recently co-authored a white paper for the financial services industry, Roth IRA Conversions and College Planning, which was published in July 2010 by Financial Advisor. Prior to co-founding Stratagee, he specialized in education planning as a financial advisor, consultant, author and mutual fund company executive.

YBS is a Web-based software application that employs a proprietary algorithm to help advisors determine their client's best strategy to pay for college while saving for retirement. It can also be used to plan for K-12 private school expenses.

The primary value proposition of YBS is its ability to integrate the wealth management, financial aid and college admissions aspects of education planning in one sophisticated yet easy-to-use package. YBS has the ability to rapidly generate and examine a large number of scenarios that encompass college admissions, taxes, financial aid and other projections in order to arrive at one or more scenarios that meet a client's objectives.

YBS Test Drive
I recently took a brief test drive of YBS. Although my tour of the site was limited, I was generally impressed with what I saw. When I logged in to the site, I landed at the "Your Account" page. Here, you provide your name, company and contact information as you want it to appear on client-facing reports.

There is also ample space to insert custom disclaimer language to be displayed on each client report. In addition, this screen allows you to change your password. After you save your information, you hit the "Launch YBS" button to begin your first case. When you click on the new family icon, you are prompted to enter the first and last names of the parents. This becomes the case (file) name.
Next, you enter the parent's ages, their state of residence, and whether they own a business. This last piece of information is necessary to determine whether the parents should consider hiring a child to shift income to a lower tax bracket.

The financial information that the application requires is minimal when compared to college financial aid forms. YBS requires adjusted gross income, farm and business assets, home equity, tax form filed, tax filing status and the monthly amount (if any) pledged to funding education. In addition, YBS asks if Parent PLUS loans are to be considered, and if so what the maximum parent loan amount is.

Next, you enter any parent assets. It will also ask if the assets entered can be used to fund education if you select a 529 plan, and it will ask who the student beneficiary is. Finally, you enter any gifts or expected gifts from family members, such as appreciated stock.

Next, you add one or more students. For each student, you enter the date of birth and financial information (such as income, if any, and whether private loans are allowed and, if so, what is the maximum). If you have specified that the parents own a business, you have the option to shift earned income. This strategy adds income to the student's tax return so any tax benefits could be offset by a decrease in financial aid. The benefit of the strategy depends on how much income you are shifting (according to the literature, amounts under $5,000 often have little impact on financial aid) and whether or not the student qualifies for needs-based aid.

You then enter education plans. Here, you can specify if you want to fund private education for K-12 or any part thereof. You can specify the type of college (two-year or four year, public or private) and the year the student will enter college. If you anticipate the student will require more than four years to complete the coursework, there is a fifth-year option. You also specify whether the application should calculate all costs, and what inflation rate to use (the default for education is 6%).

By default, the program will estimate costs based upon the national average of similar educational institutions. If you prefer, you can add your own custom costs on a year-by-year basis for increased accuracy.

YBS also requires academic information. This is used to determine the likelihood of a student gaining admittance to a specified school. Here you enter SAT or ACT scores, grade point average (GPA) and class size/rank. There is also an optional ethnicity question. Ethnicity is used to better gauge a student's admissibility to a school.

Assets in the student's name come next. This is followed by a college "wish list," if any. Entry here, as in much of the program, is easy. You can begin typing to see a list of applicable colleges, or you can select a state from a dropdown list and scroll through the results to select the school(s) you are interested in.

Once you have entered the information, you click the "start algorithm" button. The program will display a chart with all the colleges you listed. It will provide the likelihood of admittance to each, the gross costs and the net costs after projected financial aid. You can then select a specific college and generate a full education plan for the student.

At this point, one of two things will happen. If you have insufficient education funding, the program will give you a warning and suggest tactics to address the shortfall. If you have sufficient funding, the application will generate a full plan. The plan lists all the inputs, sources of funding including tax deductions, tax credits, parent and student loans, admissibility index and something called the "strategy score."

The strategy score is a measure of how the education plan impacts the parent's retirement plan. It consists of two components: total education costs and family net asset value (the parent's net assets at age 70). The score equals family net asset value minus Parent PLUS loan debt plus student assets after education minus all Stafford Loan debt. It is a method of measuring the cost of one education plan vs. another.

Overall, the YBS application is a welcome addition to the financial advisor's toolkit. The application addresses the four pillars of education planning in a way that no other program we've seen does. When compared to filling out a financial aid form or creating a comprehensive financial plan, the amount of data entry required to produce meaningful results is minimal.

The admissibility index is useful and quite impressive. Although the strategy score will not satisfy all users, it is a good, quick method of comparing one strategy to another.

Overall, the reports are clear, easy to comprehend and client-friendly. They include all relevant data, all conclusions, and an explanation of all terminology and a disclaimer. Unfortunately, the information about the report (definitions, explanations and disclaimers) can equal or exceed the length of the data and recommendations, but unfortunately, in the current regulatory climate, this is probably unavoidable.

Pricing is reasonable. A license costs $599 per year per user. That strikes us as reasonable given the usefulness and uniqueness of the product.

Some minor design flaws are typical of a 1.0 product, and YBS is no exception. Why require users to go through the "Your Accounts" page each time they log on? Once the information is provided, it rarely requires editing. This needs to be fixed.

The optimal workflow is not clear. The layout of items onscreen suggested one workflow to me, but the manual suggests a different one. A wizard or automated workflow guidance option would be helpful if the developers believe that data should be entered in a specific order. Of course, much of this could be addressed through integration with other software applications and data sources, negating the need for manual data entry, but this has not happened yet. I suspect it will in the future.

Currently, when selecting colleges from the dropdown list, you must select each one individually. You should be able to select multiple ones at the same time. The program's insistence that you select a single college to run a report on is also overly restrictive. Why not give advisors the ability to run multiple colleges side by side? Furthermore, why not run strategies side by side? For example, why can't you run a scenario with income shifting vs. no income shifting in the same report?

YBS does not take into account all types of state aid. For example, some statewide programs such as the Florida Bright Futures program are merit scholarships. Other states have similar programs. The algorithm does not currently account for these. Onink says that since funding for state programs from year to year is uncertain, a number of college admissions officers he spoke with suggested excluding this information from consideration when planning. As an advisor, I'd like the option to turn the feature on or off with the appropriate disclosures and disclaimers.

Currently, the algorithm does not account for reciprocity agreements between states. Minnesota and Wisconsin, for example, have a reciprocity agreement that allows Wisconsin residents to attend Minnesota public universities at Wisconsin in-state tuition rates. Similar arrangements exist between other states. The algorithm does not yet account for these.

Some of the terminology may be new to users and clients. For example, the "EFC Method" refers to how the program arrived at the expected family contribution. In some cases, the application uses the federal system; in others it uses the method specific to that institution. Those new to college planning might not know what EFC is, and there is no explanation of it in the user guide or the input screens. It is not until you generate a report that the definitions and explanations become viewable.

Stratagee offers other services of interest to advisors. For example, if you don't want to run plans yourself, you can outsource to a Stratagee expert for $795 per case. The firm offers individualized admissions consulting with a highly qualified professional for prices ranging between $595 and $3,795, depending on the services required. The firm offers coaching for $250 per hour. They also offer marketing materials including private labeled letters/handouts, PowerPoint presentations, ad copy and Web site content for prices starting at $250.

YBS is a real step forward in college planning software. Since it is a 1.0 product, there are a few rough edges, but overall, Stratagee has done an impressive job. With some tweaks and further enhancements, the product will no doubt improve over time, but given the lack of alternative and the competitive price, we think YBS is a solid value.

The option of being able to outsource the planning to Stratagee is a plus, as is the option to call in their experts for coaching and marketing support of admissions expertise when needed. Onink claims that a number of his advisor clients have attracted significant new wealth management assets by positioning themselves as college planning experts, and this sounds totally credible.

With the proper education and marketing support, advisors have a good chance of attracting new clients by positioning themselves as experts in this underserved niche. Working with Stratagee and YBS software appears to be a reasonable entry point into the college planning marketplace.