The concept of the "virtual office" has been around for over a decade and qualifies as one of the most overused clichés among firms marketing to advisors. Despite all the hype, my guess is that fewer than 3% of all independent advisory firms are truly virtual offices. That is, they have no staff or brick and mortar office. Yet there are a lot of advisory firms that have adopted some aspects of a virtual office, and the most captivating among them are outsourcing projects over the Web instead of using staff.
Outsourcing Web sites are abundant and work well. Elance.com and Guru.com are two of the best-known sites for hiring freelancers and both are worth considering for advisors. These sites allow you to post a project for a specific period of time-from a few hours to 30 days-and freelancers bid on your project. Outsourcing work this way will save you money because competitive bidding creates price efficiency. Moreover, you may find that bidding out projects allows you to reduce or replace your staff, saving you lots more money.
Posting a project is free and simple. You are guided through the posting process by a wizard, which helps you define the type of project help you need from professionals such as transcribers, writers, designers or programmers. It takes about 15 minutes to create a description and post a project. Once it is posted, those with the skills you are seeking can bid on your project and e-mail you questions. Once you award the project, bidding is stopped. You pay for the project when the work is completed and both you and the person you hire can rate each other.
While outsourcing is often made to sound like a no-brainer, it's not. Many of the chores that advisors need the most help with are technical and detailed and can't be entrusted to non-experts. So forget about using a site like Guru or Elance for help creating portfolio reports and financial plans. A bevy of qualified specialist firms can help you with those tasks. But even for less arcane, non-technical chores, finding a good freelancer can be challenging.
For instance, I've hired transcriptionists, writers, programmers, graphic designers and others over the past three years through Guru and have outsourced about 20 projects. Overall, my experience has been good. The quality of the work has been acceptable in all but a couple of projects. Yet projects have gone awry several times. Deadlines are often not met, and a couple of times the freelancer simply vanished and stopped responding to my e-mails in the middle of a project. And it is rare to be able to develop a relationship in which you repeatedly send work to the same person since most of the freelancers are unreliable. They are apparently so busy juggling projects and looking for the most lucrative ones that they do not respond when you contact them about new work.
For simple projects, such as transcribing, cleaning up files, mail merges and other clerical tasks, outsourcing is a great idea. But when it comes to more complex projects-such as creative work or programming-you could easily run into a problem unless you provide extremely detailed specifications and take the time to give the freelancer plenty of guidance.
Fill It Up. I hate to repeat myself, but this program has continued to be one of the most useful and underused applications around since I first wrote about it ten years ago. RoboForm, a plug-in for Internet Explorer, Firefox and PC-compatible browsers, remembers all your passwords to different Web sites and all of your contact information. Whenever you visit a Web site requiring you to log in, RoboForm automatically fills in your password and user name.
The screenshot below shows that I have saved about 150 user identities and passwords. When I navigate to iGoogle, for instance, RoboForm will automatically fill in my user name and password. I can also choose not to automatically fill in the form but select a pop-up screen prompting me to "submit" the log-in information. When I'm faced with the prospect of memorizing all of the user names and passwords for so many sites, RoboForm is a big help. But it is also a big time-saver because it saves me the trouble of keying in all of this information every time I go to a secure site.
In addition, RoboForm stores all of your credit card numbers, personal and business addresses and phone numbers, your Social Security number and other data frequently requested by Web sites. Whenever you're shopping online or signing up with a Web site service for the first time, your stored personal information can be filled in automatically by RoboForm.
The program encrypts all of your data and you save it all behind a master password. Passwords and personal information cannot be accessed unless someone knows your master password. So even if someone steals your computer, they won't be able to access your sensitive information stored in RoboForm. (An experienced hacker could use a program to crack your master password, but that would take a long time and you could change passwords before they crack your code-in the unlikely event an experienced and patient hacker makes off with your computer.) RoboForm also contains a feature in which it creates its own unique passwords for you, which would effectively thwart even the most capable and malevolent thieves since it would require cracking each password individually. The program randomly creates "strong" passwords combining letters, numbers and non-alphanumeric characters.
At $30, RoboForm is inexpensive considering all it does, and you can buy an add-on allowing you to copy all of your passwords to more than one computer or to a USB flash drive. It's important to create a backup of your passwords often-just in case. The program is very easy to use, but getting into the habit of using it may take some effort. Once you get used to it, though, you'll be lost without it. To learn more, go to http://www.roboform.com
Organizing E-mails. Another application that I first reviewed nearly ten years ago is also worth mentioning again because it will make you more efficient. It's Nelson Email Organizer. This is an Outlook add-on that helps me throughout the day to manage my e-mail correspondence smartly.
NEO indexes all of your e-mails so they can be searched fast. Outlook 2007's e-mail search capability has improved, but NEO is still a bit faster. But the main reason NEO is so helpful is that it lets you easily track a discussion thread with each of your correspondents. So if you want to see if you indeed reminded a colleague to take care of a chore in a previous e-mail, you just click on the colleague's folder in NEO and all correspondence with that person is displayed in chronological order. Being able to track your correspondence history with an individual in a second or two is a convenience Outlook does not offer.
In recent months, a new competitor to NEO, Xobni, has been getting a lot of good press. I tried Xobni and thought it was lightweight compared to NEO.
The Reflecting Pool
We've come such a long way since men first bartered beads 100,000 years ago and since Joseph advised Pharaoh to store enough grain to feed all of Egypt for seven years. Personal financial planning has evolved into a complex process for modeling the future. And when the history of financial planning is recorded many years from now, Bob Curtis' latest contribution should be noted. Curtis has come up with a way to reflect a person's feelings about the most critical decisions on which a financial plan rests. He has invented a more humane way of planning, a plan that reflects subtle preferences.
Curtis is the founder of PIE Technologies Inc., which develops the popular financial planning application MoneyGuid Pro. With 25 employees, PIE Technologies serves about 22,000 MoneyGuidePro users. Since founding the company in 1999, Curtis has managed to make his application as popular with less-sophisticated registered representatives at banks and brokerages as it is with demanding fee-only Certified Financial Planner professionals-a rare feat among tech vendors. MoneyGuide is used by 10,000 independent advisors and 12,000 captive reps. Curtis is among the most successful entrepreneurs providing technology to independent advisors.
But it's not for his success as a businessman that Curtis will be remembered; it is for Curtis' innovations in the way financial plans re-created.
Curtis' avant-garde ideas were evident from the start of MoneyGuidePro in 1999. For one thing, his system was made available only as a Web-based application. Not offering a desktop version so soon after the dawning of the Internet era was probably a first among tech vendors serving independent advisors. Several other decisions Curtis made differentiated MoneyGuidePro from all other planning software.
He made MoneyGuide a goal-based planning application. While all other applications had focused on creating year-by-year cash flows-forecasting income, expenses, inflation, investment growth, tax rates and myriad other variables-Curtis sought a simpler method. He asserted that predicting cash flows ten years hence was pure folly, like arguing how many angels could dance on the head of a pin. The amount of input involved to solve for a number subject to so many variables was not worth it and succeeded only in giving clients unfounded confidence in a plan that he viewed as educated guesswork. MoneyGuide instead focused on funding goals. Instead of gathering laborious details from a client to create a cash-flow-based plan, the goal-based planning approach Curtis applied allowed advisors to engage in a discussion with clients about their wishes, wants and needs-whether they want to buy a boat, retire early, buy new cars every three years or retire before age 70. The resulting plans were realistic and client-centered yet required far less data input. That an advisor could create a plan with many fewer data inputs than traditional planning software further differentiated MoneyGuidePro.
Moreover, Curtis invented a totally new method of funding a client's goals. Planning software before had funded goals chronologically-college planning before retirement, for instance. Curtis took an entirely different approach, funding each goal based on how important it is to a client. If buying a boat is more important to a client than a new car, the boat would be funded first. If buying a car is more important than annual vacations, then the car purchase would be funded first. A client's priorities-not an arbitrary timeline-would govern the way a client's savings are used. (Years later, Curtis would realize that he missed an opportunity by not patenting the technology for this funding approach.) Simple graphics displaying how
well funded your goals are and how much confidence you have in your plan replaced the mind-numbing rows of numbers in cash-flow-planning applications.
In recent years, other planning systems have followed MoneyGuidePro's lead: Online applications are taking over the market. Goal-based modules have been added to several popular applications with large user bases. Data inputs have been minimized. The interfaces use graphics more, and the numbing rows of numbers are hidden from view. Competitors caught up to MoneyGuide Pro.
Now, however, Curtis has done it again. The 60-year-old, who says he plans on working until he dies, has released a new version of MoneyGuidePro that is once again different from other financial planning applications. Curtis has refined his ideas about planning and softened the effect hard numbers can have on a financial plan. In a masterful display of the power of cybernetics, the new version of MoneyGuide makes computers
automatically calculate tradeoffs between one financial goal and another. He's made financial planning understand human nature.
"Specifying an age at which you retire is specific," says Curtis. "In fact, most things in a retirement plan are too specific." For instance, all planning programs today ask clients when they want to retire. Curtis has created a different way of handling that question. The new version of MoneyGuide asks, "What is your ideal age to retire?" And right after that it asks, "How willing are you to retire later than your ideal?" You have a choice of willing, somewhat willing, very willing and unwilling.
Similarly, the software asks what the maximum additional monthly amount is that you realistically can save toward retirement and other goals. You can input that amount for your client and also record whether the client is very willing, willing, somewhat willing or unwilling to save that amount.
By adding inputs that capture a client's feelings about key financial decisions-such as how much to save and when to retire-MoneyGuide creates an algorithm that calculates a financial plan based on subtle personal preferences. Combining the quantification of feelings and preference with the priority of your goals produces a very different sort of financial plan from the traditional methodology.
Curtis says financial planning is driven by an accounting mentality-an approach that he says is too concerned with numbers and precision. "Planning is inherently imprecise," he says.
"What we're trying to do is to change the way planners plan," says Curtis. "The way they were trained is not optimal for real-world clients."
The new version of MoneyGuide, which Curtis says required reprogramming in its calculation engine, also automates some of the decisions for individuals by making some common sense decisions. This is an effort to make a plan easier to create yet thorough. For instance, if the advisor doesn't want to ask a client about how much he can save over and above his current monthly savings and his willingness to do so, a "Super Solve" function streamlines the data input required. The software will assume that the client is willing to save 5% more than he currently is.
Curtis says that the way plans are created now by advisors is an iterative process. The planner meets with a client, asks questions, and then comes back to the client with a plan. Usually the plan requires revision because the retirement age is off, the amount that needs to be saved is too low or too high, or other assumptions are incorrect. The new version of MoneyGuide, by gauging the strength of a client's feelings and preferences about specific goals and financial decisions, outputs a plan that falls within the client's wishes and wants. Curtis says the plans generated should require fewer iterations than those of traditional planning software because the algorithm reflects what is acceptable to a client and the plan results will thus be within an acceptable range to the client.
Creating plans that better reflect our sentiment is probably the most important new development in the evolution of the financial planning process since Monte Carlo was first used in the mid-1990s to illustrate the risks involved planning. It reflects the complexity involved in making long-term financial decisions, but makes planning easier. It uses calculations to reflect the trade-offs in planning decisions and the imprecise nature of people. It's a step forward not just for MoneyGuidePro, but for the entire profession.
Andrew Gluck, a longtime writer and journalist, is CEO of Advisor Products Inc. (www.advisorproducts.com), a Westbury, N.Y., marketing company serving 1,800 advisory firms.