One of the purposes of financial plans is to make clients' resources more efficient so they can pursue their needs and goals. And yet advisors themselves may be inefficiently producing plans. The old saying, "Physician, heal thyself," comes to mind.
Some practitioners fear that by developing routines, standards and efficient methodologies to develop financial plans, they would have to sacrifice the quality of advice. A cookie-cutter or one-size-fits-all approach to plan development, they believe, would dilute the quality of the product. But is this really true? One could argue that there is a middle ground: a quality financial plan that avoids the feel of an assembly line.
To begin with, advisors must evaluate their firm's operations to determine what can be made better, starting with their physical operations. For example, they could look at how information is stored and shared within the firm, a critical factor when they are building the front end of a client's plan. If the initial plan data can be seamlessly migrated into the financial planning software, the result will be faster plan production, since most of the keystrokes associated with initial data entry could be reduced or eliminated.
Most financial planning software companies embrace integrations with other software such as client relationship management (CRM) applications. Not all programs can be universally plugged into others, but a number of combinations are available. Platforms such as Interactive Advisory Software (IAS) or E-Money Advisor already have integration abilities built into their proprietary CRM modules, simply because the other modules are internal (part of the program). Programs such as Naviplan, Money Guide Pro and MoneyTree, while they don't have the integration built in, can still communicate with other CRM programs to permit seamless sharing of data. They accomplish this through agreements with other software companies that permit data sharing. Such integrations can significantly decrease the amount of time a financial planning staff requires in the preparation of a plan.
A firm will also make its plan production more efficient by storing client information in formats that are easy to file and retrieve. Many firms have chosen paperless solutions. Electronic document management is a hot topic these days, and many firms have embraced this type of tool, which allows them to reduce the space they require to store large amounts of paper files.
A typical four-drawer file cabinet takes up about two square feet of space. In larger offices, there may be 15 to 20 of these cabinets, if not the larger, lateral file cabinets, and that could mean an office is using up 50 square feet or more. That means, in a leased office space with costs of $30 per square foot, one file room measuring 10 by 12 feet could alone cost $3,600 or more per year.
Also overlooked is the staff time (not to mention the aggravation) of maintaining these files, which could cause the costs to balloon.
Firms going paperless face the challenge of conversion. An advisor can cut down the cost of staff interruptions by using temps or interns to do the lion's share of this initial scanning work, storing the files electronically and opening up substantial space for other uses.
But as good as that sounds, the reality is most firms rarely go completely paperless; they may in fact have to maintain some paper to meet the requirements of their broker-dealers or regulators, for instance, depending on the practice. Still, there is a considerable cost and space savings that can result from developing a paperless solution for the office.
Planners are also often frustrated with clutter, as they grapple with finding specific items they need for a financial plan's initial data entry. This is where electronic document management comes in. Such programs can improve plan production by allowing an advisor to index documents and easily retrieve them to the desktop without having to hunt through files or piles of paper.
However, financial plans are of course more complicated than just initial data entry. Advisors also need to offer clients analysis and recommendations-to develop different "what-if" scenarios with supporting charts and graphs. Could this area of the financial plan be made more efficient as well?