(This is the first in a two-part article on retirement issues for advisors.)
Advisors face down many problems with efficiency. Not only is it labor-intensive to manually type names, phone numbers and addresses into software, but it's also a challenge to make sure that the work they are doing makes an impact.
For instance, advisors face heavy burdens in operations and time commitment when they build a comprehensive financial plan. It can require a lot of data entry and consume much time and manpower. And then, when the advisors have finished with it, they sometimes find to their chagrin that their clients don't even understand it (much less read it).
The highly analytical work associated with risk tolerance and asset allocation, for instance, requires a level of knowledge and experience most clients lack. It requires a detailed set of graphs and charts, lengthy mathematical calculations and, when the advisor shares it with the client, a lot of time to explain the concepts.
Even though clients should have some understanding of their investment strategies, it might be too much for an advisor to share every detail with them. In the words of one advisor, "If I ask you what time it is, don't tell me how to build a clock." The clients may not need that level of specificity, nor do they want to sit through a presentation several hours long.
These issues have made some professionals wonder whether to scale back the reports. They don't want to skimp on research and documentation, but perhaps give the clients a simpler version that's easier to digest. That raises another question, however: How can they do it while also satisfying all the regulatory and ethical requirements? Advisors must provide full disclosure and live up to fiduciary standards of care, and no one would suggest they bypass any steps. But they also have to be sympathetic to their clients, who may not have the level of knowledge to read a comprehensive retirement plan.
Software To The Rescue
The right software might be the key, and surprisingly, this may be the easy part. Most financial planning software already scales back printed documents for clients, items that meet regulatory requirements with features built in. Rather than share the full-blown financial plan with their clients, advisors might want to instead build the financial plan for internal use and give the client a much smaller summary, which might not only be faster to produce, but also more efficient, saving the firm money.
Consider the presentation of risk tolerance. This is a complicated methodology, using mathematical algorithms. Some software can translate the algorithms into visual charts or classifications such as "conservative," "moderately aggressive" and so on. A client most likely will be able to identify with that classification rather than a mathematical expression.
These major financial planning software companies are popular with financial advisors, but there are other choices as well: Plan Builder (www.financialsoftware.com); Cheshire Software (www.cheshire.com); Still River Retirement Planning Software (www.stillriverretire.com); Torrid Technologies (www.torrid-tech.com); PenD'Calc (www.pendcalc.com); and Money Minders Software (www.money-software.com).