Developments provide new opportunities for advisors.

    When sitting down to do a complete survey of the technology landscape as it relates to advisors, I found many developments had or were about to take place in the financial planning software sector. As a result, this column is dedicated exclusively to financial planning software. I'll discuss developments in other areas of interest next month.

    Since its humble beginning in 1990, EISI, the developer of NaviPlan (, has grown to more than 270 professionals serving more than 70,000 advisors in North America. By the time you read this, EISI should be releasing version 10.0 of the NaviPlan Suite (Standard and Extended), a major upgrade. Today, we'll provide you with an introduction to some of 10.0's most notable features.
    Perhaps the most important aspect of NaviPlan 10.0 is EISI's focus on usability. While NaviPlan has long been regarded as one of the elite financial planning programs in the business, nobody in recent memory has accused it of being the easiest to use. Version 10.0 should yield a much more user friendly experience.
    According to Dr. Linda Strachan, Ph.D., CFP and vice president of product marketing at EISI: "The program has an entirely new look and feel. We've removed the navigation icons, which confused some users, and we've replaced them with text hotlinks." In addition, the latest version has a new color palette, new fonts and an improved navigation bar. Also when a user now opens a planning file, the name of the client, a description of the plan and the type of plan being worked on will be displayed in the banner at the top of the page.
    The time required to create a new client file in the system has been reduced. "Required" data has been minimized, and the layout has been improved to facilitate the entry of the data that is still required.
    The estate planning capabilities have been beefed up, particularly in the handling of ILITs and community property. The "Planning Assistant" now includes a net worth report, and several additional planning checks are run.
    With version 10.0, EISI is implementing some of the enhanced retirement income planning capabilities that Strachan discussed at the Financial Advisor Retirement Symposium last April. NaviPlan Standard 10.0 will offer the ability to mark expenses as either fixed or discretionary. This new functionality will eventually be put to good use when employing the new "scenario manager" to illustrate the trade-offs of various preprogrammed retirement choices.
    Initially, in version 10.0, only a couple of preprogrammed scenarios like "retire early" and "retire late" will be included, but version 10.1, to be released in first quarter 2006, should include scenarios with variable discretionary spending options. Version 10.1 of Standard will also enhance the ability to model retirement distribution options. In addition, look for 10.1 to offer the ability to model tax-efficient withdrawals vs. capital preservation, to alter the order in which assets are spent during retirement (qualified vs. nonqualified) and to model the annuitization of a portion (or all) of the retirement assets.

    The folks at PIE Technologies Inc., the distributors of MoneyGuidePro (, a collaborative, Internet-based financial planning software application, are working on significant enhancements that should be in place before the end of the year. Chief among them is a robust mean variance optimization (MVO) capability.
    Currently, the program defaults to optimized portfolios at various risk levels that advisors can chose from, but it does not give advisors the flexibility to add or subtract asset classes and re-optimize. When the new MVO capabilities are added, advisors will have the ability to customize the asset mix and set their own constraints. The program will allow for an unlimited number of optimized portfolios to be created; those portfolios can then be added to the "portfolio selection list," where they can be applied to multiple clients. The program will also empower advisors to select different optimized portfolios and view them side by side to gauge their overall impact on the outcome of a plan.
    MoneyGuidePro's innovative "sharing" feature will be further enhanced with the addition of "guest sharing." Currently, through "sharing," advisors can give permission to their clients and other advisors who are MGP subscribers to view only, make limited edits (view/update) or make unlimited edits (update all) to a plan. Guest sharing will expand the scope of "sharing" by allowing advisors to give permission to outside third parties, such as an attorney, accountant or relative to share the plan (with proper authorization, of course). Permissioning will be granular. Advisors can grant permission by individual client, by plan within a client file and by section within a plan; with three modes of access to choose from: view only, view/update, and update all.
    Currently, MoneyGuidePro can track the potential value of employee stock options, but not restricted stock holdings. This deficiency will be corrected.
    Stress testing, a popular MGP feature that allows users to backtest a portfolio using a number of different historical parameters for illustrative and educational purposes, will be better integrated into the planning workflow. According to PIE Technologies CEO Bob Curtis: "Because stress testing has proved so popular, we are simplifying its use by integrating it into the standard flow and reducing the number of steps required to run it. Also, when a fixed return is entered on the What If, MGP will utilize our new optimization engine to automatically create a portfolio for use in Stress Testing and Monte Carlo."
    A new stress test for concentrated positions will identify any stock that constitutes a high portion of the portfolio and "test" the plan for a significant price drop. This new stress test will make it easy to explain concentration risk to the client, and to recommend diversification.
    Finally, account aggregation will be offered as an option at an additional cost.

Financial Profiles
    Founded in 1969, Financial Profiles (, a subsidiary of Allmerica Financial (, licenses its software to more than 50,000 financial professionals.
    During first quarter 2006, Financial Profiles plans to launch its Universal Desktop application. According David Oates, director of marketing, the application will support new, enhanced versions of Financial Profiles Professional and Financial Profiles Forecaster, which will be capable of working both online and offline. Like the online/offline software NaviPlan currently offers, this application will allow both local and centralized plan storage, as well as plan synchronization when a connection is established.
    Oates says the new version will offer a number of benefits, including the ability to tailor the application to the needs of a firm, reporting and auditing at the firm level, enterprise level data and application integration, and the ability to operate in a mixed technology environment.
    Financial Profiles plans to offer dedicated retirement distribution software next summer. According to Oates, the firm has not yet decided whether the retirement distribution planner will be integrated as a module of Profiles, or whether it will be released as a standalone product. While the software development process is a fluid one, Oates told me that he expects the product to provide:
    1. Measurements of success. Benchmarks will be used to measure the success of an individual's plan, such as withdrawal rates (for measuring a plan's risk of premature depletion) and the tax efficiency of the plan. A Monte Carlo analysis will assist in measuring the likelihood of a plan's success.
    2. Phased retirement. Recognizing that "retirement" is no longer synonymous with "cease working," the software will ensure that the planner can reflect the client's desire to continue working. The opportunity to continue making contributions to qualified plans will also be reflected, where applicable.
    3. Detailed budgeting analysis. This analysis will help distinguish the "basic" or "fundamental" needs from the "discretionary" or "lifestyle" needs.
    4. Greater emphasis on health care issues. The system will reflect, in greater detail, the anticipated long-term care costs and health care costs, as well as long-term care insurance, health insurance, Social Security, Medicare and various gap insurance policies.
    5. New asset allocation models. New strategies targeted at immediate income needs, as well as the possibility for an extended time horizon, will be included. Unlike typical asset allocation models for the accumulation phase of retirement planning, these models will change in steps as the client approaches mortality.
    6. Asset disposition. As a client approaches retirement, the amount and type of assets at his disposal are known. This creates the need to indicate how each and every asset will be disposed of during the retirement years. Disposition methods should include annuitizing an asset (essentially selling the asset and purchasing an immediate annuity).
    7. Liquidation order. The software should offer a tax-wise liquidation order for the depletion of assets. The aim will be to defer taxes as long as possible. Required minimum distributions will be accounted for and applicable income taxes paid. Further customization of the liquidation order will allow clients to set the parameters based on other criteria.

    The products from MoneyTree Software ( have received a major overhaul during the past 12 months. Earlier this year, the firm released its TOTAL Planning System (TPS), which includes, among other things, redesigned versions of the firm's popular Easy Money (goal-based comprehensive planning) and Golden Years (cash-flow-based retirement planning) on a new .NET framework, making it much more flexible than its predecessor. A subsequent upgrade was released in early July.
    Like NaviPlan and the upcoming release from Financial Profiles, the new MoneyTree program architecture affords previously unheard of flexibility. Now, the software can be configured not only as a standalone desktop application using local storage, it can also be configured as client/server software on a local network. Under this scenario, the data would be stored on the server, not the local machine. As a third option, firms can purchase a Web server version of the software. This will allow anyone with the "smart client" software installed on a computer to access client data on the Web server from anywhere in the world over an Internet connection. As a security measure, all data passing back and forth over the Internet is encrypted. In effect, this third option allows firms of even relatively modest size to act as their own ASP (application service provider), or to select their own third party to provide this service for them.
    TPS features a single point of data entry, meaning that three sets of reports can be generated without having to reenter data. Users can enter data via the standard MoneyTree methodology, or they can select to use the new "Quick Entry Wizard" as an alternative.
The firm is making a conscious effort to integrate with other software providers. TPS already provides some connectivity with Allbridge Solutions (contact and asset information), MS Outlook (import contact details), and Laser App (fills forms with client information). Connectivity with additional vendors is expected soon. In addition, files from MoneyTree Silver can be used directly by TPS.
    One interesting innovation is the online client questionnaire. Designed to be user-friendly, this application will collect information from the client and send the information automatically to the advisor, who can then upload it into the TPS applications.
    The "age change event tables" are a new utility that allows the advisor to change various plan assumptions at multiple points in a client's life. It eases the modeling of uneven income streams, expenses, savings, retirement plan withdrawal assumptions, etc.
    MoneyTree Silver has received a makeover as well. Among the recent improvements: the ability to create, save and retrieve multiple "what ifs," and an upgraded educational module that includes cost information on more than 1,500 schools, plus links to school Web sites. The program's speed has improved too.
    Finally, MoneyTree has developed Silver Online, a consumer-oriented application built on MoneyTree Silver technology. It's also appropriate for financial service firms wanting to offer a consumer-facing application.

    WealthTec ( specializes in developing high-end financial and estate planning software applications for the experienced professional. The firm's founder, president and software developer, Howard Eisenberg, CPA/PFS, CFP, is a modern renaissance man. He holds bachelor's degrees in accounting, psychology and zoology, and a master's degree in financial planning.
    The firm's flagship product is the WealthTec Suite, which gives licensees access to all of the WealthTec products. These include:
    WealthMaster, advanced modular tools for financial & estate planning.
    Foundations, a comprehensive, integrated cash flow and estate planning tool.
    Counselor, a presentation tool that integrates with WealthMaster but which can also be used as a stand-alone presentation tool. Counselor includes 17 presentations, 15 of which are focused on a specific planning technique.
    Affluence, the latest addition to the WealthTec family, is designed to be used for comprehensive lifetime cash flow modeling, asset allocation and side-by-side scenario comparisons.
    With the exception of Counselor, all of the programs are MS Excel-based.
    Currently, Affluence offers no estate planning capabilities, however Eisenberg says he will add some simple "what if" capabilities. Soon, Affluence will provide a year-by-year glance at estate shrinkage if the client died early.
    For some time, Eisenberg has been toying with the idea of developing a new estate planning tool, but he has been deterred by the uncertainty surrounding the status of the estate tax. Now, convinced that some form of the estate tax will survive, he is ready to begin developing a new program. This tool, to be released by year-end, will allow advisors to enter a single set of assumptions and then compare the application of various strategies to the case. For example, advisors will be able to enter a client's data and then apply various tax-freezing or charity techniques to the fact set.
    In the past, WealthTec has always offered all its products exclusively as a suite, but individual components or sets of components can now be purchased at a modest discount to the $1,195 price for the entire suite.

Looking Ahead
    A few trends appear to be emerging. First, most software firms are offering, or plan to offer, software that can operate either as a standalone desktop application or as a Web-enabled application. Second, most firms are devoting considerable resources to beef up their "retirement distribution" modeling capabilities. Third, as part of this renewed interest in retirement distribution planning, firms are making other adjustments to their software, including the ability to differentiate between fixed and discretionary expenses and to incorporate annuitization into the distribution illustrations. Overall, it appears that the major financial planning software providers are producing better tools than they were just a few years ago, and this trend shows no sign of abating. 

Joel P. Bruckenstein, publisher of Virtual Office News ( and an expert in applied technology for financial services professionals, can be contacted at [email protected].