It's no secret that good software can make the life of a financial advisor more efficient, orderly and creative.
But Arlene Moore is one advisor who has yet to find technological nirvana. In a software-product universe whose offerings can seem infinite sometimes, Moore, senior partner of Financial Strategies of Southwest Florida in Sarasota and Tampa, is a dabbler. She's tried lots of programs, although she's lost count of exactly how many.
Some of them perform specific functions quite well. Several programs, she says, were smart as a whip in churning out calculations. But too many, she says, failed to show exactly how those calculations were made. Other programs shone when it came to producing colorful and easy-to-read charts and reports. All too often, however, they didn't enable her to include all the information she needed. There was one program, for instance, that only would allow her to put in a client's housing costs, without the ability to break out mortgage and property taxes-a fatal omission in her eyes.
"If you're projecting out future costs, the mortgage is not going to inflate, but the others could go up 2% or 3% a year," she says.
So, Moore continues to dabble and occasionally does use software for things such as cash-flow analysis and the building of "what-if" scenarios. There's also a lot for which she doesn't use specialized software. For example, Moore performs client reports from scratch on a computer spreadsheet.
Yes, she says, it can be frustrating and time-consuming. "If everyone could just get together and put everything they do best into one product," Moore says in exasperation.
Actually, Moore isn't the only one in a quest to find the "holy grail" of software solutions for financial advisors. Software companies have been hot on the trail of the elusive goal for years. Some say they're getting close. Some even insist they've got it. Software users, meanwhile, still seem to be groping for more.
Financial Advisor surveyed some of the leading financial-software companies and found that the holy grail concept is literally one of the buzzwords companies throw around when talking about the latest and greatest trends in the industry.
It's the goal of providing a top-to-bottom software solution for financial advisors-a neatly wrapped package that covers everything from client management, financial planning and portfolio analysis and management to estate and retirement planning and numerous back-office functions with one click of the "Start" button.
If not that, advisors want software that smoothly integrates with a family of products or even competing offerings in a way that makes it seem like they function as one. It's the utopian dream about financial planning software these days and, indeed, one that few advisors see as becoming a reality any time soon.
"Everyone is chasing the holy grail of software to get it all in one place, but I think there are a lot of hurdles," says David Drucker, a financial advisor in Albuquerque, N.M., who heads PlanWare Inc., the company that sells Integrate, a financial planning program he wrote in 1985. "If you look at the best in each area of software-portfolio tracking, client database management, etc.-each of them is a very complex product."
While companies pursue the goal, financial advisors remain overwhelmed with an array of choices, ranging from very specialized programs that may focus on one component of the advisory business to products that claim to cover most of the bases.
There are other trends as well. Monte Carlo simulators are so much in demand that they have become "must have" features in any product billing itself as a comprehensive tool. Many companies have added the feature. Those that haven't are scrambling to do so. Internet compatibility also is growing in popularity, as some predict Web-based solutions shortly will be a necessity.
The choices are so vast that the majority of advisors say they use a combination of experience and word-of-mouth in deciding what to buy. Norm Boone, of Boone Financial Advisors Inc. in San Francisco, knows the process well. As he looks at his desktop computer, he counts 30 to 35 different icons for programs he and his eight employees use to service 180 clients with assets totaling $150 million.
Among the programs on Boone's PC are NaviPlan, a comprehensive financial planning tool; StockOpter, a specialized program for analyzing stock-option planning; BNA Income Tax Planner; SchwabLink; ViewPlan for estate planning; Turbo Tax; Quicken; the Crystal Ball Monte Carlo simulation program; Goldmine client-management software; and the standard Microsoft Word and Excel programs. "It does pile up," he says.
For Boone, the software is particularly essential because he runs a "paperless office," in which all client records are stored in computers rather than in filing cabinets. He longs for a less cluttered computer screen, but he doesn't foresee that happening. "There is no one software product that does all the analysis and all the things we all need. That's the biggest frustration," he says.
Multiple products also are on the desktop of Vars Smith, first vice president of investments with Janney Montgomery Scott LLC in Syracuse, N.Y., who has used software tools as part of his routine. After initial interviews with clients, he uses several programs, including CheckFree's M-plan, to generate a five-page summary report. "For a minimal amount of input, you can get some good quick numbers," he says.
Michael Kresh, of M.D. Kresh Financial Services Inc. in Hauppauge, N.Y., estimates he would be able to handle no more than one client every two weeks without software support. How much software does he use? "Too much," he says. "It's one of the Catch-22s of the business."
Saying he has yet to find any one software program that can "fill out the entire puzzle," Kresh uses Advent Office, Wilson Analytics and Morningstar's Principia Pro as his chief software tools. His office's software costs, when maintenance fees are included, easily reach $10,000 per year.
Using software to lay out scenarios for clients is an invaluable tool, he says. He relates one example, when a couple with about $1.5 million in assets wanted to retire in five years. With four kids yet to put through college, and annual income needs of about $200,000, Monte Carlo simulations gave them a 95% chance of failure. Using a mix of programs to lay out new possibilities, the simulator gave them an 80% probability of success if they delayed their retirement by 10 years.
"I'm smart enough to know that there is never going to be one program to do all these things well. There is not going to be a totally integrated program that I can conceive of," Kresh says. "I would say any planner that relied on any one company's product as its principal tool is being shortsighted."
Yet companies both big and small continue to strive for the one killer product. Mark Evans started his quest back in 1990, when a group of advisors asked him to develop an application while he was an associate computer-science professor at the University of Manitoba in Winnipeg, Canada.
The product he came up with was NaviPlan, around which Emerging Information Systems Inc. (EISI) of Winnipeg was formed. By the company's own estimates, NaviPlan has captured about 70% of the financial advisory software market in Canada. The company has been marketing for the past two years in the United States, where about 12,000 advisors use NaviPlan.
Evans says he feels his company is on target to come up with an all-in-one solution. "We're the closest to it," he says. "It's not there yet. There is more functionality needed, like adding long-term care capabilities and more detailed functions for estate planning."
But he's not the only one making that claim. Roy Quarve, a CPA and financial advisor in Stamford, Conn., wrote QPlan in 1995 because he felt handcuffed by commercial software. Program capabilities, such as adding one-time or temporary cash-flow events, were lacking in products at the time, or they would clutter his client reports with information that did not pertain to them, he says.
Quarve released QPlan commercially last year, and 30 advisors currently use it, he says. As to whether QPlan is an all-in-one solution, he's not bashful in saying, "I think we've got it. I use it day in and day out." Yet the program does not have a Monte Carlo simulator, which Quarve feels is unnecessary with a conservative portfolio.
How badly advisors want everything wrapped in one package is debatable, but there are practical reasons for integrating many functions into one product. Chief among them, advisors say, is the time-consuming data-entry process. Within individual programs, users want "flow-through," meaning that if data is changed in one field, they want the change automatically passed through to other segments of the program. Likewise, they want the same type of flow-through among different programs.
It's a demand that developers acknowledge is a struggle with which to keep up. "People are always telling me, and I experience it myself, about the need to enter data about clients two or three times in different pieces of software," says Gary Smith, of Pleasanton Financial Advisors in Pleasanton, Calif., and a former physicist who is one of the chief programmers with PlanWare Inc. "Then trying to keep all the data accurate is another headache."
That's why "integration"-or the ability of one program to exchange and share data among different programs-is a frequent buzzword in software-company marketing.
But in a market composed of dozens of companies and hundreds of products, integration on a broad basis is an extremely tough endeavor. Some companies have tackled the problem by forming alliances, such as last year's announcement by the Charles Schwab & Co. subsidiary Performance Technologies Inc. PTI said it was offering CRM Software Inc.'s Junxure, a contact-management and workflow-automation system for investment advisors to use along with PTI's Centerpiece portfolio-management software. In April, FrontRange Solutions Inc. announced its GoldMine Plus client-relationship software was available as an add-on to Financial Computer Support Inc.'s dbCAMS+ investment-tracking and portfolio-management software.
But such alliances just scratch the surface when compared with what advisors want, says Warren Mackensen, an advisor who is founder and head of ProTracker Software in Hampton, N.H. ProTracker offers a client-management program. "Based on the questions I get, they want to be able to have it 100% integrated," he says. "But there is a lot more to it than most people realize. They'd like to have a name and address, put it in one program and have it put in all their other programs automatically. The reality is, for the industry as a whole, we're a long way from that."
Drucker, of PlanWare Inc., sees the job as near impossible. "They [software products] tend to be put together by programmers who don't have the same skill sets," he says. "They're often done in [different] programming languages because one may serve one purpose better than the other."
Nonetheless, the more integrated the better. And in a crowded industry, the pressure is on to form alliances or consolidate to increase competitiveness. That's putting smaller companies in a tough spot, observers say.
Drucker acknowledges that companies like his, with a customer base of fewer than 100 advisors, can't sit still. "If we want to be a viable business, we have to strike an alliance," he says, adding that his firm is involved in some discussions with others.
For advisors, such rumblings mean it would be wise to consider a company's staying power before investing thousands in its software. Boone even suggests that small advisory firms join together as buying groups to save on software costs.
The tenuous stock market only adds to the necessity for long-term thinking, says Evans of EISI. "Things are slowing down in terms of large organizations making contract commitments," he says. "There is no longer the utopian dream of, 'Well, if I just sign a contract with Merrill Lynch, things will be fine.'"