PFP Notebook can be a good planning
solution for new and low-volume practices.

    An interesting aspect of being an advisor is that each of us has his or her own unique approach to financial planning. All Certified Financial Planners (CFP) and other planning professionals follow a six-step planning process, and they abide by certain practice standards. However, within that broad framework there is plenty of room to exhibit one's individuality, and most good advisors I know do just that.
    This individualism carries over into the way advisors select and use financial planning software. The larger, better known firms in the business, such as EISI (NaviPlan), Financial Profiles, MoneyTree and PIE Technologies (MoneyGuidePro) are well aware of the many approaches advisors take to financial planning, and they generally do a good job of being flexible enough to cater to advisors' diverse needs. For those who cannot find what they are looking for from the above-mentioned firms, however, other options do exist. One of those alternatives, which has managed to fly below my radar screen until now, is PFP Notebook.
    PFP Notebook is distributed by Brentmark Software (, a firm best know for its specialized estate, retirement and tax applications. These include Pensions & Roth IRA Analyzer, Pension Distribution Planner, Estate Planning QuickView, and Kugler Estate Analyzer. In addition, Brentmark maintains a number of informative Web sites such as the Roth IRA Web site (, the Roth 401(k) Web site ( and the State Death Tax Web site (
    PFP Notebook defies categorization. It is a comprehensive financial planning program in the sense that it covers all the major bases (personal financial statements, risk management, investments, retirement, estate, education, income tax), but it is not nearly as comprehensive as MoneyTree's Total Planning System, NaviPlan Extended, or, in many respects, MoneyGuidePro.
    Priced at $595 for the first year and $199 for annual maintenance thereafter, the program is less expensive than major competitors, but it is not so inexpensive that it can be considered an impulse purchase. Some of the screens have an old, almost antiquated (technologically speaking) feel to them, but overall navigation is surprisingly intuitive. These incongruities make PFP Notebook a particularly challenging program to review, but it is a task worth undertaking because PFP notebook represents a good value when paired with the right advisor.

Getting Started
    The program comes with adequate documentation to get you going. There is a printed Quick Start Guide that complements the 100 page-plus manual. System requirements are modest. If you have a Windows computer that functions, it can probably support this program (if it can't, you definitely need to buy a new computer).
    Once the program is installed on your hard drive, you need to perform a few simple setup tasks. First, set up yourself, and any others who will use the program, as a registered planner. This allows the program to link each client case to a planner profile. It also allows planners to designate a password, so each planner can control access to their own files. Planners also can customize how their name will appear in letters and reports.
Next, you set up the company. Again, this is to specify the company information that will appear on letters and reports. It is also a good idea to set up "general assumptions." These are the default values the program will use for inflation, pretax investment returns, after-tax investment returns, education, inflation rate and years until retirement. These rates can be changed for individual cases; they are just the defaults.  
    The program provides a number of data gathering aids. Advisors can elect to send clients a forms packet to fill out. The packet includes a detailed fact finder. It also includes a very well done document called The Financial Planning Bill of Rights. This one-page document clearly spells out the rights and responsibilities of the planner and the client. It can be edited if desired. There's also a list of required documents that the client is expected to bring to the initial meeting.  In addition, the program has the ability to generate a cover letter to be included with the packet.
    There are two negatives to using this method. One is that the client may not want to be bothered with a long form. The other is that someone must enter the data contained in the form into the program. To combat the latter deficiency, the program offers an automated method of data collection. You can create an electronic data gatherer with a few mouse clicks. This form can be loaded on a disk or e-mailed to the client, who then enters the information electronically. Once the data comes back to the advisor, the file is effortlessly uploaded to the program creating, or populating, the client file.
    Once the client file is created, the program creates a progress schedule for the client. The progress schedule is a list, or work-flow map outlining all the steps in the planning process (engagement letter sent, engagement letter received, completion of general information, etc.). This allows the advisor to stay on task; it also provides a record for compliance and for the client.
    PFP Notebook includes other practice management tools. There are general letters (engagement letters, transmittal letters, etc.), insurance letters covering various types of insurance, an action checklist, a client evaluation form and a request for Social Security information.
The planning process is straightforward. Advisors click an arrow to move from one screen to the next. Client information, including goals and objectives, are entered first. Next comes Finances. Of note here is the clear handling of mortgages, with easy schedule creation, payment history, graphs and the like. Risk management includes a capital needs analysis and current policy information. The investment section is flimsy but functional. It offers three asset classes (equities, fixed income, cash). The risk questionnaire is also bare bones.  
    Like the investment section, the retirement section is no frills. Essentially, the program looks at the client's estimated retirement income need in today's dollars, subtracts any expected indexed income, such as Social Security payments, and arrives at a future income need. Next, the program looks at income-producing assets, assumed rate of return, assumed inflation rate and retirement age to determine if additional funds are needed. If there is a shortfall, the program can calculate the additional savings required to cover the shortfall. PFP allows adjustments for surplus and deficit years during retirement, prioritizing order of withdrawal and designating assets subject to RMD.
    The estate section includes a checklist to help insure that advisors contemplate potentially appropriate planning techniques. While of limited use to veteran planners, it is useful to less experienced folks. In any event, going through the checklist is appropriate because it allows one to document the process for compliance purposes. Once the section is completed, advisors can view the impact of estate and gift taxes in graphical form. Multiple methods of calculation are offered including 2009 rates, Repeal in 2010, Sunset in 2011.  
    The tax section allows the advisor to create an abbreviated Form 1040 to estimate the impact of income taxes and plan for tax minimization. Again, a simple checklist documents the process.

    PFP Notebook has a number of things going for it. Price is right there at the top of the list. The $595 initial price is reasonable, but the renewals, at $199, are a true bargain. If you end up owning the program for four years (assuming no increase in the yearly maintenance), your cost of ownership would come to under $300 per year. That's cheap for anything approaching a comprehensive financial planning program.
    PFP Notebook is easy to learn and use. Navigation is intuitive. Compared with other comprehensive financial planning programs, it is streamlined comprehensive planning, but it does cover the critical elements; and it allows the advisor to do so fairly rapidly. Depending on one's client base, more complex programs may be overkill, in which case you are paying a premium in time and money for unnecessary features and added complexity. There's something to be said for buying what you need, and nothing more. PFP Notebook fits that bill for some.
    There is a great deal to be said for the built-in practice management tools. I fully recognize that many readers are already documenting their process and creating letters elsewhere, but the facility of having processes, action checklists, forms, form letters, etc., all built right into the system makes it more likely that advisors will use them. This is a plus, not only from a practice efficiency standpoint, but also from a compliance standpoint.
    Not all is rosy, however.  The interface is a mixed bag. It t is reminiscent of DOS or Windows 95. On the one hand this ook may be partially responsible for the ease of use; on the other hand, some screens, like the report options screen, are antiquated to the point that it detracts from performance. The "old" style precludes some features that are becoming increasingly common in other programs, such as the ability to create presentations (as opposed to printed reports) on the fly.
    Most of the calculations are of the straight-line variety. You pick a rate of return, for example 8%, you project it out at a constant rate for 20 years, and bingo, you get a result. The same can be said for spending assets during retirement. We all know that the return on most assets fluctuates, and the order of the returns matters. We really cannot illustrate this to clients effortlessly using PFP Notebook due to a lack of stress testing and/or Monte Carlo.
By the same token, there is no real facility to model employee stock options. You can count them as an asset and designate a rate of return, but the results will be less than satisfactory from an investment modeling perspective.
    The estate tax module covers the basics in a very solid manner, but it is not appropriate for complex planning needs. As mentioned previously, the investment portion of the program is basic.

    For an experienced planner who routinely deals with the complex planning needs of high-net-worth clients, PFP Notebook is not the best product. On the other hand, if your typical client is in the accumulation phase and has a fairly straightforward financial picture, it might be a nice fit, provided that you provide supplementary education regarding the variability of returns and their impact on the plan.
    PFP Notebook is appropriate for those new to the profession, or those who do a limited number of comprehensive plans each year. For such planners the checklist, work flow and other practice management tools can provide critical reminders as well as a facility to document the planning process. In addition these planners, with their lower anticipated volume of plans, may not be able to justify the cost of more expensive comprehensive programs.
Overall, PFP Notebook strikes me as a reasonable balance of price and functionality. It's unlikely to take on the market leaders any time soon; however there are those who can profitably deploy this application in their practice.