After maintaining a very low public profile over the past year or so, Matt Abar and his portfolio management software, FinFolio, will likely be much more visible in financial advisory circles this year. His application, which already has a loyal following among a select group of advisory firms, is capable and robust, but it is not the core functionality of the application that will create the buzz in the months ahead.

It is the new Windows 8 reporting capabilities, which I feel certain will captivate a great many advisors once they are exposed to it. In my opinion, the FinFolio reporting system is a significant leap forward in reporting, and one that every advisor should become familiar with. It is the first concrete example of how the new Windows 8 operating system can deliver tangible benefits to advisors and their clients, and it provides the type of reporting that the next generation of clients will expect.

For those of you who don’t know Matt Abar, he was the majority owner of TechFi, a portfolio management and reporting platform (whose minority owners included Rob Major, currently the president of AssetBook, and Morningstar). TechFi was purchased by Advent Software in 2002 and essentially dismantled shortly thereafter. But before that, in the spring of 2000, TechFi launched AdvisorMart, a product that was revolutionary at the time.

AdvisorMart was an online portfolio management solution that allowed independent advisors and independent B-Ds to outsource data reconciliation and database maintenance chores to a third-party provider. The pricing was very competitive at the time. Unfortunately for TechFi, AdvisorMart was ahead of its time, and advisors, being a conservative lot, are often behind the curve when it comes to adopting new technologies. That can make things difficult for firms trying to market revolutionary new products, and in 2000, the idea of having an outside firm host your portfolio data on the Web was revolutionary.

In 2009, I previewed an alpha edition of FinFolio. Like other industry observers at the time, I was impressed with what I saw. FinFolio was no AdvisorMart look-alike; on the contrary, it took a different approach. Instead of offering a Web-based platform that includes download and reconciliation services, FinFolio was built for a larger firm that prefers to do its own downloads and account reconciliation. That makes it one of the few new advisor-facing applications designed as a server/desktop application—it targets large firms with their own IT staff and   service teams.

How large does a firm have to be to use FinFolio? According to Abar, it is designed for midsize to large advisory firms—those with anywhere from $200 million to $10 billion in assets under management. The current client base’s asset range is even broader, with a low of $50 million to a high of $100 billion.

Although FinFolio is not offered as a hosted service through Abar’s firm, the application does work with third-party hosts who are capable of hosting it if the advisor wants that service. One FinFolio host, he says, is BaySys Technology LLC. Coincidentally, BaySys principal Larry Baker founded an outsourcing data management firm that he also subsequently sold to Advent and also worked for Advent as a technical consultant and custom report engineer for a number of years.

A Quick Overview of FinFolio
The purpose of this article is not to offer a complete review of FinFolio, but rather to highlight the application’s reporting features and client portal capabilities. That said, a brief overview of the application is in order.

The core of the system is the FinFolio Workstation. This is the application that advisors use to manage all of their data. Typically, this would be loaded on a server, but FinFolio was kind enough to send me a version loaded on a Windows 8 laptop with an Intel i7 processor and a touch screen so that I could enjoy the full Windows 8 experience the beta version offers.

FinFolio is a very robust, flexible application. It allows advisors to manage portfolios containing most types of publicly traded securities, and to classify them in various ways (by class and sector, for instance). It can create all sorts of blended benchmarks, fee schedules and reports, including management reports. It is more than able to meet the needs of the vast majority of independent RIA firms. Let’s highlight just a few aspects of the FinFolio Workstation.

When you log on to the application, you feel like you are right inside the Microsoft Office 2010 or 2013 applications. The familiar tabbed ribbon is on the top of the page. Depending on which tab you select, the appropriate ribbon appears with the appropriate underlying functionality. So, for example, if you click the “create” tab, icons on the ribbon are available to create a new household, portfolio, account client, security, model, fee schedule, report package, etc.

One example of what it can do is substitute XYZ mutual fund for ABC fund in a model if XYZ is closed to new investments or substitute DEF fund if the minimum investment for the other two could not be met.

The product also grants you access to FinFolio’s rebalancing features once they are released. My beta software included this feature, but it is not yet included in the production version.

The rebalance wizard allows you to easily perform a full rebalance, a rebalance to raise cash or a rebalance to allocate cash. Although FinFolio does not currently perform intelligent, tax-sensitive rebalancing, it does provide all of the necessary information for advisors to rapidly review their data and make their own decisions. Although Abar was mum on future plans to enhance the rebalancing tool, it would not surprise me if this was the first step toward a more robust solution since his target market certainly wants one.

One of the features, aside from reporting, that sets FinFolio apart from the competition is the robust set of account reconciliation tools. When you download your custodial files, FinFolio uses a form of artificial intelligence to compare your FinFolio data to that of the custodian in order to automatically identify areas of concern. These alerts fall into three categories: errors, warnings and general “information alerts.” An error, identified with a red “x” so it is easily spotted within the list of accounts, indicates something that requires immediate attention. This could be something like a discrepancy in the number of shares of an asset held, a discrepancy in a purchase or sales, or some other important thing. A warning relates to something requiring intervention, but perhaps not something critical. It could alert the user to a zero price for a security, for example, or a security pricing that falls above or below the day’s trading range for the security. An information alert might tell you a piece of information is missing, such as the ex-dividend date for a stock. In all cases, when you click on an account that displays an alert, a full explanation of the problem appears on a split screen toward the bottom of the page so that problems can be identified and corrected.

Reconciliation problems can be fixed manually or you can use a reconciliation wizard to partially automate the process. For example, if you have the price and the transition amount of a given transaction, but you are missing the number of units, you can tell the program to automatically calculate the units and insert the answer in the appropriate field. FinFolio offers additional reconciliation wizards that support other common tasks, including stock spin-offs, stock splits, account closings and account transfers.

FinFolio is one of the first firms in our market to release dynamic reports optimized for Windows 8. To say these reports are stunning does not begin to do them justice. Abar insisted on sending me a Windows 8 touch-enabled laptop with the software loaded to ensure that I experienced the reports in the best environment, and now I understand why. With Windows 8, you can have an animated video as your background, for example a video of the ocean, or trees with the leaves blowing in the breeze. Of course, you can also have a static background if you wish. On top of this background, you layer translucent charts and graphs. Some reports, like the performance overview, allow you to toggle between various time periods on the fly. You can change the graph by simply pushing an on-screen button.

FinFolio will help you customize the charts and graphs so they show up well on top of your chosen background. The application has a collection of dynamic report templates that can be customized for you. You can then display these charts and graphs individually on a computer screen, or you can group a number of them together into a client presentation package. With a presentation package, you might have 10 or more charts and graphs that tell the story for the client. If you are using a touch screen, you can move from one illustration to another by swiping side to side or up and down. Imagine reporting to clients on a 27-inch touch screen, as I’ve seen Abar do, or on Microsoft Surface Pro tablets, which will be available by the time you read this.

Each FinFolio advisor client receives a SharePoint library. This library powers, among other things, the client portal. Advisors can create a SharePoint workspace for each client (which acts as the client portal), and then create a file structure within the client portal. So, for example, you could set up a folder for each client labeled “quarterly reports,” so when you generate PDF reports for clients, they would automatically be routed to the appropriate folder. You could set up additional folders to hold financial plans, estate planning documents, etc. Since this is SharePoint, the administrator can determine who can read, edit, upload to or download from each folder. You maintain control of the portal and its contents at all times.

Speaking of PDF reports, I’d be remiss if I failed to mention that the PDF reporting templates are also gorgeous. If you compare these to what the industry standard was a few years ago, or for that matter what some competitors still produce today, you come to realize that the gulf in quality between the best and the worst reporting has never been greater. This bodes well for innovators such as FinFolio, and not so well for those resting on past laurels.

After briefly examining FinFolio, one obvious conclusion I’ve reached is that the upcoming version is a significant improvement over the current version. Improved usability, new features and some of the best graphics in the business should ensure that FinFolio has a steady stream of new clients in the year ahead.

Even if you are not a potential FinFolio client, you’d be well served to examine the product. FinFolio’s reporting makes it clear that Windows 8 is ushering in a more robust environment for advisors to work in. Although FinFolio is the first such application I’ve had hands-on experience with, I’m sure it will not be the last. As I write this, a number of other vendors in the industry are working on Windows 8 apps of their own. That bodes well for the future of the profession.

Finally, FinFolio’s reporting features should serve as a wake-up call for any advisor whose reports look the same as they did five years ago, or anyone else who is using, graphically speaking, an inferior product. There are other vendors offering graphically rich programs out there (Black Diamond and Tamarac come to mind), but many others do not. If you use one from the latter camp and your client sees FinFolio or a similar report, look out. Rich, dynamic, interactive graphs on a touch screen or tablet, plus simply beautiful PDF reports, will cause embarrassment for advisors that continue to send out poorly crafted paper reports to their clients. At some point soon, those inferior reports are going to start impacting the bottom line of advisors. Don’t wait until it is too late! This is a competitive market, and you need to keep up with the times. Innovative firms like FinFolio can help you stay ahead of the competition and provide the type of technology that the next generation of clients expect from their advisors.