by Spenser Segal
With any software purchase, there are some fundamental questions that you need to evaluate. There are also some specialized considerations for specific types of software.
Fundamental Questions
We covered the fundamental questions in detail with customer relationship management (CRM) software in the November/December 2009 issue of Practice Management Solutions (see "7 Essential Steps When Considering CRM" at www.FPAPracticeManagement.org). While the questions do change slightly when being applied to financial planning software, the general concept remains the same. Even before you begin to evaluate specific software solutions, you ought to answer the following questions:
- What are your business objectives?
- What processes that you currently have in place will be affected or need to change if/when you adopt financial planning software?
- What do you expect to gain from using financial planning software?
- What functionality do you need the software to provide in order to gain the benefits you want?
- How will you measure your/your staff's adoption of the financial planning software and will you use incentives to encourage proper use of the software?
- Who will be in charge of evaluating and improving your use of the software?
The answers to these questions are the basis of your financial planning software adoption plan. Once you have this understanding of what you need and how you will leverage the software, you can move on to specific evaluations of the available software packages.
Specialized Questions
The unique aspects of financial planning software require some additional thought. The answers to these questions will help you quickly weed out financial planning solutions that won't work well for your practice, enabling you to focus on those solutions that are pertinent to your needs, goals and resources.
What type of reports/reporting is best suited for your clients?
A plan is ultimately only as good as a client's ability and willingness to understand and implement it. Depending on the type of client you serve, certain types and formats for reports may have a better impact on the client's implementation progress. For example, if you work primarily with middle-income clients, you probably do not need software that provides in-depth analysis of estate and legacy issues or provides only a cursory overview of budgeting/money management.
Leverage your understanding of your clients to determine what types of reports are of the best value and enable you to present your findings and recommendations most effectively. If your clients are better able to follow through on your recommendations, they are more likely to see positive results from your advice, thereby increasing their satisfaction and likelihood to continue working with you.
Is it important for you to have the ability to deliver the plan online through a client portal?
In addition to considering the report itself, it is also important to consider the ways in which you would like to be able to deliver the plan to the client. Vendor functionality varies significantly in this area, so if you want to provide delivery of financial plans or other client documents via a secure client portal, for example, that will immediately narrow down your list of potential vendors.
Some vendors allow the planner and client to collaborate on a plan via the Web. If you have clients who are technology savvy or live outside your geographic area, this may be an important feature.
Which methodology most closely aligns with your planning philosophy and style?
Different software packages use different methodologies, such as cash flow-based planning versus goal-based planning. Keep your planning philosophy in mind when you evaluate the various software options and eliminate any that do not align with your preferred methodology.
Does the software integrate with your existing portfolio management and CRM software?
If you already use portfolio management and/or CRM software, be sure to identify the financial planning solutions that integrate with your existing software so that you do not waste time inputting data twice-once into each solution.
If you currently do not have portfolio management software and/or CRM, evaluate what future options you will have for integration if you implement the financial planning software you are evaluating. You do not want to end up in a situation where you have successfully embedded financial planning software into your planning process only to realize later you will have to change providers or software due to a lack of integration with portfolio management vendors.
Several vendors pull all client online financial information together and allow it to be directly transferred into specific financial planning software applications. This could be an important factor as you consider vendors.
Use the answers to these questions to narrow the field of vendors, then evaluate the remaining options. Use your financial planning software adoption plan to identify the specific functions you need to achieve your business objectives. In June, FPA and ActiFi will release a full report, sponsored by TD AMERITRADE Institutional, evaluating the functionality of financial planning software solutions. Leverage the findings in this report to compare the functionality across your vendor list and identify the solution that is the best fit for you.
Spenser Segal is the chief executive officer of ActiFiTM, a software and solutions company focused on delivering scalable practice management programs to the financial services industry.
TD AMERITRADE participated as a custodian respondent and is the sponsor of the study. TD AMERITRADE is separate and not affiliated with the Financial Planning Association or ActiFi and each is not responsible for the other's policies or services, except to the limited extent that TD AMERITRADE participated in the study. TD AMERITRADE does not guarantee nor is it responsible for the completeness or accuracy of the data provided or for the quality of any third-party product or service. TD AMERITRADE makes no warranty or representation with respect to the service as to suitability or fitness for a particular purpose. In no instance should the listing of a third party be construed as a recommendation or endorsement by TD AMERITRADE.
Tools to Use
Do you want to ensure you successfully adopt a new financial planning software solution? Use FPA's Financial Planning Software Adoption Plan template to help guide you through the six-step process that includes identifying your business objectives, expectations and functionality needs. Then evaluate what existing processes will be affected by implanting new software, determine how you will measure your firm's adoption of the new software and assign responsibilities for improving usage of the new software.
