Kitces: Choosing the Best Financial Planning Software

Commentary on  Nerd’s Eye View article by Michael Kitces

With a plethora of financial planning tools out there, it can be difficult for advisors to make the right choice. Financial industry expert Michael Kitces has some tips.

No One Size Fits All

No financial software will be perfect for every advisor, Kitces writes. The key differences between what’s available today relate to how the software works collaboratively with the client in real-time, he writes. Advisors will have to select what’s right for them depending on their niche clientele and the necessary level of integration with their practice and the technology already in place, according to Kices.

Goals-Based vs. Cash-Flow-Based Software

The first choice to consider is between goals-based software, where MoneyGuidePro has been a leader, vs. cash-flow-based software, where NaviPlan has been the standout, Kitces writes.

But the lines are becoming increasingly blurred, as many types of software now offers elements of both approaches.

Next, advisors should consider how the software models projects, whether on a straight-line basis or using Monte Carlo analysis, and its capacity to add what-if scenarios, according to Kitces.

Some advisors may also want to see an audit trail for the calculations, such as that provided by MoneyTree, rather than rely on the black-box method that’s used by MonedyGuidePro. Financial software tools also vary in how they models taxes, he warns.

All About the Looks

Appearances are key as well — how software looks is increasingly important as the industry moves away from printed financial reports to collaborative environments that include the client, according to Kitces. By extension, the ease as well as the flexibility of input are also a deciding factor, he writes.

And depending on the customer, the software may need additional modules to account for life insurance, college savings, social security timing and other financial considerations, according to Kitces.

In addition to the established software providers, Kitces points out some promising upstarts, such as Advizr, RightCapital and Figlo.

Another aspect to consider is the personal financial management dashboard for clients, with companies such as eMoney Advisor building their own while others partner with providers such as Wealth Access, he writes.

Bells and Whistles

Account aggregation capabilities are another factor to weigh, particularly because the level of integration with other software varies greatly among providers, according to Kitces.

Finally, advisors should evaluate the choice of add-on tools available with their software, such as the content marketing tool Advisor Briefcase from Advicent or MyMoneyGuide from MoneyGuidePro.

The key, however, is to choose the right software for the core needs of each financial advisor and his or her clients, Kitces writes. For a full review of what’s out there, head to his blog.


Posted by: The Trust Advisor


More Articles