A special panel discussion, “CPA/PFS Perspectives On Using Technology in a Personal Financial Planning Practice” was held Jan. 9, 2014, as part of the AICPA CPA/PFS Perspectives webinar series. Marc Minker, CPA/PFS, moderated the panel; participants included Gina Chironis, CPA/PFS, Michael Goodman, CPA/PFS, and Steven Levey, CPA/PFS. Here are the highlights of the conversation as they relate to financial and estate planning. Links to the audio recording and presentation materials are at the end of the article.
If you provide personal financial planning (PFP) services, technology can be one of your most valuable tools. Today’s more robust hardware and software can have a huge impact on productivity and client satisfaction. The challenge is to find the right mix of technology and learn how to deploy and use those systems to meet the needs of your clients and your practice.
The options can be exciting and a bit daunting. Hardware includes more than desktop computers and laptops; today, we carry a number of portable devices, including tablets and smartphones. Business software applications continue to expand to handle cloud-based document management, email and other types of messaging, and even client relationships.
More specifically for planners, a growing set of software solutions include financial planning systems and software for custodians, financial analytics and portfolio rebalancing.
Financial Planning Software
Firms that offer PFP services can access a broad array of packaged and customized financial planning applications.
Software is used to manage and present information. You can manage annuities, wealth management, insurance, 401(k) plans, rollovers and other financial variables. You can present cash flow, current net worth, liquidity, projected retirement income, Monte Carlo and other analytics to clients. The popular systems now being used by PFP firms include NaviPlan Extended and MoneyGuidePro.
When considering which financial planning software to choose, look for a vendor and a technology that will stand the test of time. If a vendor goes out of business or a software system is discontinued, you may spend huge amounts of time and money finding a replacement and migrating client financial data to a new platform.
Keep in mind that sometimes, the output can be overwhelming; most clients’ eyes glaze over when they are presented with dozens of charts and graphics. Understand each client’s preference, and adjust your use of graphics and technology accordingly.
Portfolio Management and Reporting
Portfolio management can be one of the more challenging aspects of a practice. Fortunately, firms can now leverage robust technologies to track and manage 401(k), brokerage and savings accounts.
Many independent advisers, typically fiduciaries, rely on turnkey asset management programs (TAMP) to handle portfolio management and reporting, as well as research, rebalancing, reconciliation and tax management. A TAMP service can enter data points and interface with custodians, freeing the adviser to focus on client service and advice.
Other firms leverage various portfolio management applications to provide calculations, comparatives and reporting to support a more manual, personalized approach. While it’s true that most people use just 25% of the capabilities available from a software program, planners
can benefit greatly by learning the features, functionality and customized capabilities of a portfolio management system. Just reading the manuals, or consulting with the supplier, can reduce the need to invest in new systems.
Given its technical, data-oriented nature, portfolio rebalancing may be a prime example of how software can support the professional financial planner.
A wide array of rebalancing systems are available, from inexpensive, basic off-the-shelf software to more sophisticated, expensive applications that are highly automated and offer robust features such as portfolio-related tax management, imports to internally- or custodian-managed trading systems, and grouping of accounts.
Some financial practice management software systems include basic rebalancing capabilities, and though TAMP solutions typically include portfolio rebalancing as a core component, firms should oversee and customize the output of these basic systems. Other, typically larger, PFP firms use software only as a tool, and devote considerable time and staff to the reviews, research and analysis needed to do more personalized manual rebalancing.
Client-Facing Apps and Communications
PFP firms are using email and Web-based communications, as well as traditional media such as newsletters, to connect with clients and prospects.
Some firms use agencies or packaged software to handle many website and communications tasks, and others encourage principals to generate more personalized messaging and content. Some also caution against using social media like Facebook, where firms have little or no control over content or comments.
is a good example of a client communication and education tool that can personalize articles and presentations for clients and prospects on any aspect of financial planning. It is a free and very popular section benefit for PFP section members and CPA/PFS credential holders.
Newsletters are still a popular way to highlight the expertise of a partner or firm, educate clients, and offer reminders or new services. Websites, CRM systems, and snail mail are common ways to forward newsletters and other information to clients and prospects.
Take time to find out if, and how, clients want to receive communications. Younger readers may insist on electronic media, while older clients often prefer printed materials. Electronic communications allow firms to see who opened a newsletter, for example, and to follow-up automatically when appropriate. A good rule of thumb is to ask permission and use opt-outs to make sure communications are welcome.
All About the Cloud
The cloud is one of the hottest technology topics today and, as such, firms should be aware of the new capabilities associated with it. As a way to back up and protect sensitive client information, cloud-based storage offers the benefits of advanced physical and software-based security, and the ability to recover quickly if your office-based systems are down for any reason. Ideally, crucial data should be protected by multiple layers, including onsite storage, Storage Area Network capabilities and cloud-based backup.
Making client information available through a secure online portal can be helpful, particularly for those who are tech-savvy. Clients may not know or care precisely where their data is stored, but they expect it to be secure and easy to access.
The paperless office concept has been around quite a while. Many planners are now using advanced optical scanners, cloud-based storage, and other technologies to reduce or eliminate paper documents. A paperless approach can eliminate the need for expensive printers and fax machines and the cost of physical paper file storage space. Electronic documents are far easier to index, research and use, and give clients fast and easy online access to their information. That said, some clients are “old school,” preferring the touch and feel of a paper-based chart or report.
Think About the Future
Technology challenges and opportunities will differ depending on the size of the firm. Due to higher client counts and workloads, larger firms often have more need for the automation made possible by technology, but they also have larger IT-oriented budgets. Smaller firms may get by with less technology, and with basic systems now far more affordable, smaller PFP providers could benefit just as much from IT as their larger counterparts.
By its nature, technology changes fast, and client requirements and the needs of a given firm also will evolve. CPA financial planners need a strategy to handle that change, but one thing is certain: think years ahead and buy for the future in order for your firm to grow into its technology.
The audio recording and presentation materials for “CPA/PFS Perspectives on Using Technology in a Personal Financial Planning Practice” are available to PFP section members (inclusive of CPA/PFS credential holders) at no cost. To download, visit the PFP webcast library
to access this session, as well as all the webcasts in this series.
If you attended the Advanced PFP Conference in January, you may have sat in on several sessions that focused on technology, including “Technology Security Issues for Financial Advisers” and “Energizing Your Practice With Cutting-Edge CRM Software.” In case you missed these—or attended and want more information—audio recordings and presentation materials are available in the AICPA’s online library
. Registered attendees for the 2014 conference have complimentary access when they log in through the website (see instructions
to access). Those who did not attend can create an account
to purchase audio recordings and presentation materials.
The CPA's Guide to Technology in a PFP Practice, by Joel Bruckenstein, provides an overview of the essential technology components of an efficient financial planning firm. Joel covers general office productivity tools and industry specific tools. Consult this guide as you make technology decisions for your firm! An updated edition of this guide will be available this spring. Watch PFP News for the latest!
PFP Member Discounts: One of the valuable benefits of being a member of the PFP section is the discounts that you receive on a variety of AICPA and third-party products and services. There are several discounts from third-party, technology oriented providers available for review. To peruse the list, visit the PFP Member Discounts website.