(April 2006) Investing in technology can be a daunting task, but a necessary one given the pace of change and the push for greater productivity in the industry. The fact that computer and software costs have dropped notably in recent years, while program capabilities have far surpassed those imagined when financial planning software packages first came to the market, are other very good reasons to have a look at the products available today.

"We’re in the knowledge business for our clients," says Malcolm Ross, president of Vancouver-based Investaflex. "First we’re in the relationship business with clients and then we’re in the knowledge business. I don’t believe that you can effectively manage a lot of relationships without using technology to support you in that business. I also believe that in terms of planning and advising clients, you can’t effectively communicate a lot of complex issues to clients without using technology to rationalize and simplify that communication process."

Advisors who haven’t reviewed the software offerings made available in recent years could be pleasantly surprised by recent developments.

Michael Curtis, president of Vision Systems Corp., says new computers are exponentially faster than those built five and ten years ago and programming technology has evolved dramatically, giving software developers the ability to build programs that process more complex and realistic models — taxes are no longer projected using average rates in most cases, asset allocation models can process thousands of scenarios to forecast different rates of return, and the complex rules associated with estate planning can be built into programs that run on the average computer desktop.

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    One of the most important steps in narrowing the field, however, is spelling out your financial planning style and identifying what, exactly, you need the software to accomplish in your practice. Some financial planning software packages are simply designed to model different scenarios in front of clients while others require a lot more data entry, preparation and analysis. Some financial planning programs will interact with back-office applications and contact managers, for a price, if that’s what’s needed. Other advisors, though, might do just as well with a boxed solution that meets a specific need.

    "You need to strike a balance between wanting an application that’s comprehensive, and yet one that’s simple enough to be used primarily as a sales tool," says George Aguiar, president and CEO of GP Capital Management Group. "For the most part our advisors are looking for an application that’s user-friendly, presents well to the client and hits on key points. Some retirement planners out there are so comprehensive, they calculate things to the nth degree. Our advisors want an application that takes in all of the key elements of retirement planning — government benefits, pensions, RRSPs and savings, so they can figure out what that gap is for the client." Other planners, however, might be more inclined towards a product that allows extensive number crunching, analysis and tax tinkering.

    Following a thorough needs analysis, planners who’ve undertaken the exercise of finding a new software package recently say training and support are key factors to consider in the decision-making process, particularly when the software has complex or advanced functions that might not readily present themselves during use.

    "I think the biggest part, for us, has always been the training and support, because this [involves] a shift in thinking," says Aguiar. "Advisors who have joined our firm, most of them were very product-oriented. We’re quietly influencing their way of thinking and focusing on the process of helping clients figure out what their goals are first, before implementing the product. That’s what a financial planning application should do."

    Aguiar began looking at different financial planning and asset allocation models last year. The company is in the final stages of interviewing its short list of suppliers. New product capabilities, particularly the ability to connect to the company’s back-office system, are one of the biggest reasons GP began the process of selecting a new application.

    "That was something we needed, primarily because we have advisors with significant practices. When you’re dealing with applications that are not speaking to each other, it causes a need for clerical input into each application." He says the ultimate goal is to integrate the software so data flows back and forth seamlessly, to create efficiencies.

    If your practice is not supported by deep pockets for extensive technology investment, there are a number of solutions available at various price points in the market today. Click here for a closer look at six software solutions that may be right for your practice.

    Filed by Kate McCaffery Advisor.ca, kate.mccaffery@advisor.rogers.com

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    Originally published on Advisor.ca