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Advisor Applications
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New Retirement Planning App, Likely To Catch On, Illustrates How Technology For Financial Advisors Is In The Midst Of A Creative Upheaval |
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Friday, January 20, 2012 17:31
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Tags: advisor industry people | Financial Planning Apps WealthTrace, a retirement planning app, is pretty much a one-man show. However, the one man is Doug Carey, a 39-year-old Chartered Financial Analyst with undergraduate and graduate degrees in economics who taught himself programming. So it’s a good bet Carey won’t be a one-man show for long.
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In addition, WealthTrace’s recent debut, at $695 for the first year and $495 annually thereafter, illustrates the creative upheaval upending practice management software for financial advisors.
WealthTrace is being marketed as a simpler alternative to other financial planning apps. Here are the bullet points Carey wrote to describe the app:
- Powerful and accurate, yet incredibly easy to use.
- You will get a comprehensive picture of your retirement situation both on the screen and in an easy to understand report.
- Run scenarios to see what you can do to change when you can retire and when your money runs out in retirement.
- Easily change assumptions, such as social security, expected returns, and inflation to see how this impacts your plan.
Despite its ease of use, relatively low price, and simple interface, WealthTrace in some ways is sophisticated because it allows an advisor to build what-ifs using different year-by-year rates of return and inflation.
For example, you can create elaborate assumptions not permitted by popular professional retirement planning applications that cost more. You can create multi-period plans that assume one economic scenario for five years, another scenario the next five years and another scenario the next 10 years.
A wealth manager can thus model a long-term picture and overlay his or her view of the economy and markets on a plan. It’s the kind of work professionals do because it helps them as well as their clients understand and plan thoughtfully for scenarios an advisor believes are most likely to occur.
To input different scenarios, you must use WealthTrace’s syntax, but that’s simple. And controlling inflation and return variables gives you great power to model the future you envision and illustrate other outcomes clients could experience.
The story behind this story is also a big one.
WealthTrace illustrates the creative upheaval in the business of making software for financial advice professionals. Programming has become much easier over the past 20 years. A small number of standardized programming languages have replaced the proprietary code of the 1980s and early 1990s. Programming is much more plug and play and copy and paste.
An entrepreneurial economist who knows how to code can write an innovative retirement planning app and make a good business of selling it to RIAs, perhaps eventually selling it to broker-dealers, banks and custodians. Point is, WealthTrace is a one-man shop that can now pretty easily fine-tune its pricing to carve out a business serving RIAs.
Yes, he has a lot of work to do, but Carey can carve out a niche among wealth managers and financial planners and have a going concern that supports his family nicely. Whether he can turn it into a real business and manage employees is totally unknown. Still, what Carey is doing at WealthTrace is what I love most about America.
After graduating from Ball State in Indiana and getting a Masters at Miami of Ohio, Carey began his career as an analyst at National City Bank, which would become a casualty of the 2007-2008 mortgage crisis. At NatCity, Carey says he was quickly named a portfolio manager and, along the way, earned a CFA designation. In 1999, Carey left the bank to develop software analyzing mortgage-backed securities—CDOs, CMOs, and other complex derivatives securities — at Derivative Solutions, a software startup.
In 2005, Derivative Solutions was bought by FactSet. Carey stayed through mid-2010. At that point, Carey, father of a two-year-old and four-month old who lives with his wife in Boulder, Colorado, says he has no debt and has accumulated enough cash to start his own business.
In 2010, after leaving his job at FactSet, Carey says he initially started an RIA and was beginning to advise clients. But he was disappointed in the tools available.
“They either lacked flexibility or were too complex when they did not need to be,” says Carey.
Carey started building his own spreadsheets and then programmed a desktop version of WealthTrace. In March 2011, he outsourced to a software development firm to build the web version.
One new twist on this professional planning app is that a simple version of the software is sold directly to do-it-yourselfers. A less complicated version of WealthTrace is available to consumers for as little as $39 a year.
Some financial advisors will resent that a version of the professional app of WealthTrace is also being sold to consumers, but I don’t buy into that kind of thinking.
In fact, because WealthTrace has a consumer DIY version, it could one day serve as a referral source for advisors, just as custodial retail branches today are a referral source to RIAs.
A 30-year-old DIYer who uses WealthTrace today could get an inheritance next year or experience some other sudden wealth event. Of course, in 10 years, that DIYer is likely anyway to start thinking about retirement and college planning. Financial planning apps are increasingly likely to empower consumers as well as advisors, and advisors cannot stop that trend and should capitalize on it instead of getting hung up on it.
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RIA Performance Reporting Solution, AssetBook, Gets A Nifty New Graphical User Interface |
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Monday, January 16, 2012 16:14
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Tags: Portfolio Management Software AssetBook, a web-based performance reporting app, has a spiffy new user interface that uses Microsoft Silverlight as its graphics engine.
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Microsoft Silverlight, says Wikipedia, is an application framework used by software developers for writing and running rich Internet applications, with features and purposes similar to those of Adobe Flash. The result is a modern new look for a relatively low-cost performance reporting solution for RIAs.
AssetBook’s Rob Major, in the accompanying eight-minute video gives a tour of the new features.
AssetBook is located in McHenry, Maryland, a rural town about 10 miles from West Virginia. I went to visit Major about 18 months ago and Major Technology now has 20 employees and is a charming little venture.
Major was a co-founder of Techfi, which made Portfolio 2000. That firm was bought by Advent about 10 years ago and Major could probably have retired after that. But a year or two after that deal, Major began building AssetBook.
AssetBook a classic entrepreneurial adventure. Major has been iteratively building a better solution system for 10 years, and he’s now developed valuable performance reporting solution for RIAs.
AssetBook downloads data for RIAs from custodians. Advisors can change their account data if needed or work with the service team at AssetBook to clean up issues. So it’s more than software because Major has a service component into the solution.
A big difference between AssetBook and Morningstar's PMS app is that Morningstar is building a single app for CRM, financial planning, and analytics as well as portfolio management. AssetBook is just building the PMS app and will integrate with other apps so advisors can choose which CRM, financial planning and other apps they want to use. AssetBook's approach is more work for advisors but provides a lot more flexibility and choice.
Major says AssetBook currently costs $24 per year per client but that is being raised to $28 when the new GUI goes live in February.
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WSJ Blog Post Notes Trend Toward Online Apps That Might Compete With Advisors |
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Thursday, January 05, 2012 16:17
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Tags: competitors | Financial Planning Apps
"Even as many financial advisors try to shift upward from the mass-affluent segment to a wealthier clientele, some new Internet-based startups are aiming their services at the not-so-rich," says Wall Street Journal blogger Ruithie Ackerman. This Website Is For Financial Professionals Only
While online investment platforms aren’t new, such fledgling services as Wealthfront and Betterment are trying to distinguish themselves with new programs to provide advice electronically. The investment minimums are as low as $5,000 – or even nothing at all.
I've been covering the trend and believe a shakeout is coming to the advisor business over the coming decade. |
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New Salesforce Add On Makes It Easier For Private Wealth Advisors To Embed Workflows In Salesforce |
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Wednesday, January 04, 2012 22:35
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An overlay for Salesforce, recently released by the technology arm of a large RIA, makes it easier to integrate a wealth management firm’s processes deeply with Salesforce.
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Process Composer is a business process management (BPM) solution for wealth management firms. While BPM software has been around for years in large enterprises, Process Composer makes BPM for small businesses. It's just dumb luck that the entrepreneurs behind Process Composer work at at an RIA with $1 billion under management and 800 clients. They bring domain expertise that is so crucial to RIA CRM solutions.
Process Composer enables advisors to author and embed processes in Salesforce. You can clone and edit processes and create sophisticated workflows with dependencies. That’s a big deal.
Process Composer is a big step toward solving one of the most challenging problems RIAs face: customizing a CRM system to your firm’s needs.
If you have a client intake process, for example, you might author an eight-step process that requires your clerical staff email a discovery questionnaire to a new client before an advisor calls.
Process Composer makes creating multi-step processes easier in Salesforce. It allows you to author and embed your firm’s process library in Salesforce.
Salesforce is the world’s most popular CRM. TD Ameritrade Institutional and Schwab Advisor Services, two large custodians serving RIAs, both are integrating Salesforce into their custodial platforms.
Process Composer was developed and is offered by Orchestrate LLC, which is owned by Foster Group, a Des Moines, Iowa RIAs. A monthly license of for Process Composer can be purchased on Salesforce’s AppExchange and starts at $35 per month per user. Discounts are offered when a firm buys 20 licenses or more.
Travis Rychnovsky, who does double duty by serving as Leader of Client Services, IT and Operations at Foster Group's RIA while also filling a role in managing Orchestrate, says Process Composer works in concert with Salesforce overlays created by Schwab, TDAI, and App Crown or other overlays for Salesforce, which are available on Salesforce's app store, AppExchange.
I like this app. Advisors who want to professionalize and make their business scalable all must face the challenge of creating workflows and making them trackable. Process Composer fills a void in the advisor software market and heralds the opening of a welcome new category of advisor software -- BPM.
Having built a proprietary CRM to run Advisor Products, I appreciate how CRM can transform a professional services business. Plus, Orchestrate made a great first impression. In researching this post, I learned that ops-geek/MBA Rychnovsky is a CFA charterholder.
Smart people are behind this venture.
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Competitive Intelligence: New Consumer Financial App Offers "The Complete Financial Plan" For $349 |
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Tuesday, January 03, 2012 18:32
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Tags: competitors | online financial advice | Wealth Management
Another web-based competitor to advisors has popped up — “a women-centered company with the mission of educating readers about money and how it affects all aspects of her life, from where to shop, what to buy and how to save. LearnVest publishes information about personal finance, time management, organization, career and relationships to enable every woman to lead a full life.”
Most advisors will dismiss LearnVest as low-quality, saying it does not even approach the depth of their client relationships.
That’s how disruption works. The business being disrupted doesn’t know it is happening.
LearnVest is targeting investors that the vast majority of advisors are not interested in as clients: ranging from women just starting a career to working moms and who may have as little as a few thousand dollars to invest. Most of LearnVest’s membership would not be able to meet a $250,000 minimum investment requirement that most investment advisors would impose.
However, LearnVest — and those that will copy it if it’s successful — will become adept at serving this market and eventually move to more upscale clientele, and then it will clearly encroach on advisors. Advisors might not realize these services are competitors for another five or 10 years, but the cycle is under way.
LearnVest is part of a growing wave of disruptive innovation unfolding across the financial advice business. Another example comes from Wealthfront.
To succeed despite growing competition from Web-based financial advice apps like LearnVest, Wealthfront, and the online brokers, advisors might want to think about embracing these tools. Why not create a solution that works with these new markets?
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