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Financial planning software.

How can you possibly find time to evaluate the more than 100 financial planning software packages on the market? The real answer is, you can't. You probably can discount some immediately because they are too costly--to the tune of several thousand dollars. But what about the others? They promise you everything, but you really are just looking for what's best for your clients. Since your time is money let's make sure it's well spent. Here are some ideas to help you sort through the maze of variables and determine which best meet your needs.


In the past, I had hoped that my selection of financial planning software would be a one-time decision. I envisioned finding a vendor with a strong application and good technical support and staying with that vendor for a long time. However, experience has shown me that no single package meets all of my requirements.

Additionally, as financial planners, our needs are likely to change as the industry changes. New issues may become important in our practice, or our vendors' service may change in ways that no longer meet our needs. We also need to update our software each new tax year or when tax laws change.

So the process of software selection begins by defining your current needs while keeping in mind possible future requirements. This involves analyzing your clients and the information you want to deliver, the output you desire, the application's impact on other computer equipment and an understanding of the software's logic.

Approach your software search knowing it's unlikely that one package will provide an ultimate solution. More likely, you'll need to use multiple applications to best serve your clients.


An important step in your software selection process should be to review your current and potential clients. Are your clients young engineering entrepreneurs, baby boomers, pre-retirees or retirees? Each client group has different information needs, and you will need to determine the deliverables you want to offer each client.

Will most clients want to see the full gamut of financial planning scenarios, such as those for education, emergency funds, retirement, survivor benefits, long-term care, estate situations, tax analysis, cash flow statements over time in constant dollars, net worth and more? Possibly they just want specific solutions to a few nagging questions.

You also need to contemplate what topic areas you want to be involved in. For example, how much do you want to get into asset allocation and defining risk tolerance? Do you want to use asset class categories, such as equities, fixed income and cash, or do you want to use management style and capitalization categories, such as large capitalization growth, large capitalization value or mid-cap? There are risk tolerance questionnaires available that classify an investor as conservative, moderate or aggressive and various gradations of the three categories under the software manufacturer's definitions.

Remember to ask yourself, once information is produced, do you have sufficient subject expertise to explain the data and address questions that may arise?


After you determine the kind of information you want to generate, you need to make sure the software is capable of creating the type of output you desire. For example, will you want to show clients a professional-looking document with detailed information for monitoring their life goals? Or will simple graphs, tables and spreadsheets with short narratives describing specific solutions be more appropriate?

Many financial planners use Excel and Word to create spreadsheets and documents that address specific financial planning issues. If this is your situation, determine if your Excel or Word schedules and write-ups will flow smoothly with the output from the financial planning software. You don't want your presentations to look like a hodgepodge of different schedules.


Closely review the application's system requirements to ensure your equipment is able to accommodate the software you select. Some financial planning programs require substantial RAM for optimal computing and the ability to quickly switch between multiple modules. If, you don't have enough hard-disk processing space for the application, the program could slow down your computer.

Also, ensure your printer can support the program's output capabilities. It used to be sufficient to produce a professional report in black and white. But with the current emphasis on showing asset allocation and different management styles (e.g. growth versus value), the various shades of gray produced by a black and white printer do not make a clear presentation. If you want the new software to generate color output, then you might need to upgrade your printing equipment, supplies and computer memory.

Another particular consideration is the use of Monte Carlo simulations--a 60-year-old mathematical technique that is making inroads with the financial planning community. Monte Carlo simulations pull planning variables, such as rates of return and life expectancies, from probability distributions repeatedly and then generate probabilities of whether or not a plan will be successful. Running simulations requires significant computing power. Compare different programs' Monte Carlo capabilities to determine how easy the function is to use, understand and present to clients.


It is helpful to understand the logic upon which a software application has been created. Some applications' logic may bias computational answers one way or another. Other applications make assumptions with which you may not agree or which may change how you view or present a particular outcome.

For instance, if you know that excess cash flows from one year to the next have been dropped out of a model, you may change your interpretation of the results. Or, you may alter the way you view output if you know that the recent volatility in growth stocks creates a bias in the software toward an all value asset allocation.

The better you understand the software's underlying logic flow, the easier and faster it will be to produce and discuss the deliverables you and your clients want.


Have I mentioned that are more than 100 financial planning software packages on the market? You can find a listing of the majority of them by going to and searching under Financial Planning.

To narrow down the field of potential applications, talk to colleagues about their experiences with different applications. Additionally, read product reviews and conduct a Web search to find user groups, listserves or discussion forums about the products you are considering.

Experience has shown that you need to test drive the software to really get a feel for whether or not it meets your requirements. Most software providers offer a free trial, ranging from three to 30 days. If you run into a problem, you will have an opportunity to also sample the vendor's technical support, which can be an important factor in your success with the product. Be sure to try both online and call-in support offerings. Also check if support libraries exist on the provider's site.


In terms of whether buying or leasing financial planning software is worthwhile, or whether the price is right, the answer is, as always--it depends. It depends at least on how you want to use you and your staff's time; what services and deliverables you want to present to clients; and how much it costs to make these presentations to clients.

When all is said and done, and you have made your successful presentation to your client, have you accomplished something that is needed and valued by you and your client?

Best wishes in your due diligence in finding the financial planning software that achieves your goals for the right price.

RELATED ARTICLE: Financial Planning Software Evaluation Checklist

Business Requirements

* What is the focus of your business: occasional or comprehensive financial planning, estate planning, investment consulting or investment management?

* What client groups do you serve?

* What kind of information do your current and potential clients need?

* What kind of new information would you like to be able to offer?

Software Capabilities

* What is the purpose of acquiring new software?

* What features must the software have?

* Have you read product reviews?

* Have you browsed vendor Web sites?

* Can you test drive the software before buying it?

* What operating system does the application require?

* How much memory does the application require?

* Will the product run on your computer server without upgrades?

* Are upgrades available online or are they mailed to you?

Cost Considerations

* How much is in your budget for this software?

* Will the software increase profitability provide better service or make your presentations better?

* What is the cost of the software's purchase license or subscription?

* What is the cost of running the software cost for staff supplies and equipment?

* How long will it be useful?

* Is there a charge for upgrades?

* How many computers do you need to license?

* Does the application come with a warranty and what are its conditions?

Operating the Software

* Is the application easy to learn?

* What additional instructions exist for the product nationwide teleconference, online, classroom or telephone assistance?

* Will an easy-to-read hard-copy manual come with the application?

* What are the known bugs or logic inherent in the software that may affect your use?

Technical Support is Crucial

* Does unlimited and timely support come with the cost of the application?

* Does the vendor have a toll-free technical support number?

* Is tech support friendly and helpful?

* Is the support free, or is it paid per time increment or per question?

* Are there any extra charges for tech support?

Jerry Nightingale, CPA, PFS, MBA is president of Palo Alto-based Nightingale Financial Advisory. NFA focuses on achieving financial objectives for high net-worth individuals and small businesses. He is a member of CalCPA's Personal Financial Planning Committee and chair of the Peninsula Silicon Valley Chapter's PFP Committee. Nightingale can be reached at
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Author:Nightingale, Jerry
Publication:California CPA
Geographic Code:1USA
Date:May 1, 2002
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