Michael Kitces writes about the ongoing evolution of financial planning software. His article begins as follows:
For much of its history, financial planning software was basically just an elaborate calculator. Advisors could gather client data, feed it as input to the calculator tool, and the software would spit out the projected results… which were then used to facilitate the sale of a product.
As financial planning has evolved to be primarily about the delivery of advice itself – not just for the sake of a product sale – so too has the software evolved, from a calculator to illustrate the outcome of a product or strategy recommendation, to a collaborative tool that can be used to formulate the client’s plan itself. After all, given the complexity of an uncertain future, it’s hard to really understand what path to pursue, until the client first analyzes a range of scenarios to understand the opportunities. Accordingly, financial planning software has increasingly become a tool for real-time collaborative scenario planning.
In the future, though, financial planning software can and will progress further, from a tool that supports collaboration at a single point in time, to one that truly supports continuous planning for the reality of continuous change we face in our lives. Imagine a holistic personal financial management (PFM) solution for clients, that simultaneously operates as financial planning software for the advisor, all continuously updated from external data flows, making it feasible for the advisor and client to see the milestones and recommendations that have already been accomplished, and whether the client is on track in progressing towards goals of the future.
Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.