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Cash-flow-based software, on the other hand, tracks every dollar that comes in and out of your clients' households. Rather than focusing on cash flow toward specific goals, cash-flow-based software will track how your clients' resources are flowing across all spending categories.
While this creates a more thorough analysis than goals-based tracking, it can be tedious to input and project every dollar. To determine if you would be better served by goals-based or cash-flow-based software, consider the type of planning you want to provide for clients. When shopping for a financial planning software, you also need to understand your clients' needs , so you can find the tool that works best for them, Amore says.
Advisors whose core client base is complex families need a different software than those who work primarily with simple households. Likewise, higher net worth clients have different planning needs than those with fewer assets to invest.
Planning tools also vary in sophistication. If your clients prefer paper communication rather than digital, you may want to look for a software that can support this. Kane Polakoff, national practice leader for UHY Advisors' Client Accounting Advisory Service in Farmington Hills, Michigan, tells advisors to look for "an intuitive system that's easy for your clients to learn and utilize. Polakoff recommends a system that's supported on all devices, including desktop, mobile and smart devices, and allows you to communicate with clients based on the level of sophistication required.
It should also align with the level of sophistication you want to use in constructing the financial plan. A sole practitioner may not want a planning software that requires extensive data input or time to generate a plan, whereas a larger firm likely has the tech team to support more complex planning capabilities.
Amore suggests considering the importance of ancillary planning services , such as a client portal or account aggregation, as part of your offering and looking for a software that provides this. Polakoff recommends any software you use has an open architecture, which allows data to flow between different software packages.
For example, MoneyTree lets advisors extract information from other systems such as Black Diamond to use for planning purposes. This will let you provide more robust reporting, he says.
He also tells advisors to confirm any financial planning software they use can run Monte Carlo simulation analysis. This will allow you to determine the probability of a range of possible outcomes rather than simple straight-line analyses based on a flat annual return. Another important aspect to consider is the software's security capability. As advisors are increasingly moving to cloud-based planning, keeping client data digitally secure is paramount.
Polakoff says to look for a software with "strict security protocols to protect client information" such as two-factor authentication. Options trading involves risk and is not suitable for all investors. Options trading privileges are subject to Firstrade review and approval. Please review the Characteristics and Risks of Standardized Options brochure and the Supplement before you begin trading options.
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A mutual fund or ETF prospectus contains this and other information and can be obtained by emailing service firstrade. A sole practitioner may not want a planning software that requires extensive data input or time to generate a plan, whereas a larger firm likely has the tech team to support more complex planning capabilities. Amore suggests considering the importance of ancillary planning services , such as a client portal or account aggregation, as part of your offering and looking for a software that provides this.
Polakoff recommends any software you use has an open architecture, which allows data to flow between different software packages. For example, MoneyTree lets advisors extract information from other systems such as Black Diamond to use for planning purposes. This will let you provide more robust reporting, he says. He also tells advisors to confirm any financial planning software they use can run Monte Carlo simulation analysis. This will allow you to determine the probability of a range of possible outcomes rather than simple straight-line analyses based on a flat annual return.
Another important aspect to consider is the software's security capability. As advisors are increasingly moving to cloud-based planning, keeping client data digitally secure is paramount. Polakoff says to look for a software with "strict security protocols to protect client information" such as two-factor authentication. He also suggests asking software providers about their security policies and procedures: How often are they reviewed and updated?
What security testing and assessments do they run? How is data stored? Advisors should consider these key criteria:.
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