From the February 2008 issue of Wealth Manager Web • Subscribe!

The Big 5

The story of financial planning is also the story of technology, as the two have evolved hand-in-hand over almost three decades.

In 1981, both technology--as we think of it today--and financial planning were in their infancy. On the technology front, the big news was IBM's new "Personal Computer" and for those inclined to work with numbers, Lotus 1-2-3, a "spreadsheet" that could be used to automate virtually any analytical exercise.

On the planning side, the College for Financial Planning was nearly 10 years old. But more importantly, in just one decade, its curriculum had presented the possibility of creating a new profession--like law or medicine--based on financial knowledge and advice.

In the early 1980s, a high-tech advisory practice consisted of an office with one or two non-networked PCs running 640K RAM (random access memory), a 10MB hard drive and copies of Lotus and Word Perfect. Users needed to master the cryptic language of DOS in order to navigate through file directories, each with a name limited in length to eight or fewer characters. The Internet was nowhere in sight. (It had, by then, been invented, but still ahead of then-Sen. Al Gore's influence, was not yet in widespread use.)

Our industry's use of technology was confined mainly to writing letters to clients on a computer screen, where they could be corrected before printing--an upscale version of an electric typewriter. Some of us were even using spreadsheets to calculate the present value of the income stream we guessed a client would need in retirement.

Personally, I'm happy to have lived through this period. It's been exciting to watch my own work as a financial guy take me from the days of legal pads and HP 12C hand-held calculators to Core Duo processors and beyond. Yet with all of today's advanced technology and dramatically heightened productivity comes the requirement to climb a never-ending learning curve while protecting our flanks from security threats never anticipated almost three decades ago.

And that's why 2008 brings us a new set of challenges--five big tech trends you should be aware of and on top of to keep your shop up-to-speed: Client Portals, Remote Computing, Rebalancing Software, Software Integration and Security.

Client Portals

Client portals are nothing new, but the direction in which they are changing is.

First made possible by companies producing Web sites for financial advisors--companies like AdvisorProducts Inc. ( and Lightport, Inc. ( advisors thought a client portal consisted of a page on their Web site that permitted password-protected entrance to clients enabling them to link to the Web site of a custodian--like Schwab or Fidelity--and view their latest portfolio balance. Considering all of our current technological opportunities, this now seems an unambitious usage, at best. However, savvy advisors are finding new ways to squeeze as much value as possible from their client portals.

Today, clients can access not only investment holdings, but all manner of financial information customized to their needs and desires. For example, Jordan Dechtman of Jordan Dechtman Wealth Management in Englewood, Colo. employs what he calls "Wealth Check," a system made available to him by Securities America, his broker/dealer. "The design is structured so that it is 'One Click, One View, and Total Access' to our client's entire financial picture," explains Dechtman. "Wealth Check provides one-click online access to all of their important financial information, including bank, investment, credit card and other accounts," he adds.

Expanding the breadth of financial information captured within a client portal is valuable, of course, but there is even more the client can do. "Wealth Check offers document storage for such items as clients' tax returns, personal records and legal documents--wills, marriage certificates, birth certificates--in a secure, paperless environment. It also gives clients the ability to run reports of their entire financial picture--updated and refreshed each day."

Build it and they will come--maybe. Kenny Landgraf, president and founder of Kenjol Capital Management LLC in Austin, Texas says, "Attempts to give clients a portal have been disappointing. Most clients will log on to, but when we have attempted to set up a client-specific site, we end up doing a lot of work for very minimal use."

Yet, Dechtman reports a different experience: "We have had tremendous feedback with this added value service. Our older clientele travels quite a bit, and they have told us how valuable this tool is in tracking their data and ultimately being able to share information with other family members and advisors who need access to it."

When clients of Huff, Stuart & Carlton in Forest, Va. sign onto their portals on the firm's Web site, they see their photo, address, phone numbers and email addresses, with the flexibility to update this information. They also gain access to a file cabinet where they can find folders containing quarterly performance reports, copies of their tax returns, their estate planning documents, their Investment Policy Statement and folders for other random information like credit card numbers.

"These are on our server," says Rick Huff, "so we know the data is secure." Do clients use it? "Feedback has been very good, and about 60 percent of our clients use it in varying frequencies. For example, the daughter of a single client used it recently to retrieve an Advanced Medical Directive when her mother was hospitalized while traveling. We continue to inform and remind our clients of its availability."

J. Patrick Collins Jr., a principal with Greenspring Wealth Management, Inc. in Towson, Md., says his firm created its own client portal dubbed MyGreenspring using Microsoft's Sharepoint program. "MyGreenspring is meant to be collaborative," Collins explains. With the client's permission, we give access to his CPA, attorney, insurance agent, etc. These professionals then have the ability to upload new documents or work on old documents in the client folder. Finally, we send an email to all interested parties when a new document is uploaded or modified."

In time, client portals will come to be appreciated by advisors much as email has. Just as email has proven its value by reducing time wasted in lengthy phone calls with clients and associates--while maintaining a written record of their communications--client portals will relieve staff members of much of the time-intensive and costly client hand-holding that goes on in any financial planning practice.

Remote Computing

Remote computing used to mean taking work home on your notebook computer, a device that wasn't even widely available until the late 1980s.

Now, it means working at a distance from the source of one's data, whether the data are stored on a company server across town or the server of a hosting entity halfway around the world. Says George Papadopoulos, CPA/PFS, CFP, a Novi, Mich. advisor: "I took my family to Europe for three weeks this summer. I had with me a USB mini-drive with my RoboForm2Go ( software loaded with all my passwords. There are plenty of Internet cafes everywhere, so I was able to pop in my mini-drive, log into GoToMyPC (, and use my desktop computer at my home office. It worked wonderfully, and I didn't have to haul my laptop and cords with me."

Whether traveling on vacation, living in a foreign country for six months of the year, or just working from home on a Friday afternoon, remote computing is a trend that can only grow. It has taken forever, but many corners of the business world now accept the fact that employees can maintain (and even enhance) their productivity working outside the office, away from the constant gaze of their supervisors.

Joyce Smith Cole's planning niche--horse owners--requires that she spend the winter months in Ocala, Fla., away from her horse farm in Saratoga Springs, N.Y. "I work from my Living Quarter Exiss trailer which is tricked out with sleeping and cooking accommodations, water, electric, and bathing amenities. If I don't have an electric hookup at the site, I have a generator to power FM radio, TV, CD player, cooking, pumps and computer. I have a mini-office setup in it so I can work every day, fielding client calls by cell phone and computing via Verizon Broadband wireless on my Dell XPS M1210."

Frank Moore, of Vintage Financial Services LLC in Ann Arbor, Mich., spent 10 weeks at his Lake Michigan beach house last summer plus three weeks at conferences and another three weeks on vacations. Moore keeps in touch with staff back at the office with AOL Instant Messenger from his laptop, and CentralDesktop (, a collaborative online site that allows employees--wherever they may be--to share the latest news on clients, lists and status of prospects, folders for company files like vacation policy and other information used daily. "We use Central Desktop's calendar to schedule vacation time and conference room use, among other things," says Moore.

The point being: We are no longer chained to our desks (and, if you are, it's your own fault). Whether you're a firm owner or an employee, remote computing capabilities will be tried and used because they are what's allowing us to spend more time with our families and non-work interests while still taking care of our clients. With remote computing, we can have a life.

Rebalancing Software

Traditionally, one of an investment advisor's greatest inefficiencies has been the rebalancing process. Commonly used portfolio management software products like Advent and Centerpiece, as well as the major custodian trading platforms, have failed to address this gap in the management process--a gap that has been particularly resistant to modernization.

Good software in this niche is not inexpensive, either: iRebal (, for instance, costs a minimum of $50,000--with a $10,000 setup fee. Yet advisors in all but the smallest of operations are realizing that $50,000 isn't much compared to the personnel time they can save. Michael Kitces, director of financial planning for Pinnacle Advisory Group in Columbia, Md. says, "iRebal allows us to execute our entire trading strategy in a way that's both radically more efficient and higher value for our clients for whom we're able to get better execution." The firm's senior portfolio analyst, Rick Vollaro, adds, "iRebal lets us manage our entire trading operation--involving 550 clients [and all their accounts]--with just one employee. Before iRebal, we had three full-time traders and still had instances when a full block trade for a portfolio change could take a week or more, depending on how complicated it was."

Those who can't afford an iRebal, but have the skills to develop their own rebalancing systems, will do so to advantage. That's the approach Rich Chambers of Investor's Capital Management in Menlo Park, Calif. took when he developed his own rebalancing system. "Our program makes viewing a client's asset allocation easy and error free. For example, when a client adds $10,000 to one of their accounts, using the program makes it possible to quickly view the current asset allocation across all client accounts, decide which asset classes need the cash, enter the trades, and upload and submit the trades in less than five minutes. Without the program, it would take us 30 to 45 minutes and be far more error prone."

Thus, this one efficiency "hole"--the need for seriously labor-intensive efforts to periodically rebalance client portfolios--will be addressed by more advisory firms, if not by iRebal, then with products like Tamarac (, or eAllocator, developed by Joel Javer, a principal at Sharkey, Howes and Javer in Denver, or other homegrown systems.

Software Integration

The history of software integration highlights our industry's greatest area of technological inefficiency--one that transcends even those long-needed rebalancing systems.

We don't know if all industries struggle with this problem, but the need to enter duplicative information in multiple software systems or, conversely, the inability of our key software products to "talk to each other" has persisted for almost 30 years. Finally we're seeing a change.

Two strategies are possible, and both are being pursued by a community of software developers. The first--the all-in-one, do-everything system--is exemplified by Solution 360O by Interactive Advisory Software ( IAS, as it is referred to simply by most advisors, brings together financial planning, portfolio management and client relationship management capabilities in one, Web-based, very compelling system.

What happens, though, if you already use software for one or more of these functions that contains many years and millions of bytes of client information, and handles it--you believe--in a manner superior to anything else on the market? Then you urge the software's developer to do what's necessary to integrate that software with other products you don't care to abandon.

Javer, developer of the eAllocator rebalancing system, also uses Junxure for CRM and dbCAMS for portfolio reporting. "Both of these products are 'Silver Bullet' participants. The integration [of these products] allows us to view client portfolios and accounts in Junxure, which is a big help for our staff," Javer points out.

The "Silver Bullet" to which Javer refers is actually the YourSilverBullet ( consortium of 22 independent software companies and custodians that joined together in March 2007 to carry out the mission it describes as giving you "...the freedom to select the best software for each of your core applications from different vendors without paying the price of repetitive data entry and system incompatibility" and "to make our separate programs 'play well' together so that you can spend more of your time managing your client's money and not managing incompatible software." (For more on this venture, see "Hi-Yo Silver" on p. 42.)

Integration has been a perennial challenge for our industry. Now we have the tools and choices to achieve integration at a much higher level than ever before possible. And the benefits will be obvious in your bottom line.


We said it in the beginning of this article: Thanks to all the new capabilities we have, we now must spend commensurately more time protecting ourselves from security threats that--without the Internet--were much less of an issue in the early 1980s when the first PCs arrived. Security is the overarching issue that encompasses the other items.

Think "disaster plan." Required by regulators and dictated by common sense, an advisory firm owner must now know exactly what she and her team will do if their office burns to the ground. In fact, what would you do? Devise a plan and, better yet, stage a drill. Call your employees early one morning, have them pretend the office no longer exists, and tell them to carry out the firm's disaster plan.

Don't have one? Then you expose yourself to downtime, at best, and lawsuits at worst, when client data is leaked all over the Internet. Don't know where to start? Start where most advisors do with the hiring of a reputable, outside IT consultant--practically a necessity in today's complex computing environment--even for the smallest advisors.

In conclusion, this year's five tech trends are "big" because they either help us cut operating expenses, augment our lifestyles or prevent costly accidents. And if they make you groan instead of grin, I've got a circa 1981 Osborne computer I might be willing to let go.

An independent financial advisor since 1981, David J. Drucker, MBA, CFP is a prolific journalist whose work can be accessed at

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