I recently posted a summary of the Financial Planning Software Panel from the Tools and Technology Today (T3) Conference that took place in Miami last month. The responses from the four vendors were quite enlightening and I thought it would be interesting to hear from a few other vendors who couldn’t be part of the panel.
The first vendor to get back to me was Fiserv. I spoke with Pierre Bossaert, Vice President, Product Management of their Financial Advice Management group. This unit was created after Fiserv’s purchase of AdviceAmerica in 2010. I asked Pierre the same questions that were discussed in the T3 panel.
What is your firm’s approach to financial planning?
Fiserv believes that financial planning should be the cornerstone of an advisor’s product recommendations, Bossaert began, so the decision was made to integrate their financial planning software products into their industry-leading middle and back office advisory solutions. This end-to-end platform has improved advisor efficiency and reduced implementation time, he said.
According to Bossaert, Fiserv’s financial advice software is flexible and can cater to the different needs of partners and end clients. For example, AdvisorVision, their financial planning tool, offers comprehensive, goal-based financial planning that can scale from basic to advanced needs. Retirement Illustrator, an interactive retirement planning tool, analyzes income and expenses in retirement using a unique methodology for assessing potential vulnerabilities and demonstrating solutions to help avoid catastrophic risks. Their Proposal Generation Manager product focuses on portfolio analysis by dissecting an investor’s current portfolio and highlighting areas that diverge from the client’s risk profile. This allows the advisor to construct and propose a more suitable portfolio.
Does your software offer multiple methodologies that advisors can choose from when modeling retirement income needs for clients?
AdvisorVision assesses the needs of the individual in two phases of their lives: accumulation towards retirement and decumulation in retirement, Bossaert said. This methodology recognizes that clients have different concerns prior to retirement (savings) than during retirement (income) so the system provides the advisor with the choice of planning for one or both depending on the needs of their clients. Their system also gives the advisor the choice to include retirement stages in the distribution phase to highlight how spending and incomes change from early, mid, late and survivor transitions for a more realistic conversation about spending and income needs across the entire retirement horizon, he said.
The Retirement Illustrator application uses a different approach, Bossaert explained. Rather than a deterministic forecast, it uses Monte Carlo Simulations to forecast poor, average and above average market conditions. It then overlays long term care, longevity and survivor needs scenarios, allowing the advisor to illustrate the most common risks and the best way to solve for them. It is a highly interactive and visual client and user experience, intended to be part of a face to face engagement in which an advisor can model multiple planning scenarios on the spot, he said.
How important is ease of use in your software design?
Bossaert replied that ease of use is essential in any software design. If the user experience is poor, adoption will be too, no matter how feature rich it is. Fiserv develops software for the end-consumer so it has to be easy to use and they don’t lose sight of that when developing software for financial advisors. Simple, yet powerful is the foundation of their software, he stated.
In addition, with their commitment to flexibility in software design, they have developed extensive web services enabling their partners to create their own user experiences powered by Fiserv’s sophisticated planning engine, Bossaert asserted.
How does your software handle the uncertainty that is part of every plan?
There is no algorithm that can predict all the events and changes that will occur throughout a person’s life, Bossaert emphasized. However, software can generate scenarios to uncover many common vulnerabilities that can be addressed before they have catastrophic, financial impact on one’s life, he said.
For example, running thousands of Monte Carlo simulations with different market returns and inflation projections helps to illustrate market risks and promotes the use of a diversified portfolios with adequate financial cushions, Bossaert explained. This helps clients weather the ups and downs of the market, he said.
Their software can assist advisors to mitigate other uncertainties such as emergency fund planning, survivor needs assessments and disability analysis. At the end of the day, planning is about providing peace of mind to navigate through the uncertainties of life, he observed.
Additionally, planning should never be regarded as a onetime event or a single “plan”, Bossaert cautioned. Planning is a means of evaluating one’s ability to achieve the things that really matter and applying the discipline to realize those dreams. Eisenhower said it well, “when going into battle, the plan is useless, but planning is essential”.
Financial planning is an on-going process, he observed. There will always be unpredictable events that force clients to re-evaluate and re-negotiate their goals for the future and how to achieve them. The real value of an advisor is to be there to help the client navigate those events and keep them on track, even as their goals change, he said.
Software is an essential tool to define, quantify and qualify a person’s long range dreams and prepare them for uncertain risks, Bossaert asserted. Good software makes planning easier to assess, solve and monitor. AdvisorVision includes a monitoring section and progress reporting to enable ongoing conversations and help clients remain on track and focused on the big picture, he stated.
How does your product handle risks?
Risk management is a key focus of their software, Bossaert insisted. AdvisorVision comes with functionality to analyze debt management, survivor needs, long term care, disability, emergency funding and Monte Carlo analysis. Each are designed to expose vulnerabilities visually and contextually so advisors can help clients understand the risk and take action to address them, he said.
Retirement illustrator was designed to address the four biggest concerns of retirees: market risk, longevity, healthcare and survivor needs, Bossaert noted. With multiple, unlimited scenario capability, advisors can propose solutions to insure the highest probability of reaching their desired retirement lifestyle.
Fiserv is continually searching for ways to streamline the advisor experience, automate the planning process and reduce the need for manual and redundant data entry in multiple systems, Bossaert responded. To this end, they have added automated business logic, called Advice Rules, which allows the advisor to personalize the relevant solutions that are specific to the client’s circumstances, he said.
Another helpful feature they incorporated is automated daily pricing and portfolio updates, which generate email alerts to inform advisors and clients of changes in their situation. In addition, they have integrated several data adapters to import data from external source, which reduces the need for manual entry, he observed.
Fiserv’s Unified Wealth Platform (UWP) is designed to make it easier for advisors to bridge the gap between advice and implementation, Bossaert claimed. Advisors can move from goal planning to investment proposals to execution to performance monitoring in one seamless platform without the error prone and time consuming process of data entry in multiple system, he concluded.