© 2020 Arizent. All rights reserved.

Are You On Team Excel, or Not?

Register now

Who says spreadsheets are boring?

In a story published last week, "Advisors, Let Go of Excel," Financial Planning contributor and industry executive Brian Leitner fired a warning shot to advisors who were still relying on Microsoft spreadsheets instead of modern financial planning software to perform basic planning for clients: "By not fully adopting the capabilities of [financial planning] software, you run a very real risk of becoming obsolete in the near future."

The senior vice president of practice management at Mariner Wealth Advisors touched off a passionate debate among readers, some extolling the virtues of Excel and dead-set against financial planning software, others firmly in the view that financial planning software was necessary for advisors to remain relevant in the future.


"Last year we took a look at all of the comprehensive financial planning software programs with an open mind and pocketbook," a reader named Sharen S. posts. "As a fee-only, analytical, and very experienced planning firm, we were very disappointed.

"Most of these programs are showy and very confining: they are meant to be sales tools not true planning," she writes. "So back to Excel. By the way, I've been a CFP for 30 years, and my CFA partner is in his sixth year. I agree with the commentor who says that clients want simple answers. But I would say that most clients want you to do the analysis, show the work and then give them the bottom line."

Read more: Kitces: Does Planning Software Go Too Far, or Not Far Enough?

Another Excel supporter argued that the spreadsheet software is very powerful in the right hands.

"If you really know Excel well, you can out do most of the financial planning software and maintain control," posts a commentor named Harlan F. "By knowing it well, I mean being an advanced user that understands pivot tables, use of macros, programming in visual basic and being able to integrate monte carlo simulation. Excel is an extraordinarily powerful tool if you know how to use it. I would add to this that most clients do not care for detailed analysis and want to have simple answers that make sense."


One reader argues at length that advisors suggesting the Excel can do the same job of financial planning software don't understand the difference between using spreadsheets and using data visualization tools. 

"Comparing a spreadsheet to a planning program is like comparing a golf cart to a Mercedes sedan," posts a commentor named Gene K. "Both can haul four adults quickly, but the differences are dramatically apparent over time and distance.

"I use spreadsheets for focused data analysis across clients when the tool does not exist within a program, but never for projections into the future. Clients have too many moving parts (social security, pensions, income, away accounts as well as managed ones), all of which start and stop at different times to use a spreadsheet easily to answer questions at specific points in the future.

"Moreover,most cash flows react differently to stressors (early death or disability), so stress testing is virtually impossible in a spreadsheet. Find a decent planning program or you will find your advice to be not very helpful the farther into the future you go."


In his blog, Leitner noted that according to the last Financial Planning Technology Survey, approximately 25% of the respondents were not using financial planning software. And, in the prior year survey, almost a third were not using planning software.

Read more: The eAdvisor Cometh, is Your Firm Ready?

A commentor named Dave K. posts that he has seen this disconnect.

"I work with advisors all day every day (I work for a planning software company) and the number of those not using anything or just using spreadsheets is surprising -- especially when you consider the time spent preparing a financial plan or updating when using spreadsheets."

Is it really a question of which tool is better, or rather a generational issue regarding technology use and attitudes toward serving clients, suggests one reader.

"Are the 25% of advisors who don't use financial planning software doing comprehensive financial planning?" asks a commentor named JWM.

"I know a bunch of advisors who give lip service to financial planning, but are just AUM collectors," he adds. "I also turned away a client once who came in with an inflation-adjusted Excel spreadsheet that I told him was better than the current financial planning software on the market. So I guess it all depends on what the advisor is trying to do. Is use of Excel more correlated to advisor age or to advisor cost management?"

For reprint and licensing requests for this article, click here.