True innovations in financial planning software don't occur all that often. Zywave, formerly EISI, changed the way advisors did planning in the 1990s with wizards, artificial intelligence, automated report generation and a host of other features. About 10 years ago, MoneyGuidePro erased the stigma of goal-based financial planning by introducing an intelligent, sophisticated approach that continues to be refined.

While it's early in the game, inStream Solutions might be next in this line of financial planning software innovators. It's a free, goal- and cloud-based planning solution for financial professionals. That's right, free.

The inStream platform is still being built out, of course. But it's not too early to highlight the shortcomings of traditional planning software that inStream is trying to address, and the tools they are building to differentiate their product.



Like Junxure, Orion, PowerAdvisor, ProTracker and several other applications used by advisors, inStream grew from the needs of one RIA firm - McLean Asset Management of McLean, Va. - that were not being met by the products available in the marketplace. What McLean was looking for, and what inStream is designed to provide, is a more proactive approach to planning that incorporates, among other things, goal-based planning, best practices and a system that allows advisors to play a more active role in their clients' numerous financial decisions.

In a short period, Alex Murguia, CEO of inStream, has assembled an impressive team. They include Scott Appleby, who's worked at Deutsche Bank, Robertson Stephens, ABN Amro and Paine Webber in various capacities, including as Internet and software services analyst; Bob French, director of advisor services, formerly of Dimensional Fund Advisors; Rajeev Dharmapurikar, CIO, who's worked at AT&T Labs, CTP, Fidelity and the Oak Ridge National Labs; and Andrew Mahon, an honors graduate of the Parsons School of Design who developed the user interface for Make History, a project of the National 9/11 Memorial and Museum. Their top-notch technical know-how, combined with McLean's practical experience servicing high-net-worth clients, makes it seem that inStream is well positioned to execute on its vision.



The company's slogan is "Life Cycle Tools for the Financial Advising Industry." What does that mean?

There are three major principals of the system that differentiate inStream from other solutions, Murguia says. They are proactive planning, the ability to easily coordinate and deliver the appropriate products and services, and crowdsourcing.

Most financial planning software is reactive. You enter data, analyze it, create a report and present the results to the client. That's it. Until the next client meeting, which might be six or 12 months later, it's doubtful you will have any additional interaction with the plan unless the client has contacted you to report a major life change.

But why not put the data lying dormant in the planning software to some use? That's what inStream does. By updating asset values constantly and running Monte Carlo simulations nightly without user intervention, the application can generate alerts that allow an advisor to contact a client whenever a plan moves out of an acceptable range. For example, you can set the program so that any time a computed probability of plan success fall outside of a range of 78% to 93%, you will be alerted.

Maybe a client can benefit from refinancing a mortgage, but only if rates drop another 25 basis points. Or perhaps a client has agreed to refinance whenever the breakeven point after all costs is 12 months or less. Once the alert is set, an advisor would be informed automatically when the preprogrammed conditions were met.

This proactive approach serves multiple purposes. Foremost, it helps an advisor stay up to date on planning opportunities that can drive measurable benefits.

It also creates more opportunities for meaningful client touches. Murguia cites CEG Worldwide research suggesting that 24 client touches per year are optimal, but the quality of those touches matters just as well. Rather than pick up the telephone merely to say hello, an advisor calling with a concrete, proactive suggestion should be better received. It reinforces the notion that a financial advisor is looking out for a client's best interests.

Another differentiator is the ability to deliver appropriate products and services. Perhaps a client is willing to purchase an immediate fixed annuity with a lump sum of $250,000, but only if the annuity can generate at least $1,500 of income monthly from an AAA-rated carrier. An advisor would enter the goal in the system and, when an annuity with the required characteristics became available, the system would alert the advisor.

The company is in the process of building relationships with insurance and mortgage marketplaces, so the system has a wide selection of product providers to draw upon. If taken to its logical conclusion, financial advisors will be able to comparison shop, automatically, for auto insurance, homeowners' insurance and a host of other products.

Yet another benefit inStream will roll out is crowdsourcing. Say you have a new client who's a 43-year-old small business owner with a 40-year-old wife and two young kids. He's got $2 million in liquid assets and two employees.

As you work through a financial plan for the couple, it might be useful to know what other inStream users have done. Perhaps 93% of your peers recommended a Roth 401(k) for clients in similar circumstances. Wouldn't you like to know that to ensure you haven't missed an opportunity?

Perhaps similar clients carry an average of $5 million in life insurance, but your client only has $2 million. Just because others have made a particular choice doesn't mean that it's appropriate for your client, but wouldn't that be useful to know?



Although Microsoft Outlook does not qualify as CRM software, 23% of respondents to Financial Planning's recent annual technology survey said they used it as their CRM. So it's no surprise that inStream includes some contact management capabilities into its platform that can synchronize with Outlook.

The sum of the information contained in the contact management portion (personal demographics, family members, network outside the family), assets, goals and exploration (a client's values and interests) comprise the client profile. One function unique to inStream is its creation of a mind map of a client profile. If you appreciate the utility of mind maps but don't have the inclination to jump to a second application to reenter data in a mind mapping application, this functionality will appeal to you.

The application includes calculators for common tasks like figuring the maximum mortgage clients can afford, a mortgage prepayment calculator, a refinance breakeven calculator and insurance calculators. Not only do these calculators allow financial advisors to answer common client questions quickly, they also allow advisors to deliver the results to clients in an easy-to-understand PDF format.

As for the core planning application itself, it is a solid goal-based planner, but inStream only possesses 75% (or perhaps less) of the capabilities of category leader MoneyGuidePro. Yet the interface is well designed so that navigation and data entry (when necessary) is easy.

Ideally, inStream will integrate with your portfolio management software, your CRM (if any), and your custodian, so data entry will be minimized. Already, inStream integrates with Schwab PortfolioCenter. Integration with Orion Advisor Services is imminent.



By the company's own admission, the product is a bit light on the planning side. There's no great impediment to enriching the goal-based planning portion, however, and it's likely the firm will do what needs to be done if users demand it.

The crowdsourcing functionality has not yet been rolled out because inStream is holding off until the company has sufficient data, which should be soon. While the idea has a great deal of appeal, there are questions about how it will work on a practical level. Without knowing who else is on the system, it's difficult to evaluate the soundness of the crowd's actions.

Let's assume there's a normal distribution of knowledge among users. Crowdsourcing will be very helpful to below-average users, but not so much for those at the other end of the curve. How will those better financial planners feel about sharing their hard-earned knowledge with the lower end?

Or, for example, let's assume that inStream licenses to a large institution that serves a less-sophisticated clientele. How much use is the crowd going to be to high-end financial planning firms? The idea has appeal, but it may turn out to be much more useful for some users than others.

The idea of the marketplace also has great appeal, but again, success will hinge upon execution. Will inStream be able to attract the best and most cost-effective providers to its platform? If so, will the company impose charges on the providers that diminish their price advantage? If top-ranked, low-cost annuity and life insurance providers, for example, do not participate, its value will be questionable.

In order for the inStream crowdsourcing or marketplace to provide value, they must attract a significant number of users quickly. The company appears to be off to a good start, but it's not operating in a vacuum.

MoneyGuidePro has been working on a third-generation product for some time. I've had a chance to test some of the features - they're impressive. A second- or third-quarter release is likely.

MoneyGuidePro has offered alert capabilities similar to that of inStream for some time for institutional clients, so it wouldn't be surprising if they chose to offer it to RIAs, as well. Version 3 will offer a type of crowdsourcing, but it's far different than the approach taken by inStream.



The company has the potential to be the next big thing in financial planning software, but inStream Solutions faces some substantial challenges to get there: It needs to get the crowdsourcing and marketplace pieces right, and it needs to fend off established, competent competitors such as MoneyGuidePro, Zywave and FinanceLogix, all of which have a history of innovation and responding to the marketplace.

My recommendation? Sign up for a free inStream account and get an early glimpse of what the financial planning software of the future may look like.


Joel Bruckenstein, a Financial Planning editor-at-large, is co-creator of the Technology Tools for Today newsletter and conference series, and president of Global Financial Advisors in Miramar, Fla. For details and contact information, visit

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