As the financial planning industry matures and evolves, so does the technology it relies upon. You might be surprised to find that software systems you once found tangential to the success of your practice are gradually becoming essential. Thus is the evolutionary process.

In the early days of financial planning, advisors mainly needed software just for financial planning itself. However, in those early days, the industry hadn't evolved to the point it has now. Financial planning was about selling products, and financial planning software was designed to support that effort. As the industry has moved toward true planning-the analysis of clients' financial affairs in order to apply strategies for success-financial planning software has kept up with the need for intelligent solutions to client problems by moving beyond a product emphasis to one of problem-solving.

Today, the financial planning software advisors use is exemplified by solutions such as NaviPlanSelect (, MoneyGuidePro ( and Finance Logix (, which embody the analytical sophistication needed for today's more advanced financial planning effort. Software designed to promote the use of products is on the wane except, perhaps, within the wirehouses.

As financial planning has evolved, requiring the use of better software tools, so too has "wealth management." In its infancy, the management of client assets wasn't seen as essential to the financial planning engagement. Because financial planning was product heavy, commissions from product sales were adequate compensation to the financial planner, who was almost certainly licensed to sell insurance and investment products.

However, over time, advisors who made their clients' success the primary focus of the planning relationship reasoned that a full-service offering to clients must include asset management. This conclusion was the result of the fact that financial planning was evolving into an ongoing service rather than a single transaction designed to line planners' pockets with commission dollars. If the plan was good, reasoned these advisors, then managing client assets to make the plan come to fruition was even better.

The Move to Outsourcing

Early on, advisors performed portfolio accounting with software products like Advent Axys ( and Centerpiece/Schwab PortfolioCenter (www., which are still in use today. What has evolved along with the industry's move toward wealth management is the way in which portfolio accounting is done. Eschewing desktop, in-house portfolio management systems, many advisors are now realizing that the economics are such that outsourcing portfolio accounting is perhaps a better way to go.

Companies like Black Diamond Performance Reporting (, Orion Advisor Services (, AssetBook ( and Morningstar Office ( represent software-as-a-service solutions that largely automate the process of trading and accounting for trades. Because working with one of these providers constitutes an outsourcing relationship whereby much of the work in running and maintaining the portfolio software is done by the outsource company rather than by internal staff, there are substantial savings to be had. Thus, most advisors not only manage clients' assets today, but they also report on them with an ever-increasing reliance on outsourced solutions.

Beyond Names and Numbers

In the "dialing for dollars" era, what we now know as client relationship management (CRM) software was a rolodex sitting on the advisor's desk. With the advent of personal information managers (PIMs), the advisor digitized the Rolodex with a computer-based solution, but still used the PIM mainly to store names and phone numbers.

CRM software replaced PIMs bringing greater functionality to the PIM software. With early CRM systems, the user could store more information than just names and numbers. The advisor could click on a client's record during a phone call and see useful information like children's names, the client's birthday, hobbies, etc. But this greater functionality still didn't approach that of today's CRM options, which have become more advanced to meet the needs of a growing industry.

Advisory practices are evolving not just in the sophistication of their planning and management services, but in size as well. Whereas the early planners tended to be solo or very small operations, those firms have grown substantially. It is not uncommon for planning firms to manage billions of dollars with a staff of 20 or more employees. This growth has brought with it the need to establish strict internal processes that must be followed consistently by all employees.

And today's CRM options are up to the task. Products like Junxure (, ProTracker Advantage Desktop ( and Redtail CRM ( systems geared specifically to financial advisory practices- feature robustness not present in early CRM offerings. Advisors can use these software products to go beyond just maintaining contact information for the firm's clients; these CRM offerings permit workflow/process management, document management, email management and overall information management such that users can respond more quickly and effectively to requests for information flowing from client interactions.

Farewell to Paper

The evolution of CRM solutions is really the evolution of efforts to better manage information-the financial planner's raw material. In earlier days, information was almost exclusively paper based. Within the planner's office, this took the form of never-ending file cabinets devoted to the storage of client documents, research materials and corporate records. Now, information comes from a multitude of sources, many of them internet based. The office that still runs on paper must convert internet based information to paper, a decidedly inefficient process. A better process is converting paper to a digital format.

Ten years ago, the so-called paperless office was considered a nice-to-have technology. Today, as the industry has morphed into information management entities, the digitizing of information is essential not just to space management within the office, but to client service and competition. Digital records are easy to create, easy to duplicate and back up, and most important, easy to retrieve. The ability to retrieve information quickly is a necessary component of superior client service and enlightened firms have recognized this.

Thus, the paperless office isn't nice to have, it's essential. And, whereas the advisor's choice of paper-scanning technology was limited to off-the-shelf products 10 years ago, today products abound for advisors, such as those by Laserfiche Avante (, iNautix Document Management (, Trumpet Inc. and Worldox Document Management Software (, NetDocuments ( and CEO Image Systems' Executive Assistant (

Future Must-Haves

What's next on the evolutionary horizon? That is, what's the next new technology that advisors will initially view as interesting and later view as indispensable? Is it rebalancing software such as iRebal, Tamarac, Total Rebalance Expert and others? The use of tablet PCs in client-facing activities (e.g., Apple's iPad)? A software solution for the creation of Investment Policy Statements (e.g., IPS AdvisorPro)? The use of online client portals, like those offered by many of the companies now building advisor websites? These are just some of the technology candidates that will evolve in the future from nice-to-have to must-have status.

The question is, will you keep up with these new developments or get stuck in the past? There are 1,001 roadblocks to implementing new technology: It costs too much, it means having to convert an old system to a new system, it requires training of all employees and so on. Yet, when all the benefits are weighed along with the apparent costs of new technology, those benefits will be the deciding factor. What we can say for certain is that advisors will continue to evolve both in the sophistication of their business practices as well as the technology that supports them.

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