When it comes to planning, Excel is old news

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Most advisers say that they provide clients with comprehensive wealth advice, but is that really the case?

And if they do provide wealth advice, how is it done? What tools do they use?

It is very difficult to provide advice without the right technology.

Interestingly enough, according to the most recent Financial Planning Technology Survey, about 25% of respondents said that they don’t use financial planning software, and, in the prior year survey, almost a third said that they didn’t.

So why the disconnect?

It exists because there are advisers who plan on the back of a napkin and consider that comprehensive planning. This method generally results in using a rule-of-thumb methodology and perhaps leveraging a financial calculator to solve for a number or projection.

This isn’t comprehensive planning.

Another possibility for the disconnect is that while we have access to powerful tools, very few know how to use them to their full potential. Aside from not maximizing planning software, advisers often deliver basic planning with spreadsheets.

The rationale for these decisions is often attributable to already having access to Excel, readily available formulas, the ability to customize assumptions, and/or the ability to easily brand the reports and control the way the message is conveyed.

Using Excel, or another calculator, rather than a financial planning program often is telling of the services that the adviser is really providing. Even when Excel or a similar calculator is used, much like true planning software, it isn’t fully applied.

When considering the varying client situations that advisers face, a spreadsheet isn’t an effective way to run a scalable business.

There are many reasons to use the financial planning technology that is available, including:

1. It aids in delivering advice. There is a great deal of complexity in articulating to a client what the next 30 years of their life might look like and how strategic decisions they make may affect their future. Showing them a variety of scenarios based on their level of risk and their goals is very difficult to do in general.

2. Efficiency. Having client data within the financial planning software allows advisers to share that information with the entire ecosystem of tech applications. In other words, unlike Excel, once the information is in the software, users may be able to leverage that existing data to gain a much greater perspective of the overall book of business.

The analytics and intelligence alone can pay for the cost of the program many times over.

3. The look and feel. Some of us turned in an answer to a complicated question for high school calculus on a folded piece of paper. Then, we saw others with phenomenal looking projections and beautiful charts wrapped in plastic binding.

Who impressed the teacher? Today, the teacher is the client, and by presenting a plan in a manner that resembles high school homework assignments results in being poorly perceived.

With automated advice platforms now a standard offering, the easy assumption is that technology is being universally adopted by advisers. Key insights from our annual Tech Survey, though, challenge that notion.
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When advisers position financial planning as the primary service they provide, they need to demonstrate that expertise throughout the entire client experience. It becomes the center of how an adviser conducts his or her business, runs meetings and interacts with clients.

Changes like this can have a huge impact on how clients and prospects view advisers. The plan, and your client’s ability to attain their goals, is how advisers should be judged, rather than being judged based on quarterly market fluctuations.

Financial planning and clients’ individual situations are becoming more complex.

The good news is that financial planning software vendors are innovating and developing their platforms faster than ever. For many, these vendors become true partners to advisers in helping them build their business.

Although there have historically been some good reasons for using customized Excel reports instead of a financial planning program, the advantages now available in the premier software packages outweigh the drawbacks. This is especially true as technology continues to advance.

Daily updated aggregation of assets that integrate with the plan, as well as virtual vault storage capabilities for important documents, are increasingly becoming a basic expectation of clients. And by not fully adopting the capabilities of software, an adviser runs a very real risk of becoming obsolete in the near future, essentially offering a BlackBerry and legal pad to clients living in a world of iPhone and Mint.

This story is part of a 30-30 series on ways to upgrade your practice. It was originally published on March 30, 2016.

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