So you want to make the right moves with your money, but you aren’t sure where to start or which tools to use. I’ve heard that before!
The thing is, there is no shortage of general financial advice out there or DIY financial management tools. From net worth spreadsheets to financing calculators and everything in between, there are “tools” out there. However, what you’re really wondering is, “Am I on track financially?” and there are no free and publicly available applications out there that can tell you that.
There are, however, personal financial planning tools that financial advisors use that can tell you if you’re on track financially. More than that, they help manage a complete financial life in a clear, organized, and personalized way. Like any tool, they need someone who knows how to use them properly. This is why these robust financial planning and management applications are available to financial advisors.
Here are some of the personal financial planning tools fee-only financial advisors use, like myself, to assess a client’s financial situation and make recommendations - and you won’t find them in the app store.
Financial Planning Software
There are a few major players in the financial planning software space. The three systems I talk about below offer similar financial planning and management capabilities. What makes all of these so valuable to investors is that they consolidate your entire financial life into a single view, make it easy to stress-test your portfolio against market predictions and individual decisions, and offer a wealth of historical data to inform money choices.
Right Capital happens to be the solution I use with my clients at Afton Advisors, LLC.
RightCapital was launched in 2015 to provide a more direct, more modern experience for clients regarding wealth management reporting and interfaces.
Like other financial planning software tools, it offers similar features like goal setting, financial plan creation, portfolio construction, cash flow analysis and tax-efficient distribution strategies, but it also provides Social Security optimization features and insurance assessments.
What I like about it so much is how straightforward it is to use from a client's perspective. I particularly like the client dashboard view that allows my clients to log in to their portals, review performance, run simple scenarios, and have a clear picture of where they stand financially. It’s easy, and it feels easy.
Financial advisors should always look for gaps in a client’s financial life so that they aren’t exposed to too much risk or leaving themselves financially vulnerable. This is a powerful tool that facilitates that effectively.
MoneyGuidePro and eMoney Advisor
MoneyGuidePro and eMoney Advisor are the other major financial planning and management tools financial advisors use to help clients set and keep their financial goals.
These systems have been around since 2000 and are very capable as well. Just like RightCapital, these tools feature cash flow calculations, risk tolerance, historical analysis, projections, and so forth. According to your vision, they allow advisors to accurately predict how much money you need to save to retire.
These systems were originally developed for retirement planning and have since grown into all the financial planning and wealth management capabilities needed and wanted by today’s investors.
Orion Advisor Tech
This is an investment management platform that puts a lot of historical data in the hands of financial advisors so that we can accurately report on performance, build custom investment models, manage the investment experience, offer tax management of investment accounts, and initiate trading and rebalancing of accounts.
Additional Financial Management Software
Should you rebalance? If you are a DIYer, you’ve probably asked yourself this question before. If you have your money managed by someone, you may wonder how they know when it’s the right time for your portfolio to be rebalanced.
To keep investors on track, portfolios must be rebalanced from time to time to ensure the proper asset allocation within portfolios.
iRebal is a rebalancing software owned by TD Ameritrade. I use this system for portfolio management because it allows me to manage accounts at a household level. There are features in the system that allow me to set rules that trigger rebalancing when certain conditions are met. I also set alerts for specific opportunities that may arise that shouldn’t be missed for individual client accounts.
Asset location is probably the hardest thing for DIY investors to effectively DO because most custodians only allow for management at the account level. iRebal allows me to manage portfolios across multiple accounts so that we can ensure the proper assets are held in the proper accounts for optimal tax efficiency.
Anything I want or need to efficiently manage my client portfolios, it offers. It also coordinates with the actual holdings in the client account, so trades are executed within the software itself, making management easier and better consolidated.
Social Security rules change. This software keeps financial advisors on top of it. I use this technology to optimize my client's Social Security decisions. There is complex analysis that goes into Social Security - when to collect, how much, side-by-side comparisons, family benefits, and more.
It is valuable for clients to see under which circumstances they can get the most out of their Social Security benefits.
Riskalyze is a tool that allows financial advisors to align clients’ investment strategies with their risk profiles. It’s a very analytical tool and offers a quantitative measurement of client risk tolerance.
When investing, risk tolerance is the amount of risk a client is willing to assume in their financial life. It informs the proper asset allocation within a client portfolio.
Precise FP is a financial management tool that makes the client experience better. It makes it easier and more secure for clients to share their financial documents and keep them securely stored in one place.
Keeping sensitive information secure is beyond critical in today’s digital world. Having tools that give clients the confidence that their financial data and information is secure is non-negotiable for anyone choosing to work with a financial professional.
Why Personal Financial Planning Tools Matter
Like any tool, it needs to be used properly to be useful and perform the task it’s intended to. Nowadays, there shouldn’t be any mystery over how financial advisors arrive at recommendations and the resources they use to provide accurate and dependable financial advice.
Knowing that a financial advisor utilizes such tools means that clients have best-in-class access to financial analysis and planning tools not available to them otherwise. It also means that the visibility of their financial life is clearer and easier to understand.
When you hire a financial advisor, you aren’t just hiring a person who is highly educated, trained, and experienced in personal finance. You are also gaining access to data-driven tools and resources leveraged by your financial advisor to help you set, reach, and power your financial goals.
*disclaimer: Afton Advisors, LLC does not endorse or recommend any financial product or service, nor was Afton Advisors, LLC compensated in any way for mentioning specific financial tools available on the open marketplace. This article is for informational purposes only and should not be interpreted as a product endorsement.