Innovations in Retirement Income Planning

Advisors and financial services professionals are living in a post-DOL rule world, one in which the doling out of retirement advice demands a more stringent fiduciary standard, increasing overall competition and in some ways narrowing the ability to differentiate.

No longer does an advisor's fiduciary status lend a competitive edge. Financial advisors and retirement income planners must figure out how to showcase their expertise to sustain a successful business. One way for advisors to increase the value of their practice and avoid becoming irrelevant is by using financial planning software.

In the past, large agencies, wirehouses and insurance companies would develop their own proprietary planning software. But modern technology gives individual advisors, and those without proprietary technology at their firms, a new opportunity. No longer does the size of an advisor’s firm dictate their technology options. There is software to help manage confidential client data, analyze investment products or strategies, ensure a client is on-track with his or her investment planning, or assist with general compliance responsibilities. This allows advisors to:

• Piece together their own software solution built from the products that make the most sense for their unique business
• Adopt a complete, end-to-end, or “out of the box” product suite
• Use APIs (Application Program Interfaces) to build their own custom technology platform

When choosing the right software solution for your practice, dynamic cloud-based solutions like the one Dr. Wade D. Pfau, CFA® and Professor of Retirement Income in the Ph.D. in Financial and Retirement Planning program at The American College of Financial Services helped develop. Below are several of the most popular financial planning software solutions used by financial services professionals, plus considerations for advisors when choosing one for their practice.

All-In-One Suites As Options for Financial Advisors

1) MoneyGuidePro® - One of the most widely adopted financial planning software suites is MoneyGuidePro®. It uses a goals-based system to calculate risk, present recommended scenarios and analyze client data. One innovative addition to MoneyGuidePro® is it’s newly added feature, Best Interest Scout™, a scalable, stand-alone discovery tool designed for DOL Rule compliance. It provides a standardized way to acquire and evaluate client data through a fiduciary lens to ensure clients’ best interests are met.

2) fi360 Toolkit for Advisors - Another all-in-one financial planning software suite that is popular among financial advisors and firms is the fi360 Toolkit for Advisors. Touted for its ability to produce clear and simple reports to show prospective and current clients, the fi360 Toolkit has powerful enough functionality to meet a variety of back office features, professional best practices, and investment needs.

3) inStream software solutions - Dr. Pfau, CFA® and Professor of Retirement Income, helped to develop inStream software solutions, a cloud-based financial planning software suite made by advisors, for advisors. Using inStream, financial and retirement income planners can proactively guide clients to better wealth management. One innovative component of inStream is that it delivers wealth management and investment advice automatically, telling advisors which clients they need to call, what needs to be discussed, and giving data-based recommendations.

Innovative Uses for Existing Technology

While some financial services professionals are finding use in robo-advisors, other more tech-savvy professionals are building their own robo-advisors or even their own software suites. Some firms don’t provide proprietary portfolio management tools, and independent advisors may need to build tools or custom reports. In these circumstances, advisors can purchase APIs or API catalogs to use for programming their own technologies.

Using APIs to build proprietary technology offerings is just one way that independent advisors and small firms can access scalable, institutional-caliber wealth management analytics. Cloud-based financial planning software and API libraries allow advisors to build their own robo-advisors, create new end-user tools or enhance existing practice management applications.

The future is bright for financial advisors and retirement income experts, thanks in part to a wave of new technologies and applications. No longer is the “best” technology reserved for large firms and wirehouses. For advisors to remain competitive, they must find a software solution that best fits the needs of their practice and clients. Knowing a client’s safe withdrawal rate, comprehensive retirement plan, personal and financial goals as well as potential challenges in meeting those goals becomes crucial in creating long-term advisor-client relationships.

Fortunately, technology is now at a point where it can assist with nearly every part of an advisor’s job, but whether or not an advisor is ultimately successful still relies on their professional development and depth of expertise.

If you’re interested in learning about another prevalent and complex issue that will affect your clients and their retirement income plan, read Retirement Planning for Longer Life Expectancy.