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Choosing Financial Planning Software

Start by figuring out your beliefs and picking a tool that reflects those beliefs.

By Janet C. Arrowood

As you expand your advisory services to include financial planning, you will face three choices: Develop plans manually, use software provided by an insurance company, or acquire freestanding software to help you organize information and develop client-tailored plans. Here is a brief description of these options.

Manually developing financial plans
Manually developing a financial plan for clients is a daunting task. You can use a word processing program like MS Word and a spreadsheet program like MS Excel to organize and present data. You can also convert files to a PDF format to give all of your documents a finished professional look. However, you run certain risks you may not be aware of.

If you hold yourself out as a financial planner or advisor, you are held to a very high standard. Even though you may only have a life insurance license or a NASD Series 6/63 license, a complete financial plan needs to include details about other investments, property/auto coverages, liability concerns and more. If you manually generate a plan, it is easy to overlook these critical areas. Unfortunately, not being licensed or not being familiar with an area of financial planning does not excuse you from omitting that area in the plan. In fact, advisors are being sued every day for these omissions.

The output is only as good as the input and your ability to synthesize the facts.

Company-provided software
If you are a career agent or producer, you probably have access to financial planning software. If your company offers the use of financial planning software, you need to make sure the emphasis is the same as your market focus. Software that is insurance-focused may not be what you need if your main thrust is mutual funds and retirement planning. Also, software that emphasizes investments may not work if your market is estate or business-succession planning.

You need to understand the limits of any software package. If, for example, the program asks you to enter your client’s mortgage payment and later asks you to enter the amount of the mortgage, does the program calculate a life insurance need that will continue to pay the mortgage and pay off the mortgage? If so, you may be recommending more insurance than your client really needs, and the cost may be more than he wants or can pay.

A comprehensive software package should include a factfinder to enable you to gather the information required by the program. This factfinder needs to include information that is often beyond the scope of your licenses, such as business and personal-line insurance details, all types of investments and employee benefits. If it doesn’t, you may end up presenting your client with an incomplete plan.

Freestanding software
There are hundreds of software programs that claim to develop comprehensive financial plans. Accountants have tax programs that include some aspects of financial planning and there are numerous packages designed for insurance and financial advisors.

However, there is no quick and easy way to choose a financial planning software package. In his article, “Two Myths About Financial Planning Software,” John L. Olsen, CLU, ChFC, points out two key misconceptions advisors often have. Olsen is a financial consultant and president of EBAL, a company that provides prelicensing training and continuing education programs.

First, some people mistakenly think there is one software program that works for every situation. But there is no single program that does it all. As Olsen points out, software doesn’t develop plans; advisors and planners do. The output (plan) is only as good as the input (factfinder data) and the advisor’s ability to synthesize the facts.

So, according to Olsen, the key is to “figure out what you believe. Then pick a tool that reflects your beliefs.” Once you have developed your personal beliefs, you can begin choosing your software.

The second misconception is that an advisor who is familiar with lots of financial planning tools will tell you what to use. Unless your belief system is the same as his, however, this will not work. Asking other advisors is a good place to start, but you should also “try before you buy.” Use the package’s factfinder on yourself. Go through the process and prepare a financial plan. Analyze the final output to see if the resulting plan works for you and mirrors your belief system. Decide if the software and input tools are easy to use and simple to tweak.

Janet Arrowood is the managing director of The Write Source, a financial and insurance writing and training company. Contact her at

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