Technology by definition is a fluid and evolutionary notion. Products, gizmos and theories once deemed as cutting edge invariably fall out of favour to alternatives that better cater to a change in individual, market or society’s changed circumstances.
It appears that financial planning software technology is no different, at least in the sense that competition is fierce and evolution is perpetual.
This year’sMoney ManagementTechnology Report reveals a handful of new entrants to the market all attempting to wrestle market share from dominant platform VisiPlan and oust its provider, IWL, as the market leader for planning software provision.
New firms included in the survey this year include tech start-up groups Coin Software with its Strategy product and CARM through its CARM Guided Planning System.
Another new inclusion to the report is the Sanchez group. However, Sanchez, a Canadian technology firm now based in Malvern, Pennsylvania in the US, has been operating in the domestic market for a few years through its broker targeted portfolio management and transaction product, Wealthware.
Perhaps more interesting to these new entrants are the number of fledgling entities unearthed, but for various reasons (predominantly the fact they are in a pre-launch phase) have been omitted from the report.
Midstreet Technology (Wealthpoint),Xplan Technology(Centrepiece) and WealthCare Mutual are three such firms.
Midstreet Technology is a quasi-new entrant to the market after it bought the Wealthpoint platform from Sealcorp back in October 2002.
However, Sealcorp still has its own version of the system — theAssirtdesktop — which over the past year has undergone three major releases.
Extensive enhancements were made to its reporting capabilities, risk and estate planning, customisation of risk profiles and transaction handling.
Meanwhile, Xplan Technology was established in July 2002 and acquired by broking software providerIress Market Technologyin February this year, while WealthCare Mutual will offer an industry owned gatekeeper and community resource centre for financial services when it launches later in the year.
Another omission from this year’s survey isMLC’s ThreeSixty, which according toThe Tom Collins Consultancyresearcher, Lisa Faddy, opted to be left off the survey because it was in the process of launching a new product into the planning software market.
According tovan Eykhead of distribution and one of the co-founders of Coin Software, Darren Pettiona, who developed the Strategy platform with Suwandi Tan and Ian Litster (who both incidentally developed VisiPlan), there is a great deal of opportunity in the market.
“There’s always good profits to be made in this market if you can offer a superior product, as there’s not too many guys that can build these platforms so that they work seamlessly,” Pettiona says.
“You can throw as much money as you want at these things, however, if you don’t know what planners want to get out at the other end, then you’re never going to succeed.”
According to financial planning consultant Paul Resnik, who part owns CARM, the majority of software in the market only caters to planners and does not really involve the client in the whole process.
“Most planning software has been designed to be used by planners.
“Our software has been designed to be used by planners, dealers and clients. We do real-time planning. Most of what is done in the industry is put together after the client leaves,” Resnik says.
“If you have done a selling course, then there are two ways of selling. One way is to be glib and smart, and the other is to make the client make the appropriate decision about what is good for them.”
Resnik argues there are four areas software providers need to focus, based on clients’ array of competing objectives.
He believes the first is how they spend their time between work and leisure, while the second is what they do with their money. The third is what do they do with their insurable risk and finally, how beyond their natural risk appetite are they prepared to go in order to achieve their goals?
Furthermore, Resnik says if a new provider in the market is unable to offer something that didn’t exist before then, they shouldn’t do it.
“If there’s no improvement then there’s no right to be in the market. If all we were doing with our product is another version of what’s in the market, then there’s no incentive to be there,” he says.
According to Midstreet (now Wealthpoint) chief executive officer Mike Giles, the Financial Services Reform Act is the main driver for change in the industry at present, given that compliance issues tend to dominate everything planners do.
“It’s all about being able to run a best practice business, so you need strong audit capabilities from your software,” he says.
