Excel or Financial Planning Software

In December last year (2017) a great debate emerged in social media. Tatyana Shumsky, (WSJ) published an article. It started the great debate relating to the pros and cons of using either Excel modelling or cloud-based modelling software.

The most famous quote from an accountant was

“You can have my Excel, after you ripped it from my cold, dead hands.”

This still brings a smile to my face. There were 205 comments to this article, including comments by myself. My comment to the article was

When I designed my financial planning software, Financial Mappers, the original mathematical model was created in Excel. From there the software developers created a cloud-based database. The advantage is that the results from the software can be quickly tested against the Excel Model.

The Pro-Excel users gave my comment overwhelming support and praise.

Which Financial Advisers use Excel

Each year NetWealth releases a research paper for the financial planning industry. According to Research, members of the financial planning industry support Excel.

These are some sobering figures from the report. It lists the percentage of advisors using Excel in their practice:

28.20% use Excel for tool to help model, develop and manage financial plans.
18.60% use Excel for cash flow, budgeting and account aggregation tools
10.49% use Excel for Fact Find and risk profiling tools

Financial Mappers is cloud-based software based on an Excel model. At conferences, the excel aficionados and software developers stand and stare in awe. They can immediately see the connection to Excel.

I started my financial modelling back in the early 1980’s before Microsoft’s Excel. In those days, VisiCalc was a very primitive version of what we have today. As I speak to both investors and advisers, many say how they have tried to develop something like my Excel model. In the end, they had to give up.

The further you go down the rabbit hole, the more complex the model.

According to NetWealth’s Advice Report, there are a lot of very competent Excel users in the industry. But, presenting an Excel model to a client, will likely put them to sleep. As soon as you display a mass of figures or very simplistic graphs in an Excel model the eye glaze over.

How much better to have software so simple to use that even your clients can use the software. But sophisticated enough for a financial adviser to create complex detailed plans.

What is the attraction of Excel, to Financial Advisers.

Some of the reasons may be:

They are comfortable with what they know

Don’t want to go through the disruption of learning new software

Alternative modelling platforms are not flexible enough.

Modelling software may be expensive when part of a whole package.

Why use Financial Planning Software

Financial Mappers for Investors and Financial Professionals

Using Financial Mappers these reasons do not stand up to critical evaluation. Financial Mappers is the perfect technology solution. It started out as over 100 interlinked Excel spreadsheets. It has undergone a long, expensive journey to cloud-based software.

Change one input or variable and immediately show the outcome on the whole 50-year plan. These changes show the new results while the client is watching. It will take seconds to generate a new report showing the effect of any change on the total plan. This plan is not only for investments. Superannuation, personal savings goals and living expenses are all integrated into one plan.

Extensive modelling tools prove many “What If?” scenarios.

Many easy to read, plain English reports explain the plan. Development of SOAs within the software is very efficient.

For those who have resisted the move to cloud-based software, problems are building. Soon it may become critical.

Practice not attracting the younger new generation of clients
Existing older clients moving to retirement areas
Practice income less with loss of trailing commissions
Practice costs rising
Difficulty in keeping abreast of technologies

Financial Mappers offers the perfect solution.

So simple clients can use it. Clients get involved in the planning process. Both the adviser and the client can use the software and share their ideas together in one mutual space.

Inexpensive and is separate from any existing software. But client data imports from CSV files or other software.

Little training is required – online videos complete the picture.

Mortgage Brokers and Accountants, are now required to provide Statements of Advice, SOA. The need for Financial Mappers is even greater. The benefits are:

Low cost on boarding of new clients including SOA generation.
Show scenarios and alternatives either face to face or online.
Connectivity to new and existing clients for annual reviews
Enables scaled advice.
Assists in client understanding, engagement and trust

The cost of providing financial advice is becoming more expensive. Ggovernments need more compliance. Also the rise of Robo-advisers has been taking market share.

Research shows that Millennials, prefer “real-life human financial advisors as opposed to robo-advisors”. They also want involvement in the planning process. What better means of working with these new clients than to provide planning tools? Both the adviser and the client can work in the one space. They can share each other’s ideas through the use of Financial Mappers Pro.

There is a need to reduce costs and increase their client demographic. Financial Mappers is so easy, that clients can enter their own data. They can create a financial model for up to 50-years. Then seek scaled advice from an adviser when required.

This business model provides a service to clients who do not need a full service financial plan. But are seeking confirmation from a trusted person that they are “on the right track”. The intergenerational transfer of wealth which has begun. Having these clients in their sale’s funnel is a very important to the adviser’s future well-being.

After the Royal Commission, some the current business models may not be viable. Advisers will need to find ways to connect with their clients.
Financial Mappers is simple enough for the DIY Investor.
Financial Mappers may be the solution for the financial services industry.

There will be occasions when a simple Excel Spreadsheet is better. Financial Mappers has a comprehensive set of Excel Tools for these situations.