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Financial advisers are constantly pelted with offers to try new “fintech” products. These tools promise to help planners with everything from assessing risk to educating clients to rebalancing portfolios. Some come with hefty price tags or steep learning curves; others are inexpensive and easy to use with plug-and-play accessibility. The challenge is sifting through all the offerings to determine which ones merit serious consideration.
Because it’s so new and still evolving, fintech remains a somewhat fuzzy term. Broadly speaking, fintech (financial technology) refers to automated tools that enable financial services companies and advisers to boost efficiency, access information more readily and serve clients more effectively via online platforms. Usually, the software provides a high level of integration — a coveted goal for advisers who want all their systems to sync seamlessly.
The onset of what experts call the fintech revolution has occurred with remarkable speed. If you ask advisers for their favorite fintech tool, they often rave about software that didn’t exist a couple of years ago.
Jerri Hewett Miller, a certified financial planner in Duluth, Ga., uses IncomeConductor, a retirement-income platform that debuted in 2017. It helps advisers counsel pre-retirees and retirees on their income distribution strategy. “It’s dynamic software that lets us tailor a presentation for a client and show them how the income process works over 25 or 30 years of being retired,” Miller said. “And we can easily update the income plan based on everything from market events to changes in a client’s life.”
The XY Planning Network, a membership organization of fee-only planners who target Gen X and Gen Y clients, has held an annual fintech competition for the past four years. There were six finalists in 2019, including Holistiplan, a startup that beat the other five to win the award.
Cecilia Fleming, an adviser in Midlothian, Va., beta-tested Holistiplan along with her colleagues over the past year. She uses the tax planning software to enhance her ability to explain a client’s tax situation and examine how projected changes from year to year can affect the amount due.
“Before Holistiplan came out in 2019, we were using Excel spreadsheets for tax planning,” Fleming said. “It was more of a backward-looking thing. Now we upload a client’s 2018 tax return and [Holistiplan] analyzes it and puts it in a report for the client.”
Using the software, Fleming can illustrate to clients how different scenarios can raise or lower their tax liability in the future, and how taking proactive steps such as changing the tax withholding from their paycheck might make sense. The user-friendly design of the report demystifies aspects of tax planning.
“The report is really digestible to the client,” she said. “The client is no longer intimidated by their taxes and is more open to us walking them through their taxes and projecting out a few years. It also cuts down on the amount of time we spend on data input because it creates more efficient steps when a tax return comes into our office.”
Another fintech product that promotes client education is fpPathfinder. Launched in 2018 by Michael Lecours, a certified financial planner in West Hartford, Conn., fpPathfnder provides flowcharts and checklists for advisers to help clients grapple with technical topics such as explaining IRA contribution limits or evaluating when to take Social Security benefits.
Lecours sells one-year memberships to advisers. In return, they can use a library currently consisting of 35 flowcharts and 10 checklists. “The checklists have doubled my client meeting efficiency by adding structure and a detailed process to our meetings,” said Trevor Scotto, a certified financial planner in Walnut Creek, Calif. “It helps us be more organized. If we know a client’s parent was diagnosed with dementia, there’s a checklist for issues to consider with aging parents. We can use it to methodically go through everything and not miss any details.”
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