Britain voting to leave the EU. ISIS terrorists attack Orlando and France. An attempted military coup in Turkey. Donald Trump. There’s no shortage of news these days that can scare investors into a panic.
Smart financial advisors know that the best way to keep their clients from panicking is to have them buy-in to a comprehensive financial plan. This teaches them to ignore market gyrations and instead focus on their long-term goals.
Financial planning software can speed up the more mechanical aspects of the process and get the client involved in the conversation – which goes a long way towards establishing a commitment to the plan. With the market hungry for a better set of tools as a means of gaining a competitive edge, it is not surprising that new players are constantly entering the space. Some, like Advizr, develop their own software from scratch. Others, like Envestnet, purchase an existing solution with the goal of incorporating it into a bigger technology platform.
Envestnet and Finance Logix – Better Together?
The example of Envestnet is an interesting one. The integrated technology solution provider acquired Finance Logix in 2015 for $30 million. The price tag for this purchase contrasts markedly with the $600 million the company paid to acquire data aggregator Yodlee.
However, rather than suggesting that Finance Logix’s planning tool lacks potential, the difference in price between the two deals may have had more to do with the app’s relatively low market share when compared to the market behemoths, eMoney Advisor and MoneyGuidePro. (see FinPlan Shootout: eMoney Advisor versus MoneyGuidePro)
Both transactions make sense in light of Envestnet’s goal of creating the industry’s most complete end-to-end wealth management platform. At their recent Advisor summit, Eric Fowler, the company’s managing director of product development, said the company will be integrating the goal-based investment planning powered by Finance Logix throughout their flagship ENV 2 product. Even as it moves forward with its integration plans, Envestnet intends to continue offering Finance Logix as a stand-alone financial planning tool.
Envestnet’s stated goal in integrating the two platforms is to give advisors the tools for a more holistic wealth management process in an open architecture environment. Automated sharing of plan data between Finance Logix and ENV 2 will facilitate the progress. An advisor will be able to use data imported from ENV 2 to create a financial plan and data can be sent back to ENV 2 to populate a new proposal. The result will be a reduction in duplicate data entry and greater efficiency.
This post will focus on evaluating Finance Logix as a stand-alone financial planning solution, examining it from a variety of perspectives. Our goal is to give you a thorough picture of its capabilities and how it compares to leading planning applications eMoney Advisor and MoneyGuidePro.
In the sections below we will provide a detailed analysis of the component parts of the software and evaluate their design, effectiveness, and convenience. Our initial takeaway is that Finance Logix, while a notch or two below the industry leaders in terms of features and work flow, is nevertheless a solid offering. It remains to be seen whether Envestnet can upgrade the solution sufficiently to enable it go toe-to-toe with the big boys. As it stands, the finplan app is already a capable performer in the sector.
As a result of this trend, companies offering financial planning, or finplan, software have had to up their game as the competition for market share has grown in scope and intensity. A look at the most popular offerings reveal that the they combine the following characteristics:
- Efficient workflow;
- Robust display capability for client presentations;
- Comprehensive planning capability, including tax projections;
- Mobile access options for client convenience, including a PFM dashboard.
When compared to MoneyGuidePro and eMoney Advisor, we feel the Finance Logix user interface is not as consistently intuitive. Some areas are well designed and easy to understand, but others make you scratch you head and require some extra clicking to find what you’re looking for.
Envestnet has been working with a Dallas-based U/X firm, Tonic 3, who helped design their Advisor Now digital offering. They will hopefully soon turn their attention to redesigning Finance Logix’s sometimes clunky interface.
The first time you see it, the advisor dashboard screen appears cluttered. But after working with it for a bit, it gets easier to navigate. Navigating the interface for evaluating client plans requires a bit of practice to figure out which modules to use to create and which to use to edit.
The dashboard does provide a convenient method to locate client profiles and switch between Book Management and Client Management modes. It indicates which client profiles have been modified recently and which clients have logged in to the portal. Links to add new clients and integrate third party data feeds are included on Finance Logix’s advisor dashboard. The process of setting these links up is easy to follow and efficient.
In the Book Management section, an advisor can search client profiles using a variety of different criteria such as net worth or specific securities held. That is useful when segmenting your client list into categories for analysis or client outreach planning.
The Opportunity Finder function helps to identify unaddressed client needs, such as delay in reaching a savings goal, a missing plan component, or cash surplus. This can power targeted just-in-time client outreach with the potential to deliver value and gather more assets.
Just as MoneyGuidePro does, the Finance Logix Advisor Dashboard uses functionally-appropriate icons to access related options. It also mirrors eMoney Advisor in prominently displaying recent client log-ins, although its display is not as comprehensive as eMoney’s Facebook-like feed.
An essential feature of modern finplan solutions is the client portal. This section should enable clients to more efficiently collaborate with their advisors in building and monitoring their financial plan. Finance Logix’s client portal is built into the app – once the client enters the required data the portal allows him to view all accounts on a single page. The client dashboard makes it possible for clients to edit and add accounts and display a snapshot of their financial situation. This feature can save advisor significant time, as he is no longer forced to enter all of the data himself.
The Finance Logix client portal is well designed and relatively easy to learn, even for those clients who aren’t sophisticated when it comes to financial terminology. The layout and visual aids make it easy to find, view and edit plan information.
The portal is comparable to the client portals provided by eMoney and MoneyGuidePro in functionality, allowing clients to view various what-if scenarios related to their plans. All three of the portals are stylistically appealing, with Finance Logix lagging a bit in terms of navigational ease as compared to the other two. All in all, eMoney’s client portal is perhaps the best of the three, given its intuitive and highly transparent interface and the ease of aggregation of outside assets.
The planning section is the most important component of financial planning solutions. No matter how sophisticated an application’s analytical engine may be, if it can’t clearly portray the major elements of the financial planning process, it is unlikely to appeal to clients and get buy-in on the plan. At the end of the day, improved client interaction and involvement is the primary objective of using such software. To achieve these objectives a finplan app must enable an advisor to effectively communicate the purpose of the plan and the progress made towards achieving goals. Interactive progress maps and reports are preferable to static reports as clients can play with “what-if” scenarios and project the financial consequences of their decisions and variables.
Selecting the Current Scenario function in the Worksheets portion of Finance Logix displays a snapshot of a client’s financial situation. It includes all main financial indicators, such as net worth, current living expenses, retirement, education and insurance objectives, as well as progress towards the goals. The layout of this module is a comparative strength of this software – it is easy to understand and navigate between the various sections of a scenario.
The Finance Logix platform provides both goal-based and cash-flow modes. This is significant, because it provides flexibility to view the same household through a variety of lenses for more holistic advice.
The Dynamic Plan module allows an advisor to model changes to the client’s financial plan in five different subsections:
- Asset Allocation
A quick retirement plan can be created for presentation in as little as 5 minutes – a significant time savings over running it manually. Using real-time ‘what-if’ sliders, an advisor can make changes while the client watches, turning the application into a live presentation tool.
The insurance planning module enables a complete analysis of a client’s insurance needs covering life insurance, disability insurance and long-term care. The module displays the resulting scenarios in a format that is easy for a client to understand.
The education planning module includes interactive graphs to help the client visualize the process. It includes calculations for savings plans including Section 529 plans, making it a comprehensive means of working through the education savings process with clients.
The Estate Tax Planning tool can be used as a stand-alone module or combined with the other modules for comprehensive financial planning. It calculates a client’s net worth and projected inheritance taxes and uses this data to offer strategic choices for increasing an estate’s value for inheritance purposes. By displaying dramatic differences various estate planning strategies can have when it comes to leaving money to one’s heirs, this tool can be quite useful to advisors who conduct estate planning sessions and reviews with their clients on a regular basis.
Robust planning functionality is a real strength of Finance Logix, making this portion of the software competitive with both eMoney Advisor and MoneyGuidePro. eMoney organizes its planning modules a bit differently, with separate portals for conventional retirement and education planning and cash-flow centric planning and estate planning. MoneyGuidePro features some additional features lacking in Finance Logix, including the Playzone, which allows clients to adjust assumptions and see how such changes affect their plan. MoneyGuidePro also offers detailed social security planning scenarios along with a feature for modeling variable annuity living benefits across various scenarios. While it isn’t quite as feature-rich as its competitors, Finance Logix nevertheless holds its own when it comes to the core utility of its financial planning modules.
Analytics & Reporting
Finance Logix’s scenario comparison and what-if functionality are powerful tools for demonstrating to clients how their assumptions and behavior can impact the outcome of the financial planning process.
Scenarios are displayed using different assumptions for factors such as inflation, retirement age, education costs, and other relevant figures. For instance, a higher inflation rate or lower retirement age can drastically increase the assets an investor must amass to retain his or her standard of living.
MoneyGuidePro offers similar presentation functionality, with the bonus of an automatic conversion provision whereby client plans are delivered as PowerPoint-style displays. The app’s Star Track feature allows advisors to save client plans and later compare them to financial projections created over a ten-year period.
The Opportunity Finder function allows an advisor to analyze client cash flows and assets for unaddressed needs in retirement, education and insurance planning. Doing so helps to identify which clients can benefit from additional planning work. eMoney offers similar opportunity “mining” functionality, but with a wider range of categories to choose from.
The Account Data Aggregation feature of Finance Logix powers the collection and consolidation of client information from a variety of sources for planning uses. The automatic download of customer data to the app makes it an effective tool that allows an investor to view all assets in one place. Consolidating all financial pieces in a single display also ensures that the planning process is comprehensive, and takes into account the totality of an investor’s financial holdings. Finance Logix plans to replace its current vendors Fiserv CashEdge and ByAllAccounts with Yodlee for account aggregation within 12 months . How this change might improve the tool’s functionality remains to be determined.
Third Party Integration
Finance Logix interfaces with a wide variety of third party applications for data imports and other interaction. It can import client information from over 35 applications to enable an advisor to get a complete picture of a client’s assets within the software with minimal data entry and effort required.
Third party import sources include:
- Junxure Cloud
- Black Diamond
- XLR8 (Salesforce)
- Ebix Smart Office
- Morningstar Office
- App Crown (Salesforce)
- Schwab Portfolio Center
Finance Logix operates with a high level of security. All communications between users and the company’s servers are encrypted with RC4 256bit Secure Socket Layer (SSL) encryption, which is the financial industry standard. Password strength policies are enforced. When a user is signed into the application, all data entered is placed on a SQL Server using NT Authentication policies for storage. The use of this approach allows only authenticated registered users to access the data.
There are no actionable opportunities within Finance Logix – no transactions can be made through the system. Additionally, any financial login information used to import data into the application is not stored by Finance Logix, but rather with the Data Aggregation providers which follow BITS Guidelines to secure them.
BITS Guidelines provide a framework for financial services companies to assist them in managing technology risks associated with IT service provider relationships. BITS is the technology policy division of the Financial Services Roundtable (FSR); it provides thought leadership addressing current and emerging technology and security challenges facing the nation’s largest financial institutions.
Finance Logix’s approach to security appears to be comparable to eMoney Advisor’s, which also uses 256-bit, SSL encryption to protect client information. MoneyGuidePro, on the other hand, seems to be lagging behind its competitors with its use of SSL from 128-bit to 256-bit encryption, rather than strictly 256-bit quality which is considered more secure.
The Retire Logix app is an interactive calculator showing how various income sources might be able to cover a client’s needs in retirement. It enables a client to access the dashboard for a snapshot of his finances at any time and any place as long as they have Internet access. The app is white-labeled and can be branded by the advisor’s firm, allowing the firm to stay top-of-mind with clients whenever they use the app.
With increasing consumer expectations of 24/7 access to financial data, offering mobile access is essential these days. Finance Logix’s mobile interface serves this purpose by offering a simple but complete view of a client’s plan. By way of comparison, eMoney Advisor’s mobile app is more full featured, offering client access to all the features of the main solution in a mobile format. MoneyGuide Pro has made its core software compatible for use with tablets and iPhones as well as on PCs, Macs and desktops.
- Per seat license fee: $90 monthly; $1,080 yearly.
- Per seat license fee with data aggregation: $135 monthly; $1,620 yearly.
- Discounts may apply depending on broker dealer or custodian affiliation.
With eMoney’s EMXpro package retailing for $3,600 per advisor, Finance Logix is attractively priced by comparison. It’s pricing is comparable to MoneyGuidePro, which runs between $1,300 and $2,000 per seat.
Each financial planning application is graded in the seven categories described above on a scale of 1 (low) to 5 (high).
Finplan Shootout: Finance Logix
While not quite as comprehensive in features and functions as its larger competitors MoneyGuidePro and eMoney Advisor, Finance Logix is nonetheless a solid financial planning solution. It offers in-depth planning options and efficient integration of client data from a wide number of outside sources. The software’s interface can take some time to get used to, but the lack of design intuitiveness is often made up for by powerful planning and analytics modules.
Finance Logix’s reasonable price and effective overall performance make it a serious competitor. While Envestnet’s success depends on convincing advisors to use their newly integrated financial planning option, as a stand-alone package, Finance Logix is ready to take its place as one of the top products on the market.
Once Envestnet completes the integration process, we will circle back and take another look at the app to gauge its performance as an integral part of the company’s wealth comprehensive management offerings.