Advisors weigh the pros and cons of goals- and cash-flow-based planning.
This monthly series of articles describes the many steps and occasional missteps we took in building our financial advisory business, Mosaic Wealth Management. Mosaic is a fee-only comprehensive financial planning and investment management firm located in Bethesda, Md., a suburb of Washington, D.C. At this writing, we have about $50 million under advisement, 40-plus clients, two employees, an 1,100-square-foot office suite in a Grade A building, and the two of us--Annette and Veena--the principals and equal owners of the firm.
Everyone hates change, right?
Yet, as we have reported in our earlier columns, during our five years of building Mosaic together, we have gone through a lot of changes. We've moved from a home-based business with no employees to an office environment with two full-time staff members and from accepting almost any client who walked in the door to setting and adhering to a relatively selective standard. We are constantly re-examining how we do things and looking for ways to better serve our clients while increasing our efficiency and effectiveness.
A Move to ASPs
Toward this end, we have recently been rethinking our technology strategy. For a variety of reasons--some that we'll be writing about further in future columns--we are moving away from our current virtual private network (VPN) and adopting programs provided by application service providers (ASPs). We concluded that maintaining and supporting our current VPN is inefficient. ASPs provide and update their own program software and in addition maintain the requisite data on their Web site in a secure environment. By using an ASP, we can gain access to client data and technology from any computer.
Our goal over time is to move much of our technology functionality to ASP environments and reduce our hardware requirement to basic non-networked computers. This will save us both time and effort--resources that could more productively be spent practicing financial planning. In addition, the moves would support our lifestyle by allowing us to work at the office, at home, and on the road. We receive this via our VPN already but feel that an all ASP environment would further enhance this flexibility.
Some of the software we currently use is already ASP based--most notably Morningstar Advisor Workstation and TD Ameritrade's VEO platform. We have never had any serious downtime or loss of data with either of these platforms, which leads us to think more favorably about other ASP solutions. A key advantage to using ASPs is that many of these programs can transfer data to each other seamlessly and make repetitive data entry unnecessary. As we look to the future of our business, reducing the amount of time spent on data entry seems both practical and hugely appealing.
A Key to Decision to Make
The financial planning software that we use, NaviPlan Extended, is a desktop program, so we know we'll need to change. The question has boiled down to: Should we move to the newer, ASP version of NaviPlan, which still does cash-flow projection-based planning, or is this the time to move to another popular ASP, MoneyGuidePro, which relies upon goals-based planning and provides excellent output and integration with other ASP-based programs?
We have embarked on a process of re-evaluating what we really need from our financial planning software. We have always believed that cash-flow analysis is the heart of good financial planning. Annette was an early adopter of NaviPlan Extended and has been a die-hard advocate of its detailed analytical approach.