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2012's Best Tech for Advisors

This year's award winners let you share documents with ease, broadcast yourself live over the Internet, and proactively plan for your clients' needs.

Bill Winterberg, 12/13/2012

Regular readers of MorningstarAdvisor know that December's technology update delivers a review of the best technology of the year. Each year I scan the financial services marketplace and identify those products and services that have an edge over the rest of the competition.

As in the previous two years, for 2012 I have selected one winner in each of the following three categories:

--Best Back-Office Technology
--Best Client-Facing Technology
--Innovation of the Year

The objective of each category is stated at the beginning, outlining how each award winner positions financial services firms to capitalize on opportunities made possible through innovative technology.

And as is customary with my award column, please take a moment to review the disclaimer: Morningstar has no involvement in the selection process, so please direct all comments and suggestions directly to me. No endorsement of any third party products or services is expressed or implied by any information, material, or content referred to in this article. Winners do not receive actual awards other than the right to declare their product or service as an award winner until next year's list is announced.

Best Back-Office Technology
The Best Back-Office Technology award winner must be a product or service that boosts the overall efficiency and productivity of a firm's back office and makes a direct impact to the bottom line. It must either improve existing processes and workflow procedures or allow the firm to pursue new business activity without adding significant overhead costs.

For roughly a decade, financial advisors have used online document vaults and client portals to exchange files containing sensitive information with their clients. Despite their best efforts to educate clients about how to use such services, advisors complain that only a small portion of their clients actually use online vaults and portals on a regular basis.

Several years ago, software startups emerged with services that store and synchronize documents through the cloud. Not only can files be synchronized across multiple computers used by one person, but also shared directly with other users of the service. Dropbox, Box, SugarSync, Google Drive, Microsoft SkyDrive, and a host of others have now become household names among cloud storage providers, but one product has come forward with attributes specific to the needs of financial advisors. That product, and this year's winner of Best Back-Office Technology, is ShareFile by Citrix Systems, Inc.

I reviewed ShareFile in detail earlier this year (see: A Document Vault Your Clients Might Actually Use), and Citrix continues to add features applicable to the financial services market and beyond. ShareFile allows advisors to easily share documents and files by dragging and dropping them into specific folders shared with clients. The ShareFile Sync App keeps everything synchronized with a designated folder on a local computer, so both advisors and clients can work with documents just like any other file on a computer, significantly lowering the learning curve of using ShareFile.

ShareFile also offers free mobile apps for iOS, Android, BlackBerry and Windows Phone, a plug-in for Microsoft Outlook, and granular permission settings to give advisors the control they desire. Large enterprises will also appreciate ShareFile with StorageZones, which lets IT administrators choose where they want to store files and data. StorageZones supports storage on one's own on-premises hardware, Citrix-managed infrastructure, or a hybrid of the two.

Because ShareFile is such a promising utility for advisors, third-party vendors are building their own integrations to make the product even more versatile. One example comes from Phoenix-based Trumpet, Inc., which added ShareFile integration to Trumpet Publisher to automate bulk file uploads to the secure site.

In the end, ShareFile's combination of control, compliance, and mobility sets it apart from other file sharing and synchronization services. Financial advisors looking to transition away form their poorly received client portals should consider how ShareFile can integrate with their existing systems.

One product deserving of honorable mention in this category is Smarsh Web Archiving from Smarsh, Inc. for its ability to capture social media and other content on the Internet without being wholly dependent on third-party application program interfaces.

Best Client-Facing Technology
The winner of Best Client-Facing Technology must be a tool that significantly enhances client deliverables or the interaction between advisors and clients. Clients clearly acknowledge the value a firm adds through such technology, either through improved personalized service or an increased level of convenience when working with the firm.

The product receiving this year's award is actually a component of Google+, Google's social networking application and one of last year's honorable mentions in the Innovation of the Year category. Taking top honors as the Best Client-Facing Technology of 2012 is Google+ Hangouts On Air.

Financial advisors are always looking for new ways to connect with clients, colleagues, and prospects. Google+ Hangouts is an online web conferencing feature built in to the Google+ social networking environment, allowing Google+ users to conduct video conferencing sessions with up to nine other Google+ users simultaneously (14 for Google Apps users).

But what really differentiates Google+ Hangouts from similar services such as Skype from Microsoft, Apple's FaceTime, and Citrix® GoToMeeting® with HDFaces™ is its On Air feature. Hangouts On Air is a free plugin that allows users to broadcast a Hangout session live over the Internet through a YouTube integration. Once the live broadcast is finished, a recording is automatically uploaded to the On Air host's YouTube page.

Consider the time and effort required to host a seminar for clients and prospects. Or perhaps advisors want to communicate new investment strategies or financial planning opportunities to clients, but would rather conduct the update in a more interactive fashion versus a written newsletter. Hangouts On Air provides a new vehicle to accomplish all these things, and the only investments required are a webcam and time.

Financial advisors are already experimenting with ways Hangouts On Air can be used to connect with an audience that transcends the driving-distance radius from a local office. For example, Jason Hull, owner of Hull Financial Planning, LLC in Crowley, Texas, has been using Hangouts On Air since September this year and has six broadcasts available for viewing on his YouTube page.

Hull uses Hangouts On Air to broadcast interviews with a variety of individuals who contribute in some way to the financial planning process. Hull recently interviewed Dr. Wade Pfau, CFA, to discuss strategies to preserve retirement income without exhausting retirement assets, and Olympic gold medalist Wendy Boglioli regarding the importance of planning for long-term care of aging parents.

Russ Thornton, vice president of Wealthcare Capital Management, is another advisor experimenting with Hangouts On Air. Thornton recently hosted broadcasts on issues such as caring for aging parents, small-business owner coaching, and leadership development, all posted on his YouTube page.

Recognizing the potential Hangouts On Air has for audience engagement, I have also created my own broadcasts of interviews with individuals involved in delivering technology solutions to financial advisors. All of my broadcasts can be viewed on my FPPad On Air page, which I encourage advisors to use as a model for broadcasts of their own.

Honorable mention in this category goes to Haiku Deck, a free app for Apple iPad that quickly creates visually appealing slide decks for presentations that are a step up from stock PowerPoint or Keynote templates.

Innovation of the Year
The Innovation of the Year award is given to a product or service that introduces a new business practice or service experience to the financial services industry. Innovative tools transform the way advisors interact with clients, enhance personal and organizational efficiency, or enable the delivery of new services not possible or practical in the past.

Changes in goals-based and cash-flow-based financial planning software have largely been gradual and consistent over the last decade, but nothing revolutionary has recently emerged from these products. Granted, programs are now accessed online and offer integrations to eliminate redundant data entry, but most financial planning software essentially operates the same way: advisors input data for each client household, define portfolio allocations and plan assumptions, and review plan output in a myriad of formats.

Should advisors need to monitor or update a plan, they must revisit each plan individually, update pertinent client details, and recreate the plan output to identify new planning opportunities. And if they want to compare plan recommendations with those of their colleagues, advisors must pick up the phone and discuss the plan in detail.

One new financial planning software product has emerged with great potential to change the way advisors monitor their clients' plans and compare recommendations with prevailing industry practices. That product is inStream from inStream Solutions and is this year's Innovation of the Year recipient.

InStream is a free, web-based software program that caters to advisors who prefer the goals-based financial planning process for their clients. The product began as an internal tool developed for McLean Asset Management Corporation, and then exited beta testing for public use in November 2011. Financial plans in inStream are created in a similar fashion to other planning programs, but it's what happens after the initial plan is created that makes inStream unique.

First, inStream integrates a suite of calculators that are continuously updated with values aggregated across the financial marketplace. These calculators obtain values such as the latest mortgage rates, baseline insurance premium quotes, and more.

InStream monitors changes in marketplace data and compares new data with that of existing financial plans in the system. Should a client's plan be configured to monitor changes in mortgage interest rates, inStream can proactively alert the advisor when it detects the client will save money by refinancing to a lower interest rate that is commercially available. Advisors can set both ceilings and floors for specific plan outcomes, controlling the threshold and frequency of alerts as needed.

Second, inStream will soon release what it calls a "participatory knowledge base" to allow advisors to compare outcomes of their own plans with those of the inStream user base. I liken this feature to crowd sourcing, for lack of a better term, as advisors will now be able to view, in aggregate, the strategies and outcomes of financial plans created by other inStream users.

Like it or not, crowd sourcing is ubiquitous in the products and services we use today. We see what other shoppers with similar interests have purchased on Amazon.com, we review ratings for restaurants and businesses on Yelp, and choose the next streaming movie or TV show to watch based on recommendations from Netflix. Applying inStream's similar suggestion and collective wisdom engines to the preparation of clients' financial plans has the potential to significantly change the relevance and perceived value of the financial planning process.

No financial plan exists in a vacuum. Client situations constantly evolve, Congress will never stop changing tax rates, and product pricing responds to supply and demand. Proactively alerting advisors to new planning opportunities and providing the ability to view trends in a knowledge base of financial plans is what excites me about inStream's potential going forward, earning it well-deserved recognition as the most innovative product for advisors this year.

Lastly, honorable mention in this category goes to Contactually, a contact management tool that gives advisors automated daily reminders to reconnect with five important contacts. For more details on Contactually, read this Morningstar Advisor Quickview: Add Automation to Your E-mail Follow-Up.

Congratulations to the winners of this year's Best Technology of 2012. As advisors complete their business planning for 2013 and beyond, I trust that one or more of the tools and services mentioned above will provide a boost in their use of technology. Remember to visit MorningstarAdvisor throughout the New Year for more leading investment research and practice management insights.

Happy holidays!

Bill Winterberg, CFP, is a technology and operations consultant to independent financial advisors. His comments on technology have been featured in a variety of financial industry publications. You can view more information about Bill and see his schedule of upcoming speaking engagements at his Web site, FPPad.com. The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

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