Innovative advisor launches financial planning software

New tool ‘helps clients live bigger lives’ and will be available to fellow advisors in the new year

Innovative advisor launches financial planning software

An entrepreneurial financial advisor will make his planning software platform available to peers in the new year fuelled by a belief in his business model and an ambition to help clients “live bigger lives”.

Doug Dahmer is the CEO and founder of Better Money Choices, a fin tech planning tool designed to scale his business and empower people to build their own life plan. It sits alongside his other business, Retirement Navigator, which builds and optimizes income plans while minimizing the tax retirees pay.

Given the commoditization of so much of the industry, Dahmer argued, if an advisor is not prepared to embrace planning, how are they going to get paid?

Ten years ago, he refocused his practice so the majority of his time and energy was spent on just that. By outsourcing investment responsibilities to Forstrong Global Investment Managers and all the compliance, reporting and onboarding activities to Wealthsimple, he believes he has increased the time he has to focus on consumer facing planning from 45% of his work week to more than 85%.

It required admirable foresight, as Dahmer was the first advisor to sign up to the Wealthsimple for Advisors platform.

Dahmer told WP: “We're sitting in an industry that's going through unprecedented disruption, but the biggest change is that the barometer people have used to measure their value from an advisor has completely blown up.

“The process of product selection, market timing, rebalancing, tax harvesting, have all been automated; commoditized.

“As an advisor, you are faced with the challenge, how do I justify the fee that I'm charging? The entire industry is having to redefine its relevance. Most players have chosen the shift towards financial guidance as the way to do it, which makes planning the core deliverable.”

The key to the Better Money Choices planning software is its ability to engage consumers to actively participate in the process. Dahmer realized that to do this, he had to make it about their life, first and foremost.

“People want to be heard and understood before they're going to take any advice or want to participate in the financial aspects of planning,” he said. “They care more about what they can accomplish, as opposed to what they can accumulate and, in most cases, their lives are really messy and complicated.

“Up until now they have not had access to a tool that allows them to organize all aspects of their life and try to figure out what life choices are moving them closer to the things most important to them and which choices were simply getting in the way. These choices aren’t just about money, they include the utilization of other limited resources such as time and energy.”

The more good choices we make, the better our lives will be. This approach to planning is far more engaging than completing the punitive exercise of trying to discover one’s “latte factor”. In fact, Dahmer encourages the drinking of lattes. He believes the quiet time spent sipping a latte or better yet sharing a latte with your life partner provides the perfect reprieve to contemplate and consciously organize your life and make better choices.

Better Money Choices starts with a core premise: a plan is not a plan until it has been crafted by the people who have to live with the choices contained in the plan. The role of the advisor is not to drive the bus, but rather to facilitate the process of the consumer building their own personalized plan. The advisors’ job is to provide frequent doses of highly valued insight as the client constructs the life they want.

This strategic focus on having the consumer doing most of the work could only be accomplished by ensuring the planning platform was extremely intuitive, accessible and transparent.

The advisor version of the software includes more robust functionality than the consumer version. This allows the advisor to quickly identify opportunities to help them shine. More importantly, the advisor platform includes important practice management features that ensure the planning becomes a process as opposed to an event.

Dahmer said: “This is critical if the value of financial guidance is to persist over the life of the relationship. A one-and-done approach to planning is not sustainable.”

From their advisor portal, financial planners are able to monitor when and how their clients are reviewing and changing their plans. This allows “just in time” arrival to assist their clients make better choices. Most interaction is done via virtual meetings that last perhaps 20 minutes. The frequency of client interaction increases significantly, as does the perceived value by the client despite significantly lower duration.

In today’s busy world, this type of interaction is dearly appreciated. Most clients will look to their advisor with a mentor-like relationship as they confront each new challenge (regardless of size). As a result of the amount of information shared through Better Money Choices, their advisor holds by far the broadest and most holistic perspective of the life outcomes they seek and offers a tool that allows them to sort out the challenges when they arrive. Every interaction with their advisor provides a highly appreciated independent, highly informed third-party perspective.

The Advisor version Better Money Choices software will be available in early 2020 for $2,000 per advisor for their first 200 plans. Additional bundles of plans will be available at a reduced rate. At roughly $10 per plan Better Money Choices allows advisors to significantly reduce the amount of time they spend collecting, entering and manipulating data.

This time instead becomes available to concentrate their talents and energy in providing each of their clients frequent high-value-add guidance and perspective. In the process, they rapidly build a much stronger rapport and relationship with their clients.

To make planning scalable at the practice level advisors must accomplish two key goals:

  1. Significantly increase the amount of time you have to spend on client facing activities that elevate your value;
  2. Significantly reduce the amount of time you spend  entering and manipulating the data within the planning software while simultaneously reducing the cycle time to when the client receives their next ah-ha moment.

US financial planning guru Michael Kitces, in his recent (October 2019) article entitled “Planning Software’s Biggest Blind Spot” estimates, based upon current practice management techniques and planning tools, that the average advisor has time to complete roughly 30 financial plans a year. Since Better Money Choices went live in mid-September 2019, Dahmer has individually completed 160 robust financial plans.

He plans to continue this pace of roughly 50 new plans a month – but in the background his clients have taken ownership of the plans they have created and are actively engaged in keeping them current. Each morning Dahmer reviews his portal to see which clients have returned to work on their plans. The portal identifies which clients need his attention with respect to potential course corrections. If so, a 20-minute virtual meeting is scheduled to review the cause of concern. At all times he is tracking the pulse of his practice to prioritize where he is needed most.

Dahmer explained that Better Money Choices puts 80% of the work in the hands of the client, which means it actually takes the advisor an average of 4.5 hours to complete a plan – a much better statistic if you want to monetize financial guidance. These  4.5 hours are spread over a number of short highly interactive sessions.

Dahmer’s financial practice, Retirement Navigator, offers a hybrid of services that closely follows the US RIA model. Those clients who are happy with their current money managers come to Retirement Navigator on a fee-for-service basis to get pure planning. The average cost of a plan is $2,500. These people have found it difficult to locate advisors who understand the unique needs of those preparing to draw from their portfolios as opposed to add to them.

However, significantly more people come for Retirement Navigator’s platinum program that integrates the key elements of cash flow sourcing and strategic tax management into their money management decisions. Dahmer explained that once clients understand the significant financial advantages of aligning their money choices with their life choices, they don’t want to fall prey to the most common outcome of the planning process, which he calls the “Implementation Gap”.

Better Money Choices will also be available directly to consumers in the new year. There will be a freemium offer that allows consumers to get a quick and easy assessment to questions like, I wonder what would happen if? Or do you think this would be possible? In addition, there will be a premium subscription model priced at $240 per year that offers enhanced detailed reporting to assist in opportunity identification and the ability to build and compare multi-plans.

The website Better Money will also provide references to advisors who qualify based upon their proven experience with the software. Early experience from the direct to consumer website has shown that many consumers desire this type of assistance from a qualified advisor to expedite the process.

Dahmer said: “If people are in mutual funds right now, they're probably paying the best part of 2% and all they get is the money management side. I’m charging 1.75% and I'm giving them a state-of-the-art planning experience that allows them to build a viable plan that clarifies what they plan to do, when they plan to do it and what they plan to spend.

“Now armed with forward knowledge of how much money they need and when they need it, we can strategically align where their required annual cash flow needs should be sourced in the most tax-efficient manner. This draw-down recipe, of where cash flow is to be sourced and how much on an annual basis is then integrated into the Forstrong money management system which allows them to better preserve capital and avoid ‘dollar cost ravaging’. This is all topped off by a leading edge custodianship through Wealthsimple.

“I've now turned my planning fee from a one-off, let's go find the next client to a recurring income stream, where I'm paid out of that MER.”

Dahmer is convinced this is the way for advisors to position themselves given the pressure for fee transparency where everybody knows what everybody is being paid for and consumers have the ability to disintermediate those along the servicing offer where perceived value is not occurring. Advisors must find a way to justify the value they add.

“As people start to go to things like robo advisors, if you're not an advisor who's figured out what your value proposition is, you're in deep doo doo.”