Capturing the needs of planners in the Net

For almost every piece of the financial planning puzzle there is an Internet company in the US committed to finding the solution.

Recordkeepers and stockbrokers have made the move online (schwabinstitutional.com), woodchip-friendly client reporting is gathering steam (advisormart.com) and research is just a click away (morningstar.com, annuitynet.com, optionwealth.com, search 401k.com).

Add to this marketing assistance (practicemark.com), the basics of compiling a financial profile (financialengines.com), gaining access to the best money managers (bridgeportfolio.com), appraising a business (spardata.com), selling it (fptransitions.com) and even keeping track of phone numbers and appointments on the road (visto.com). You get the picture.

All are focused on the same holy grail: the niche that will assure them a permanent place in advisor affections. But figuring out exactly what it is that financial planners want from the Internet has proved an unenviable task.

"I'm not sure we know what we want," says Louisiana-based CFP Scott Bordelon. For the most part demand has been shaped by supply, insofar as most planners only realise what they want when they see and understand it.

Certainly demand is at best minimal, considering the peace of mind most planners enjoy in these heady days.

Still, even as the perception of the Internet¹s role in financial planning is evolving, one observation seems to hold true of the last 12 months worth of developments, which is that the Internet is a means to an end, not the end itself.

Most sites providing advice in their own right, like AssetPlanner.com and OneHarbor.com, failed, with just a few successful start-ups transforming into business-to-business software providers.

One of these was Financial Engines, which focuses on the mass provision of financial planning advice to the 401(k) defined contribution retirement market.

The biggest beneficiaries of the financial planning industry¹s leisurely move online have been the firms doing the "dirty work", as Pennsylvania-based Persimmon Research president Stephen DeAngelis describes it.

Schwabinstitutional.com is probably the country¹s most popular website for advisers, a testament to Charles Schwab's position as the recordkeeper of choice for most independent planning firms.

"What we're clearly seeing is recognition from financial planners that their most valuable resource is their time and knowledge. They need to outsource elements not perceived to be value adding," DeAngelis says, whose firm runs Website Advisorport.com.

Advisorport, which has steadily gathered momentum in its first 12 months, is a step up the value chain from Schwab. Whereas the latter provides custody, trading, clearing, execution and settlement, Advisorport aggregates client data from all service providers, monitors, measures and reports it, DeAngelis says.

"They want us to present the data to them in an open, easily accessible and flexible ways but they are not looking for us to interact with the end client," he says.

Chicago-based Ernst & Young partner and national service leader for broad market financial planning services Glenn Pape argues the Internet is useful for two things.

The first being content, research, calculators and other information and the second, "integrated systems that provide financial planning solutions to the end users".

Evidence suggests advisers are still focused on the first of those functions. According to research published last year by Boston-based industry consultant, Cerulli Associates, of the advisers using the Web, 70 per cent were conducting research but just 24 per cent were servicing client accounts.

Even so, one cannot help but think that when the figures are next updated, they will paint a very different picture.

Advisorport initially looked at providing advisors with pre-packaged fully-serviced home pages, for instance, but quickly discovered they were not in demand, not because they were not needed, but because advisors were developing their own Websites.

Meanwhile, Bordelon has opted not to use financeware.com, which lets clients and advisors manipulate portfolios simultaneously online, but constantly sends e-mails, PDF files and other information to customers and even has a client in New Zealand.

Fund tracker Morningstar is also in the process of transforming its adviser site from an electronic magazine into a sophisticated portfolio management tool.

While basking in the strong trend that favours advice over do-it-yourself investing, US advisers also appear to have one eye on a more challenging future, one built on the terms laid down by clients.

That means utilising the Internet, and the efficiencies and better communication it facilitates, to its fullest, at the same time freeing up time for the in-depth diagnosis clients want.

"The Internet is just a transmission tool," argues Connecticut-based Undiscovered Managers Mark Hurley.

"It doesn't change the basic process, which is a combination of expertise and judgement."