Orion Users Now Can Use FinMason's 5-Minute Financial Plan

Wakeman said that he learned at the Ascent/FUSE conference that many advisors create multiple plans for clients and then wind up choosing one or more of those plans to present to  clients. The Five-Minute software provides an outline of the client's current financial situation and "where he wants to go," allowing the advisor to perhaps create only two plans from which to choose, thus improving the advisor's efficiency.

Fintech firm FinMason, said Wakeman, runs "one of the biggest investment analytics firms in the world," with its services delivered through APIs. Wakeman said the integration with Orion for the planning software is unique to FInMason's standard business model—"we don't produce front ends, but power front ends"—but created the Plan because if "felt there was a gap in the marketplace for a lighter-engagement" planning tool.

Providing financial planning to clients and prospects, he said, is "not just a benefit, but is critical" for advisors, citing both Ron Carson and Joel Bruckenstein, who he said have publicly argued that doing so is table stakes now for all advisors. Another sign of the critical nature of financial planning: "Morgan Stanley is paying its advisors a bounty" for each financial plan they produce, Wakeman said, since the brokerage firm sees doing so as a way to keep its own clients and "steal everybody else's."

The Plan uses a "full 10,000-iteration" Monte Carlo analysis to show the probability of a given client running out of money in retirement. Using data from a client's Orion portfolio, the advisor uses the Plan's sliders to adjust the common levers that can affect a retirement portfolio, such as setting spending levels in retirement; working more before or in retirement or continuing to save in retirement, for example. It also can show the effects of special spending events, such as buying a house or paying for college, on the client's portfolio.

The Plan software runs the Monte Carlo simulations almost instantly to provide a dynamic picture of the portfolio's strength or weakness at different client ages in retirement, right in front of the client or prospect. "The actual planning part takes much less than five minutes," Wakeman said in finishing the demo, while "the talking took up the rest of the time."

What are the assumptions in the Plan? Wakeman says the software uses a 15-factor, multiasset global model, similar to that used by MSCI, to forecast rates of return and volatility, which he said is an academically robust model, rather than use historical rates of return.

Since the Five-Minute Financial Plan was meant to balance "simplicity and robustness," it doesn't currently allow for data outside of Orion to be imported into the software, or allow the user to adjust for different future interest rates. However, Wakeman said FinMason is working on a variety of upgrades to the software, such as a Social Security module and the ability to input a series of portfolio models.

— Related  on ThinkAdvisor:

• Ron Carson: 9 Challenges Advisors Must Tackle
• Bruckenstein: Don't Serve 21st Century Clients With 20th Century Tech