Morningstar builds its own financial planning tool

Goal Bridge combines goals-based planning and investment proposals into a single workflow

Sep 9, 2019 @ 6:59 am

By Ryan W. Neal

While other adviser technology platforms have acquired popular financial planning vendors, Morningstar Inc. has built its own.

The company's new Goal Bridge tool brings Morningstar's existing investment planning capabilities into a goals-based setting, combining the financial planning and investment proposal processes into a single digital workflow.

Advisers can use Goal Bridge to collaborate with clients and prospects on identifying financial goals and creating an asset allocation designed to achieve them.

For each goal, Goal Bridge will use Morningstar's data and research to determine a suitable asset allocation based on the investor's risk tolerance and details like goal time horizon and duration.

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So if the client wants to retire, put money aside for a child's college education and plan a family vacation, Goal Bridge will recommend an allocation strategy to achieve each goal within the client's portfolio.

By directly connecting investment risk, reward potential and trade-offs to each goal, Morningstar head of software products Dermot O'Mahony believes Goal Bridge can help advisers demonstrate their value beyond money management.

"Investors can sit side-by-side with their advisers to set the right expectations and buy into their plans," Mr. O'Mahony said in a statement. "When investment choices are clearly rooted in investors' intrinsic motivations, investors are more likely to stay on track to achieve their goals."

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Combining financial planning with investment proposals will help advisers offer financial planning to a greater number of investors, said Jason Stipp, Morningstar director of product management.

Most advisers still need to manually move data from financial planning software over to a portfolio management system. Even when the systems are integrated, the process creates room for error.

This is one reason Morningstar chose to build a financial planning tool in-house rather than acquire a third party, Mr. Stipp said.

"One thing that distinguishes this workflow is that it connects directly to our investment planning capabilities," he added. "Working together, advisers and clients can create some goals and immediately create an investment plan based on those goals."

Goal Bridge will also do a better job of identifying an investor's true goals than other tools on the market, Mr Stipp said.

According to research from Morningstar's behavioral science team, clients will arrive at more tangible, more attainable goals when given a list of possibilities and asked to prioritize. By offering a list instead of an open-ended question like, "What do you want to do in the future?" Mr. Stipp said Goal Bridge generates deeper conversations around more concrete priorities.

Goal Bridge helps Morningstar keep up with the likes of Fidelity, Envestnet and Orion in the race to be the preferred technology and investment outsourcing provider for financial advisers. While Morningstar's Advisor Workstation integrates with most of the leading financial planning tools, the company sought its own following Fidelity's acquisition of eMoney, Envestnet's acquisition of MoneyGuide and Orion's purchase of Advizr.

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Morningstar will still integrate with other planning tools for advisers who want to build more complex plans. Goal Bridge is intended for investors with simple planning needs, Mr. Stipp said. "What we wanted to do was simply extend investment planning capabilities and create a powerful, yet straightforward plan."

However, he disagreed that Goals Bridge is intended to help Morningstar catch up with other outsourcing platforms.

"For us, it's more a matter of what we see from the adviser's perspective," Mr. Stipp said. "They are feeling the pressure. Investment selection and allocation isn't going to cut it any more."

Goal Bridge will initially be available as an additional component in Morningstar's Advisor Workstation, and will eventually be available as a standalone tool. The company declined to comment on pricing for its new financial planning software.

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