Janney Montgomery Scott, a brokerage firm with about 745 financial advisers and $66.2 billion in assets, wants to push data aggregation services further by offering its clients online budgeting and savings tools to align their expenses with their goals.
The firm recently partnered with data aggregator Quovo, a move made as more financial firms incorporate held-away assets and accounts into their platforms to offer advisers and their clients a fuller view of their financial picture.
In this case, Janney wants to segregate income and growth of assets and apply them to goals tracking, said Robert Thielmann, chief information office at Janney. It is now working with Quovo to create widgets that would avoid "double counting," where one income stream is being allocated for more than one goal.
"A lot of people are goals-based people, so having something like that is a driver to help coordinate and organize their lives toward different goals," Mr. Thielmann said.
Lowell Putnam, chief executive of Quovo, said goals-based investing is a growing trend, especially as the industry begins following the Department of Labor's
fiduciary rule, which requires all advisers act in their clients' best interests on retirement accounts. It also ties in to how firms are changing the way they work with clients.
"Broker-dealers and old traditional adviser shops are really diversifying how they serve their customers," Mr. Putnam said.
There may be a reason that savings and budgeting features have been lacking, however. First, it takes a lot of time to get the tools set up and maintained, and second, there isn't always a return on the firms' time investment, said Raef Lee, managing director and head of new services and strategic partnerships for the SEI Advisor Network.
"What we have seen on this is that the amount of work with keeping up with it is too intense," he said.
Advisers also may find themselves balancing on a fine line, not wanting to be too pushy with their findings but also providing value with these tools at the same time.
"You get some advisers in this group who say the budgeting is greatly overrated because it pushes the adviser into this role of a nag," Mr. Lee said. "The thing you really don't want to do is nagging a client."
John Prendergast, chief executive of Blueleaf, a software provider that helps advisers build relationships using
aggregated data, said the gap in budgeting and savings tools is a result of the kinds of clients who use them. Advisory firm clients are making more than they need to pay their bills, so they may be less focused on budgeting and detailed savings.
"Bottom line is in this part of the industry, it is demand-driven," he said. The demand for these features come more from younger generations.
Advizr, a financial planning software provider, is working on these features because they are focused on younger users, whose top issues include debt management and budgeting, followed by retirement, said Hussain Zaidi, co-founder and chief executive of Advizr.
There are other firms and vendors that see a need for this tool. Wealth Access, a data aggregation provider, focuses on clients' balance sheets, and has a mobile app for its users. David Benskin, chief executive of Wealth Access, said firms these days are pushing past pulling in held-away assets to include cash flow and actionable advice.
There is one more problem advisers need to address, said Michael Webb, vice president at Cammack Retirement Group. People aren't saving enough, especially for retirement, he said.
"People can be knowledgeable and still make the wrong decisions," Mr. Webb said.
Tracking finances can help, since it makes people more accountable, he said. eMoney pulls in data for savings and budgeting tools on the client portal that categorize expenses, so that clients are seeing details about what they are spending. They also can choose not to share that information with their advisers.
Matt Schulte, senior vice president and head of financial planning at eMoney, said these sorts of features make advisers more efficient.
"It is hard to create a financial plan without understanding what is going out the door every month and not identifying what they can save," he said. "It will transition from a nice-to-have feature to a need-to-have feature."
Updates to correct attribution in the original story to read Hussain Zaidi, co-founder and chief executive of Advizr, instead of Jorge Alvarez.
