When it comes to technology, financial adviser Jim Koch is truly a pioneer.
For one thing, the principal and founder of Koch Capital Management LLC loves cloud computing. That ubiquitous and somewhat amorphous term refers, most generally, to having your workaday software stored somewhere on the Internet.
I am not suggesting that there will be a legion of financial planners and advisers suddenly emulating what Mr. Koch (pronounced Coke) is doing. After all, a great many in the advisory community are a bit too tentative and technology-challenged for that.
As for Mr. Koch, he runs a one-man shop that provides individuals and corporations with retirement-planning services. He does so by relying heavily on cloud-based Google products.
Although he has largely replaced Microsoft Office and its suite of productivity software using Google Docs and that platform's spreadsheet, word-processing and calendar features, he has also created his own web store, selling customized advisory applications built on customized Google spreadsheets.
“It's really not a product per se that I've created but more of a highly customizable service,” said Mr. Koch, whose fee-only registered investment advisory firm has only $4 million in assets under management.
The essence of what Mr. Koch is doing is worth discussing and studying, according to Michael Kitces, director of research at Pinnacle Advisory Group Inc.
And that is high praise coming from Mr. Kitces, publisher of The Kitces Report.
Rather than building his practice entirely on providing individuals with
portfolio management, Mr. Koch thinks it more practical, potentially more lucrative and certainly more scalable to provide portfolio assessments to do-it-yourself investors and those nearing retirement.
He noted an affinity for working with software engineers and other Silicon Valley types based on his own software engineering background.
To do this Mr. Koch has developed his own virtual client financial dashboard using a highly customized Google spreadsheet, which he refers to as a mobile planner.
However, he said, due to the automatic association with phone applications he is considering a different name.
Mr. Koch has created several services in his web store and has embedded them into the mobile planner, including a portfolio analysis tool called the Portfolio Evaluator Toolkit.
“It is basically a portfolio checkup on steroids,” said Mr. Koch, who has created these products because he couldn't find anything out there that satisfied his needs.
“The main reason for my ongoing beef with the existing mix of
portfolio management products is that they tend to be backward-looking, don't incorporate other important return factors like expenses and rarely mention the risk associated with a reported return,” he said.
He is a fan of Geoff Considine's Quantext Portfolio Planner application from Quantext Inc.
"REASONABLE MODEL'
“By using its Monte Carlo analysis, combined with implied volatility of select asset classes, his system provides a reasonable model for forecasting future asset class returns and volatility,” Mr. Koch said.
He said that he plans to combine this type of analysis with an application such as HiddenLever.com, where he can look at the same asset classes and apply a forward-looking macroeconomic perspective to them.
Additionally, Mr. Koch created the Portfolio Cost Analyzer tool to model the total fee costs associated with both his portfolios and those managed by others.
Clearly, his technology issues are unlike those of most other advisers.
For example, Mr. Koch had to ferret out why a client's use of Internet Explorer 8 to log into a Google Apps account prevented his Google sites-based web store from loading. He still hasn't solved this dilemma.
“Your average adviser can't deal with that kind of issue,” said Mr. Koch, who said his total technology-related operational expenses last year were a little above $5,000.
He spent $2,000 on hardware, including an upgrade of his Dell file server license (kept mostly for running web tool simulations).
Mr. Koch also bought a few Apple AirPort Express mini-routers and a Samsung Chromebook, a dedicated netbook just for the Internet where everything is stored.
Finally, he spent another $3,000 for all his software and applications.
Not a bad investment for such a pioneer.
For more information visit:
Koch Capital Management LLC
Koch Capital's Web Store
E-mail Davis D. Janowski at [email protected].
