Is Your Financial Planning Technology Really Integrated?

For years, financial technology companies have claimed they can make your life easier by integrating with your existing software solutions. Integrating "best in class" solutions seems like it would save you time, but in reality, it just leads to headaches. Many fintech solutions are built on different assumptions, leaving your "integration" to provide conflicting results. 

Learn more about how the right integrations make a world of difference in our FinPlan Friday conversation with Joe.

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FinPlan Fridays

In our video blog series, FinPlan Fridays, Covisum® Founder and President, Joe Elsasser, CFP®, offers his take on the issues financial advisors see every day. Joe is a practicing financial planner with a unique perspective into the challenges for which Covisum provides technology solutions. Join us on the first Friday of every month for FinPlan Fridays, and get helpful tips to grow your financial planning practice. 


Hi, I'm Joe Elsasser, CFP®, President and Founder of Covisum and also a practicing financial advisor, and welcome to another FinPlan Friday. Today, we're going to talk about the importance of deep integrations in your software stack. Now, as an advisor, you probably use multiple tools, and you've probably heard from a variety of technology providers that those tools integrate. That word "integrate" is a pretty interesting word because some things that pass as "integration" are pulling one or two data points from another tool, and others are pulling much more expansive data — whether it's portfolio holdings, detailed tax results, or any number of different data points — can be pulled and pushed between different software programs at the same time. Many of these "integrations" are creating challenges for advisors all across the country, and I'm seeing it in my own practice and have for the last decade. One of the biggest challenges for me are conflicts in assumptions, but I'm going to set that aside and talk about the more visible issue first, and that's conflicts in results.

Integrated Financial Tech With Conflicts in Results

Inevitably, our clients are faced with a variety of different decisions:

  • What should I do about Social Security?
  • What about healthcare?
  • Which account should I use at which points in time?
  • What should I do about the equity in my home, any number of those decisions.

And while there are specialized tools for making each of those decisions, oftentimes those specialized tools carry certain assumptions. And when you bring the results of those tools into an overall financial planning tool that carries another set of different assumptions, you can run into conflicts where the result that came out of one or more of the specialized tools doesn't make sense in the context of the overall plan. Oftentimes, that's because the assumptions were not the same.

FinTech: When the Math Doesn't Add Up

The second challenge is with conflicts in assumptions — these are unresolvable. For example, I might use risk software that relies on a bell curve. If I take results from that software and integrate them into a financial planning software that uses a different methodology for how returns are projected, I may be left without informative data for my clients' financial strategy. My stress tests won't reflect reality if the math doesn't add up. Integrating software from different platforms may not actually tell me what the real risk of the client running out of money in retirement is, and of course, that's what we want to get to. We want to get to a reasonable, but real, level of confidence that the client's plan is going to be successful.

The Covisum Software Suite: Deeply Integrated Financial Advisor Tech

So, what  we're going to see more and more of going forward is the tech giants acquiring smaller software companies specifically so that they can identify the assumptions that may conflict and put them in context of their broader ecosystem. And it's exactly the path we've been following at Covisum.

Over the last decade, we started out with our Social Security optimizer, Social Security Timing®, the first patented one in this space. We introduced Tax Clarity®, mainly because so many of the financial planning softwares automatically treated Social Security benefits as 85% taxable. And as an advisor, if you're working with mass-affluent clients, you know, that's simply not true, and there are a lot of opportunities to capitalize on the fact that it's not true. So that was the second tool we introduced—Tax Clarity.

Then we acquired a company called Prairie Smarts, and that became the foundation of our SmartRisk™ tool. SmartRisk helps advisors give clients a reasonable level of confidence that when they retire, if there is a steep market decline, at least that we created a contingency plan that will allow them to either cut spending or do something else from an asset perspective in order to make it through retirement with a reasonable level of confidence. 

Advisor Tech: Seamless Integration with Clear Insights

Covisum wraps all of our advisor tech together with Income Insight®. And why did we do that? We did that so that we could get the assumptions aligned between each software tool that the advisor uses in their practice. We want to make sure you don't experience conflicts in results that you can't reconcile or have to deal with the conflicts in the underlying assumptions. That's why an overall integrated tech stack that starts with strong decision engines for each core financial planning choice that your clients must make is so critical right now.

We've been on this journey for over a decade and we're just getting started, so we hope you'll join us.


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