Excel Modelling or Financial Planning Software – which is Best?

Which side of the great debate are you?

In December last year, a great debate emerged in the social media. Tatyana Shumsky, (WSJ) published an article. It started the great debate relating to the pros and cons of using either Excel modelling or cloud-based modelling software. The most famous quote in the article was:

“You can have my Excel after you ripped it from my cold, dead hands.”

This quote about Excel modelling still brings a smile to my face. There were 205 comments to this article about whether Excel modelling or modelling software is the best. It was obviously a debate of great proportions with emotions running high on both sides. Both arguments were strenuously supported. Do you prefer Excel modelling or cloud-based Financial Planning Software?

I received a lot of support from the Excel modelling supporters with my comment on the article:

When I designed my financial planning software, Financial Mappers, the original mathematical model was created in Excel. From there the software developers created a cloud-based database. The advantage is that the results from the software can be quickly tested against the Excel model.

 

Each year NetWealth releases a research paper for the financial planning industry. According to the research, many members of the financial planning industry support Excel modelling tools.

These are some sobering figures from the report. It lists the percentage of advisors using Excel in their practice:

• 28.20% use Excel for tools to help model, develop and manage financial plans
• 18.60% use Excel for cash flow, budgeting, and account aggregation tools
• 10.49% use Excel for Fact Find and risk profiling tools

Financial Mappers is cloud-based software based on an Excel model. At conferences, the Excel aficionados and software developers stand and stare in awe. They can immediately see the connection to Excel modelling.

As I speak to both investors and advisers, many say how they have tried to develop something like my Excel modelling spreadsheets. In the end, they had to give up.  Can you image a workbook with over 100 interlinked spreadsheets? Each spreadsheet with over 2,000 rows of calculations.

The further you go down the rabbit hole, the more complex the model.

 

According to NetWealth’s AdviceTech Report, there are a lot of very competent Excel modelling users in the industry. But, presenting an Excel model to a client, will likely put them to sleep. As soon as you display a mass of figures, the eyes glaze over.

How much better to have software so simple to use that even your clients can use the software. But sophisticated enough for a financial adviser to create complex detailed plans.  And all this based on an Excel modelling tool.

What is the attraction of Excel modelling, to Financial Advisers?  Some of the reasons may be:

• They are comfortable with what they know
• Don’t want to go through the disruption of learning new software
• Alternative modeling platforms are not flexible enough
• Modeling software may be expensive when part of a whole package

Using Financial Mappers these reasons do not stand up to critical evaluation. Financial Mappers is the perfect technology solution.  It has undergone a long, expensive journey to cloud-based software. You have the benefits of easy to use software, but the rigor of Excel modelling.

Research shows that Millennials, prefer “real-life human financial advisors as opposed to robo-advisors”. They also want involvement in the planning process. What better means of working with these new clients than to provide planning tools? Both the adviser and the client can work in the one space. They can share each other’s ideas through the use of Financial Mappers Pro.

This business model provides a service to clients who do not need a full-service financial plan. They are seeking confirmation from a trusted person that they are “on the right track”. The intergenerational transfer of wealth has begun. Having these clients in their sale’s funnel is very important to the adviser’s future well-being.

After the Royal Commission, some of the current business models may not be viable. Advisers will need to find ways to connect with their clients and provide low-cost advice.  For Mortgage Brokers and Accountants who may be required to provide a Statement of Advice, (SOA), this is the perfect solution.

Financial Mappers is simple enough for the DIY Investor.

Financial Mappers is the solution for the financial services industry. Financial Advisers, Mortgage Brokers, and Accountants can all find benefits in Financial Mappers Pro.

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Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.