Choosing financial planning software can be a daunting task. Those ready for a change should consider RightCapital.
With a seemingly endless stream of new technologies to help us run our practices more efficiently, it can be difficult to choose the best tools for specific tasks. The more complex the task or procedure, the higher the switching costs, making it both difficult and time-consuming to adopt a new software platform or service to get the job done.
This is especially true with regard to financial planning software, where advisors may have years of data for hundreds of clients, and likely have policies and procedures in place specific to their particular financial planning tool(s). Moreover, their actual client planning processes may even be driven by the features and/or limitations of their current tools. For advisors in search of new planning software or those starting out on their own, it's paramount to pick the right platform, and one that will stand the test of time.
RightCapital is a relatively new competitor in the financial planning software landscape. (While it is likely I'll conduct similar in-depth reviews in the future, it should be noted that I have no financial interest in the technology tools/services evaluated.)
The Purpose of Financial Planning Software
As an advisor, I've used or tested just about every comprehensive planning software on the market. The impetus has always been one of necessity rather than sheer curiosity: My current tool is too simple, too complex, or too outdated, and I need to find a better way to provide the best possible client experience. Yet it's the client experience that companies tend to lose sight of when developing or refining their offerings, leading to significant trade-offs when choosing among different providers.
All too often, advisors are guilty of the same mistake, viewing their planning tools as magical number crunching machines that spit out pretty (or not so pretty) charts and graphs to support their recommendations in lengthy PDF documents. We tend to pull our hair out when our planning software can't exactly model the implications of a complex taxable event in a single year, yet somehow are able to come to terms with the not-so-small assumptions we make about rates of return, inflation, and a myriad of other factors that have an enormous impact on decades of future cash flows.
Thankfully, the creators of RightCapital seem to recognize this tendency for advisors to miss the forest for the trees. The platform allows for a sophisticated level of granularity in planning but is intuitive and visually appealing enough to achieve the real purpose of financial planning software: effectively communicating planning principles, influencing behavior, and helping clients feel confident in their financial futures.
What RightCapital Gets Right
Unlike some of the major planning software platforms available today, RightCapital is not a strictly cash flow or goals-based system. Advisors can choose which method to use on an individual client basis, or opt for a modified cash flow based method that assumes any excess cash flows are spent. Onboarding new clients is a breeze, with the ability to invite clients to input some of their own financial data directly into the software, link their financial accounts via the aggregation platform, and upload supporting documentation to their own secure vault using drag-and-drop functionality.
RightCapital is intuitively organized into dashboards based on subject area, including investments, retirement, insurance, education, taxes, and estate planning, with each dashboard containing several subcategories organized into tabs for more detailed analysis. Investment portfolio analysis and retirement projection rates of return are based on the client's actual holdings, and historical returns for various asset classes can be customized at the advisor level. Retirement analysis includes Monte Carlo simulations and detailed cash flow projections for future plan years, as well as forecasted withdrawal rates. These projections rely on RightCapital's robust tax engine that not only forecasts estimated effective tax rates, but will actually generate an example IRS Form 1040 for any future plan year, along with Schedules A, B, D, and Form 6251 (alternative minimum tax).