Thinking Financial Planning

Wolfram|Alpha: Cool Toy or Something Useful for Financial Analysis?

Wolfram|Alpha is a very interesting new search and analysis technology that was officially launched in the last week or so. Calling itself a "computational knowledge engine", it could revolutionize what you think about search engines like Google, and how you access information on the Internet.... someday. To say it's very ambitious (and it does), is something of an understatement, but it's already an amazingly cool tool, and shows some great promise for any area that deals with data collection and analysis, or scientific research.

Alpha is the brainchild of Stephen Wolfram who developed one of the most advanced applications ever based on Artificial Intelligence programming techniques, Mathematica. Mathematica allows users to input extremely complex math equations including calculus, differential equations, infinite series, etc., and then uses symbolic analysis and rules to solve the equations and/or plot the analysis. Many equations like this require tricks/intelligence to solve, rather than algorithmic approaches, and Mathematica has been a boon to those in the fields of physics, chemistry, and engineering for nearly three decades.

In my college days I actually studied Artificial Intelligence, and have long been an admirer of Mathematica. So, I was very interested last year when I heard about Wolfram|Alpha, and even more so when it was finally launched to much fanfare recently. Wolfram|Alpha allows you to enter a search phrase, and instead of returning a bunch of existing pages, it seeks out data and assembles a new page or analysis for you on the fly. Depending on what it decides you're looking for, it may create a chart, a map, a variation of a graphic, or tabular data. In their own words:

"Wolfram|Alpha's long-term goal is to make all systematic knowledge immediately computable and accessible to everyone. We aim to collect and curate all objective data; implement every known model, method, and algorithm; and make it possible to compute whatever can be computed about anything. Our goal is to build on the achievements of science and other systematizations of knowledge to provide a single source that can be relied on by everyone for definitive answers to factual queries."

How's that for an ambitious goal? If anyone else other than Stephen Wolfram was behind it, it would be laughable. But based on what he's accomplished with Mathematica over a few decades, and applying the same sort of approach, I think anything is possible. Just don't expect the world today. It may be several years before Wolfram|Alpha is truly ready to amaze. [When it's a little more mature, will it be called Beta? Just asking...]

One of the most interesting application areas for it already is financial data analysis. While there are some interesting sample queries on the site to show what it can do, I decided to try a few of my own. An easy data collection and analysis report that can be generated is comparing the current market caps of two stocks (in this case Toyota and Ford, a sample from their site). As you can see, we've got a simple math equation in the search form, and a historical chart is created on the fly (it just assumes that we need a historical chart along with the current value, so some decisions are being made for you about what you need most, and if you need data prior to 1989, well, you're on your own):

Another simple query I asked for is to see the current yield curve on the US Treasury. There had to be some interesting data it came up with, and good charts that would be assembled on the fly. Based on the simple query, here's what I got (simple, straightforward, and informative):

But just to show that there's a lot of evolution and development ahead of them, Wolfram|Alpha didn't have such good luck with a Corporate bond yield curve. I tried several ways of asking the question, but it couldn't figure out what I was asking for, and the suggestions were only partially helpful, if not completely irrelevant:

I guess when you're new and trying to make a good impression, but you get thrown a curve you can't handle, it's a natural response to go with your strength. Nevertheless, I don't need the encouragement to explore curves and surfaces, or weather and meteorology when I'm trying to get a graph of a yield curve.

I also found other immediate limitations in that there was no knowledge of ETF symbols, just individual stocks. I asked for GLD as a proxy for the price of gold, and got Gladstone (traded on the London exchange). I then asked for information about gold specifically and got the atomic number and its place in the periodic table.

As an exercise for the reader, check out the comparison charts of multiple stocks, like GOOG, MSFT and AAPL. Not as detailed as you'd get on Yahoo! Finance, but stylish and informative none the less. Clearly Wolfram|Alpha is not a one trick pony, but it's a small finite number of trick ponies when it endevours to handle a seemingly infinite number of ponies. It's pretty slick now, will probably be incredibly impressive in about 3-5 years, and fully baked in about 2050. I'll let you know when it's ready for Beta.

Financial Planning and CRM Tools

An article I wrote a couple of months back on CRM systems for financial advisors was finally published on three cooperative sites, Financial Planning magazine, On Wall Street, and Bank Investment Consultant. Sometimes it can be frustrating waiting until editorial calendars align themselves and the right space appears for your content to run, but I've long since taken a zen-like approach to forces you cannot control.

The crux of the article is that financial-specific CRM systems are becoming the hottest technology trend in the advisor community. Unlike a lot of other technologies, where you make an investment, plug them in, and they work for you, CRM is a bit of the opposite. You, the advisor, have to make a commitment to work in accordance with the CRM to derive any real benefit. Too many CRM tools require you to work within the framework they define, as well as requiring strict process definitions that are hard to stick to and 100% buy-in from all participants. Choosing the right CRM tool requires choosing a good fit for the processes you are looking to make more efficient, the level of commitment you are willing to make to conform to defined processes in your practice, and the size of the team you are looking to coordinate.

While not explicity stated in the article, and this is actually a good time for an addendum, one of the clear advantages of the AdviceAmerica system, ClientVision, is that it is so flexible to the way advisors currently work because it is tightly integrated with Microsoft Outlook, and the way a majority of small office advisors already work with client contact data and communicate with them. You don't end up working in another application, and you don't have to learn another entire system on top of your deskop calendar, mail and task management system. The fact that ClientVision is also integrated with an industry-leading financial planning and portfolio management platform, AdvisorVision, makes it that much more efficient to handle all your client-facing processes within one seamless platform, without re-entering data, dealing with different U/Is and multiple vendors. This can make your compliance processes go smoother as well by keeping all the client records, communication archives, plans, documents and task lists in one consolidated application.

Can Advisors Twitter Themselves to Fame and Fortune?

There is no doubt Twitter has become something of a social phenomenon. I had initially been skeptical of Twitter, thinking it was mostly a vaste wasteland for people who didn't have enough to say to actually blog (not that that ever kept me from blogging, by the way). But, what got me to take a second look was an article in the San Jose Mercury that posited that Twitter might one day overtake Google because of the profound capabilities of "real time" search (unlike Google's search results which might be, say, several hours old), even though how this would eventually translate into revenue was still a bit murky. I became particularly interested in how financial advisors could use Twitter to promote themselves, build their personal brand, network with other professionals, and generally communicate with clients. Now, recently, enough friends and colleagues have also started to Twitter and now look to me for a bit of advice, that I thought it was time for a blog summary (linked to from my Twitter profile, of course, updates to which appear in the column to the right).

For those of you who are total newbies, Twitter is a rapidly growing social media platform(?) that some people call micro-blogging, primarily because your "posts" are limited to the somewhat arbitrarily chosen number of 140 characters. You are supposed to share your activities, thoughts, inspirations and more with your "followers" as frequently as possible, as well as to interact with them in a casual, open forum.

There are enough great "How to Get Started" tutorials for Twitter, I won't bore you with the mechanics. Instead I'll try to cut through all the hype and give you some of the reality of what to expect from Twitter, the good and the bad, particularly if you are a financial professional trying to grow your business and reach out to a community.

Advantages:

• Twitter is a great way to promote yourself to a large number of people, provided, however, you take the approach that you probably would at an after hours cocktail party. You wouldn't keep soliciting clients or talking business at a party, and neither would you on Twitter, but eventually, one thing leads to another, and friends introduce friends, and Bingo!
• Twitter personas therefore have to be more casual and advisors can begin to share their outside interests easily, whether it's their family, sports, hobbies, etc. Advisors tend to connect with clients that are like themselves, so this is perhaps a good way to start to connect with people that can lead people to you for professional services.
• Twitter is certainly a great way to communicate with existing clients, prospects, friends, etc. because it's less formal and intrusive than even email, and it's so easy to reference articles, videos, whatever you want to share, that may otherwise be difficult to blast out widely.
• Twitter can also be a great source of inspiration and insight (assuming you don't set your expectations too high). Just search on any topic you have in mind, and you can find like-minded folks who have undoubtedly walked down the path you are heading already. In fact, there's probably no better way to get started than just "following" other advisors and see what they do, what they are thinking about, and what you can learn from them on any aspect of the business.
• In the advisory business, even at major firms, it can be pretty lonely sometimes. Twitter can help grow a great community and maybe a sense of comraderie that can be fun, informative and at times lucrative with virtually no effort.

Disadvantages:

• Compliance can definately be a problem, or at least a concern that needs to be managed. If you work for a major firm, it's unlikely that you'll be allowed to twitter. One advisor I follow just goes ahead anyway and doesn't disclose his firm suspecting they would shut him down. If you are independent or in a small firm and you don't do anything risky or overt, you should be fine. Just remember anything you write can come back to haunt you.
• Twitter can be a serious time sink. Reading a mountain of tweets from your rapidly growing network can be distracting, if not addictive. So be careful. Don't use this to replace any of your other marketing activities or keep you from real work. Just use the right Twitter tools to get organized and efficient to get the most out of it.
• There are many, many people with thousands or tens of thousands of followers. Some will follow you, some you may follow back. You have to decide what your protocol is and how much of a Twitter snob you will be. It's nice to think your follow count is growing, but to what end? You don't know who is really reading your posts. For me, it's kind of like real life. I've got my small community of like-minded or shared interest groups (maybe disjoint groups for each of three or four particular interests) and I love to interact with them professionally or socially. Everyone else is just walking by me in the mall and they don't really care what my t-shirt says that day.

 A bit about the technology:

• Twitter performance is terrible, making it almost unusable during peak hours. If the servers get overloaded you get a picture of a bunch of birds trying to lift a whale out of the water (a "fail whale"). A lot of times the pages don't format fully. Pray that these guys get bought by Google or start turning major revenue before they get fully overwhelmed.
• You can't use twitter.com for very long because its simple U/I doesn't allow you to get organized and focus on your main network (and filter all the trash you end up following along the way). You should quickly use tweetdeck, tweetvisor (which shows promise along with many bugs), or some equivalent. You can also post from one of many sites that shorten URLs to get your character count down, like bit.ly.
• Start out by going to wefollow.com to register your interests or affilliations so people can find you. Maybe you are a #CFP, or #financialadvisor. You can also find others to follow by the tags already created there. You can also find stock tweets/discussions by searching on a ticker symbol preceded by "$", like $MSFT.
• As long as we're all interacting socially and sharing bits about ourselves, make sure to drop a few of your favorite songs out there to help people to get to know you better, which you can do from blip.fm.

Finally, it would be a serious injustice not to point you to the twitterers I have admired and learned from, especially if you have an interest in financial stuff, even just your own. So if you haven't started Twittering yet, open an account and #follow these advisors or financial professionals: @KristenLuke, @jeffrosecfp, @billwinterberg, @jdbuerger, @agluck, @financialcents, @susanweiner, and probably many more I've forgotten but you'll find quickly enough. Kristen Luke and Andy Gluck particularly have great resources and tips for advisors looking to make it in the Twitter/social media world, including navigating compliance issues, and I highly recommend you check out their contributions on this topic as well. @Lawain is currently running a social media bootcamp for advisors, and had @RussThornton on a podcast today regarding social media in his practice (replays available). If you do use Twitter, @ddjanowski is looking to interview advisors for an upcoming article about how they use Twitter in their practices.

T3 Wrap

It's a surprisingly quietly Saturday morning here on the show floor at the Technology Tools for Today Conference here in a chilly Dallas, Texas. Most of the financial advisors are upstairs in sessions sharing the lastest in technology best practices and learning about the lastest products from vendors such as us. It's been a very informative show and I really think there's nothing more valuable to an advisors practice than the opportunity to leverage experience and ideas from other leading edge advisors. Particularly the folks that trekked down to Dallas this week who appear to be among the best and the brightest towards adopting the latest in technology to improve the efficiency of their practice.

There's no doubt that the hot button on everyone's mind is CRM (client relationship management). There's a number of compelling products in the market now that suit a wide range of advisor needs, practice models and firm sizes, including our own recently announced ClientVision. While there have been contact management solutions for advisors for a while, advisors are really looking for strategies to optimize their business processes and how they manage clients data and portfolios. Historically CRM solutions have been designed for managing leads and converting them to sales, as opposed to something an advisor and his team could use to run the practice.

Joel Bruckenstein and David Drucker do a great job in putting on this show every year. I think it's about the 5th or 6th year. The interchange between advisors is great. They recently announced that next year's show would be in sunny San Diego and we at AdviceAmerica look forward to it.

Smart Use of Technology...

David Drucker and Joel Bruckenstein, two of the industry’s best known practice management and technology gurus, are urging advisors to shore up their technology and practice management tools. “With market forces pushing down the way they are, advisors must be smarter about how they do business and where they invest their resources,” Drucker says. “The smart use of technology can make a firm more efficient and profitable. “This is not the time to be penny-wise and pound-foolish,” Bruckenstein adds. “You can’t just bury yourself in client service and investment issues and expect everything to be okay. Smart investments in technology, staffing and PR are vital right now.”

Drucker and Bruckenstein put on the Technology Tools for Today (T3) Conference each year to showcase leading advisor productivity technologies. AdviceAmerica will be there in Dallas, February 26-27. This may be a great time for advisors to differentiate themselves and increase their productivity by revisiting their financial planning tools and client management platforms. You can find out more at www.VirtualOfficeNews.com.

//Gary