College planning is one area where financial advisers can really stand out from the crowd.
Pity, then, that helping families with their educational needs is so complex and so few tools are available to help.
Stratagee Corp. is out to change that.
Its new web-based tool, Your Best Strategy, uses a sophisticated algorithm to help advisers determine the best way for a client to pay for K-12 private school and college — while taking into account the client's need to continue saving for retirement.
As we reported in July 2009, Stratagee also produces Smart Search, a hands-on tool meant to help advisers and their clients jointly explore college admissions and financial aid possibilities. It is meant to be used as part of an initial college search and provides a snapshot of a school's affordability.
Your Best Strategy goes beyond that by helping with the remainder of the selection process. It even can be used for multiple children and different schools.
“[Your Best Strategy] helps advisers determine the best strategy to pay for college and save for retirement, based on four key areas: college admissions, financial aid, tax aid and personal resources,” said Troy Onink, chief executive of Stratagee. “It is more of a high-level integration of wealth management, college admissions and financial aid.”
Once the necessary client data are in the system, the software carries out dozens of tax, admissions, college aid and financial planning calculations specific to each of the four key areas.
Part of the reason that so few advisers tackle college or private-school planning is that so many variables go into the calculations. For example, weighing how investments, household income, taxes, gifts and other factors will affect a family's estimated financial contribution and the student's aid eligibility requires tremendously complex number crunching.
Adding to the complexity is that clients are typically affluent, meaning that they probably are ineligible for aid.
In such cases, finding ways to save on college costs comes down to what Mr. Onink and the software refer to as “tax aid.” Essentially, that means finding ways for clients to save on taxes or receive education tax credits.
Once the software has run through its calculations, it generates a strategy report containing the adviser's notes and what-if scenarios, all of which can be saved as a PDF with one click. Each strategy created by the adviser is quantified with a score, which helps the adviser determine the best one for the client to follow.
Although unfamiliar with Stratagee's software, Joseph Hurley, chief executive and founder of Savingforcollege.com, said that gaining the expertise to handle the complex calculations for college planning traditionally has been the biggest hurdle for advisers wanting to become experts in the field.
“The opportunity for advisers and planners is the confusion that many people have in coordinating their many objectives, whether retirement, estate planning, etc.,” he said. “Tools like this have the potential to help tie it all together.”
Taking Your Best Strategy for a test spin, I found the interface very straightforward and intuitive to follow — even for a non-adviser. The abundance of data populating the application's back end is what makes the software so valuable and such a timesaver.
My only criticism is the need to enter client data manually.
Mr. Onink said that his company is developing a way to import client data, and that feature will be part of future software updates.
Advisers said the software is proving itself very valuable.
“Time is money, and in today's environment, you need to be able to juggle multiple balls. You are constantly asking yourself, "How do I win more clients, yet serve them efficiently?'” said adviser Troy E. Miller, a registered representative affiliated with LPL Financial. He has been integrating college planning into his practice for years.
“College planning is also a financial planning and retirement-planning problem, and this software allows me to pull things together in minutes — we are talking minutes versus hours,” Mr. Miller said.
He related how he recently was talking to a high-net-worth client who needed college-planning advice for his two elementary-school-age children. After Mr. Miller worked through some planning scenarios using the software, the client said that his stockbroker, accountant and insurance agent didn't have the tools or expertise to help him.
“This gives me a real way to differentiate myself,” Mr. Miller said.
Although several large brokerage firms provide calculators that are more complex than the simple ones available at many consumer-oriented college-planning sites, I am unaware of any software alternatives that provide the depth of Stratagee's offering. It is worth noting that YBS has been approved for client use by the compliance departments of several broker-dealers, including Cambridge Investment Research Inc., LPL Financial and Raymond James Financial Inc.
Advisers who wish to gain expertise in this area might consider joining the National Institute of Certified College Planners and earning its certified college planner designation. The group offers several planning tools.
Collegeboard.com Inc. and Petersons.com, a subsidiary of Nelnet Inc., also offer many free resources.
“The reason our group of experts founded Stratagee is that because even the software providers we attempted to work with in the past failed to innovate past simply providing an expected family contribution calculator and a bunch of statistical data on colleges,” Mr. Onink said.
Your Best Scenario costs $599 per year, including updates and enhancements. Smart Search costs $349 per year.
E-mail Davis D. Janowski at djanowski@investmentnews.com.
Visit Stratagee Corp. online for a video on YBS (you will see it on the homepage) and for additional information.
Links to other websites and sources referenced in this story:
National Institute of Certified College Planners
Savingforcollege.com
Website for adviser Troy E. Miller
Collegeboard.com
Petersons.com
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