FOR IMMEDIATE RELEASE
Contact: Hope Katz Gibbs, Inkandescent Public Relations
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hope@inkandescentpr.com / 703 346–6975
Diversity Functionality in Software for Financial Planners—The 2012 Survey Results
Arlington, VA, August 23, 2012 — In a new report by the Financial Planning Association’s Diversity Committee, members report that they want a software solution to assist them with planning for a growing demographic: unmarried couples who share the same residence.
The background: “Statistics show that the number of unmarried couples who share the same residence is on the rise,” says FPA Diversity Committee co-chairman Rita Cheng, CFP®, CERTIFIED FINANCIAL PLANNER™ and a professional with Ameriprise Financial Services, Inc. “Just two years ago, the number of opposite-sex couples jumped 13 percent, to 7.5 million, according to the U.S. Census Bureau. The number of same-sex couples living together in 2010 also increased over the previous year—up 30 percent—from 476,000 in 2009 to about 620,000 in 2010.”
The demographic: Diversity Committee member Joshua T. Hatfield Charles, CFP®, CERTIFIED FINANCIAL PLANNER™ professional with SPC Financial, Inc., points out that the members of this demographic include:
- Baby Boomers (born 1946-1964) who never married, divorced, or were widowed
- Those who prefer companionship to marriage in order to maintain and preserve income in retirement (Social Security benefits or survivor pension benefits)
- Gay, lesbian, bisexual, and transgender couples
The purpose of the survey: Stuart H. Armstrong II, CFP®, CERTIFIED FINANCIAL PLANNER™ professional with the Centinel Financial Group, LLC, and chairman of the Diversity Committee, adds: “Additional research confirms that the trend is continuing to grow, which presents unique financial planning concerns to the couples, as well as challenges for their financial planners. In an effort to raise awareness and promote an environment that embraces diverse communities of consumers and professionals, we created this survey.”
- The survey was sent to approximately 5,500 FPA members.
- Distribution focused on 500 members who previously indicated that they provided “nontraditional family” financial planning in their member profile and through their PlannerSearch information.
- The survey was also sent to the subgroup, PridePlanners, which has about 100 members, and all of them were provided surveys.
- We also included a random sampling of additional FPA CERTIFIED FINANCIAL PLANNER™ members to develop a well-rounded sampling of responses.
The issue at hand: “We realize that the financial planning industry has not responded to the changing demographics of our country,” Cheng continues. “The FPA has many stakeholders, which include the public, the financial planners, and vendors. We recognize that the software industry is fragmented and has not caught up with demographic trends. While it may be difficult for one company to take a leap of faith and develop products to serve what seems to be a niche market, it is important that we demonstrate the need.
The typical workaround: Since robust software doesn’t currently exist to meet the needs of this demographic, many planners use Excel spreadsheets. While this option is useful, it requires a tremendous amount of manual data entry—and isn’t a perfect solution because it prevents planners from adopting a more integrated approached to financial planning for their clients. Plus, if one variable is not accurate in a formula—such as planning for insurance needs, or even retirement—it could lead to an inaccurate estimate for the client, which could lead to an inaccurate estimate for the client. Based on our findings (see those below), most planners surveyed say they would switch to a targeted software package to help them best assist this population.
The findings: Of the 10 survey questions, key results included the following.
Do you currently provide financial planning services to couples that are unmarried and/or in same-sex relationships?
- Yes: 71.88% (184 of 256 respondents)
- No: 25.78% (66)
- I don’t know: 2.34% (6)
In the next 12 months, do you expect to start providing financial planning services to couples that are unmarried and/or in same-sex relationships?
- Yes: 19.7% (13 of 66 respondents)
- No: 48.49% (32)
- I don’t know: 31.82% (21)
What percentage of your clients are:
- Unmarried opposite-sex couples (not including widowed clients): mean is 7.1 (174 of 184 respondents)
- Unmarried widowed clients who are cohabiting (including unmarried widowed clients in a same-sex relationship): mean is 3.67 (161 of 184 respondents)
- Same-sex couples (not including widowed clients): mean is 12.68 (174 of 184 respondents)
In which state or providence do the majority of your unmarried and/or same-sex couples reside? The top five, based on 186 respondents, include:
- California: 19.02%
- Texas: 7.61%
- Massachusetts: 7.07%
- Illinois: 5.44%
- Maryland: 4.89%
Who is your primary planning-software vendor? The top five, based on 186 respondents, include:
- PIEtech Inc. (MoneyGuidePro): 16.85%
- Money Tree Software, Inc. (EasyMoney, Golden Years, Silver Financial Planner/Silver Online, Total Planning Suite): 15.22%
- Zywave (Emerging Information Systems, Inc., EISI, NaviPlan Select, Profiles Forecaster, Profiles Professional): 14.13%
- eMoney: 10.33%
- Morningstar, Inc. (Morningstar Advisor Workstation, Morningstar Principia): 7.07%
What are the functions provided by your planning software? The top five, based on 184 respondents, include:
- Ability to generate reports (balance sheet, asset allocation, retirement projection) on combined household members: 63.04% (116)
- Data entry for two unmarried individuals within the same household: 56.2% (104)
- Ability to generate reports (balance sheet, asset allocation, retirement projection) on individual members in household: 37.5% (69)
- Transfer on death destinations for non-qualified accounts: 34.24% (63)
- Ability to handle an asset with one ownership type, such as joint with a related/offsetting liability of a different ownership type, or an individual; and accounts for unmarried couple taxes at the federal level: 25% (46)
Which functions would you like your software to provide to assist you with planning for unmarried and/or same-sex couples? The top five, based on 184 respondents, include:
- Accurate calculation of benefits for non-spouse beneficiaries for qualified plans and IRAs: 55.44% (102)
- Allowing for different drawdown percentages on a couple’s aggregated portfolio: 52.17% (96)
- Models the tax impact for asset transfer (estate equalization with a new couple or in the event of separation) or estate planning for unmarried and same-sex couples: 50.54% (93)
- Data entry for two individuals who are married at the state level, but not federally: 47.83% (88)
- Accounts for unmarried couple taxes at the federal level: 45.65% (84)
To read the entire executive summary, click here.
To view all of the findings, click here to read the 2012 Diversity Software Survey Results.
About the FPA
The Financial Planning Association® (FPA®) is the largest membership organization for personal financial-planning experts in the United States and includes professionals from all backgrounds and business models. FPA is an open and inclusive community that fosters the value of financial planning, and advances the practice and profession of financial planning.
As the Heart of Financial Planning™, the Financial Planning Association is dedicated to providing knowledge, advocacy, community, and leadership to all those who need, support, and deliver professional financial planning. FPA National Capital Area (NCA) believes that everyone, no matter what their situation or economic status, can benefit greatly from the experience and advice of a competent, ethical financial planner.
- FPA appreciates and embraces a diversity of people, ideas, skills, and life experiences, including but not limited to: age, race, ethnicity, gender, and sexual orientation.
- FPA embraces professionals from all business/compensation models, educational backgrounds, and geographic regions to meet the unique needs of the clients they serve.
- FPA strives to create opportunities for all people to have access to competent and ethical financial planning advice.
- FPA values and respects the uniqueness of individuals and the varied perspectives and talents they provide.
- FPA believes that diversity of its membership is critical to serving a diverse public, and is committed to helping create a world where everyone thrives and prospers.
For more information, visit www.fpanet.org.