Executive Summary
Many readers of this blog contact me directly with questions and comments. While often the responses are very specific to a particular circumstance, occasionally the subject matter is general enough that it might be of interest to others as well. Accordingly, I occasionally post a new "MailBag" article, presenting the question or comment (on a strictly anonymous basis, of course!) and my response, in the hopes that the discussion may be useful food for thought.
In this week's MailBag, we look at some of the available Social Security calculator and modeling tools to analyze optimal Social Security claiming strategies for clients. We also look at a few software tools for doing “time tracking” of client activity, as more and more advisors explore fee models that include hourly billing (or retainer fees that relate back to the hours spent on client activities).
Social Security Calculator Tools To Analyze The Timing Of When It's Best To Start Benefits
Question/Comment: What tool have you found most useful to use for helping clients make Social Security decisions? I've looked at MoneyGuidePro for this, and it does a pretty good job but would appreciate hearing if you have better tools that I should consider (especially if they are free or less money).
Without a doubt, analyzing the timing of when to start Social Security benefits has become an increasingly popular topic lately, as a deep analyses can reveal all sorts of interesting insights, like why it rarely pays for both spouses to delay Social Security benefits, or how best to coordinate file-and-suspend claiming strategies with a married couple.
In practice, there seem to be three primary solutions for advisors to calculate which is the best Social Security strategy:
- SS Analyzer. Created as a partnership between entrepreneur and software expert Bill Meyer, and the highly reputable financial planning researcher Bill Reichenstein (who has published extensively on Social Security strategies in the Journal of Financial Planning), SS Analyzer is built to gather detailed information about the client’s Social Security information, and provide both a concrete recommendation about which strategy to use (“Joe should begin Social Security at age 66, Jenny should delay until age 70, but file a restricted application at her age 66…”), and also a visual display of all the possible Social Security strategies to illustrate which is best. Notably, this solution is also available directly to consumers as a Social Security calculator aptly called “Social Security Solutions”.
- Social Security Timing. Created by financial planner Joe Elsasser, Social Security Timing operates similar to SS Analyzer, with tools to gather the clients’ Social Security data details, and then illustrate various combinations of strategies to determine which claiming strategy will be best, based on the clients’ life expectancies, and various inflation and growth rate assumptions. And as with SS Analyzer, the Social Security Timing software also has a direct-to-consumer version, though notably it’s possible to sign up with Social Security Timing to become an advisor who’s available to help field and respond to (and get paid for) those consumer inquiries through their “Arrow Group” platform.
- Maximize My Social Security. Created by economics professor Larry Kotlikoff, who recently published a very widely read book on Social Security planning called “Get What’s Yours: The Secrets To Maxing Out Your Social Security”, Kotlikoff was arguably one of the first academics to really make the case of how much opportunity there is to plan around the timing of Social Security benefits. While Kotlikoff’s software is perhaps the least visually appealing in its output for clients, it is arguably the most analytically robust, especially regarding some of the more ‘esoteric’ Social Security situations, like calculating the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) rules, the Social Security earnings test, Social Security benefits for dependents when there are still minor children in the household, etc. And as with the others, MaximizeMySocialSecurity has a direct-to-consumer option, as well as a Financial Advisor licensing opportunity.
Ultimately, I find that (at least from when I demo’ed them last) Maximize My Social Security is the most robust solution, albeit because it analyzes a lot of rare situations that do not apply for most clients, but matter a lot when they do. For “most” client situations, though, the other two platforms are more than ample, and do a much better job of visually illustrating the results, and modeling various scenarios and options for clients to consider. In terms of which is better between SS Analyzer and Social Security Timing, both have been adding features so regularly for the past several years, that I find they have tended to stay fairly close to each other, and which is "best" varies over time and depends a bit on simply how you plan to use the software with clients and which is more comfortable for you. (In general, I'd suggest doing a demo of both and seeing which you prefer.)
Notably, there is a significant cost difference amongst these Social Security calculator and analysis tools as well – SS Analyzer has several pricing tiers, and will run $300/year for the ‘basic’ version but $650/year for the “Plus” option that includes showing how results vary by life expectancy (essential for doing a proper analysis!) and $1,000/year for the premium version that includes a Monte Carlo tool. On the other hand, Social Security Timing is only $500/year (or $50/month) for their full version, and Maximize My Social Security is only $200/year for a Financial Advisor “professional” license.
Time Tracking Software For Financial Advisors
Question/Comment: Can you please recommend or point me in the right direction towards a Time Billing Software Program for Fee-Only Advisors. As I move away from AUM and 100% into FP Advice and Execution, I want to start keeping track of time that I spend on client projects. I figure that this is would also be a good tool to remind our clients of our value.
As more and more advisory firms migrate towards hourly and project-based planning fees, I suspect that time-tracking tools for advisors will only become more popular. And to some extent, being able to track time - and reflect the time spent back to clients - is becoming popular simply as advisors try to continue to justify their value-add and service in an increasingly competitive environment, especially since so much of what we do is "shadow work" that clients don't see.
Despite the rising popularity, though, the surprising thing is that there are hardly any good time-tracking software solutions out there for advisors right now!
Advisor technology guru Bill Winterberg has written in the past about RescueTime as one solution, which tracks how much time you're spending in various applications on your computer (e.g., 1.7 hours in Outlook, 2.1 hours in your CRM, etc.). Notably, though, this is much about how to track your own time just to evaluate and manage your own personal productivity as an advisor. If you ever wanted to get a sense of how much time you may be… ‘researching ideas’ while you web surf, RescueTime can get you some perspective. I’m not sure how effective the tool really is to track time pertaining to particular client activities, though.
Another alternative I’ve just heard of a few advisors using lately is Toggl, which also makes it very easy for you to “Toggle” on and off a time tracking feature on your computer (one click to start the timer, one click to stop, and the software automatically records the time and a note of what application you were doing). So with Toggl, if you also note what you’re doing/working on at the time (e.g., what client you're working on), this effectively becomes a means to track the amount of time you’re spending on particular client activities. Though the caveat is that once done, you’ll still need to pull out a report and record it in your CRM to actually relate it back to particular clients (though some third-party apps can indirectly integrate between the Toggl API and any CRM with an open API, such as Salesforce). Unfortunately, I’m not aware of any third-party time-tracking solutions that directly integrate back into current advisor CRM platforms.
Notably, a third alternative is to use Junxure CRM, which I believe has some capabilities to do time-tracking and record it directly back into a client’s record in the CRM - or at least to manually record your own time spent on client activities into the client's record - which is useful for everything from subsequent client billing, to just tracking how much time you (and staff) are spending on particular clients. Of course, that’s only relevant if you use Junxure, and/or would be ready and willing to adopt it just to do this. And it's still reportedly a fairly manual process.
Ultimately, though, I will admit that this isn’t an area in which I’ve spent a ton of time myself (no pun intended!), so perhaps some of our readers here will share their own thoughts and feedback about what they’re using to do time tracking for clients, what works, and what doesn’t!
So what do you think? Do you use any time tracking software, either separate from your CRM, or integrated into it? For those who do hourly billing, or project planning but track your hours, what technology do you use to help with the process?
Great insight as always Michael. Just chiming in with my two cents on the time tracking software. We do a lot of our billing, both on tax returns and financial planning on an hourly basis, so I am always tracking all of my time. I have Rescuetime installed on my computer but mostly use that to help keep me focused, see how productive I’ve been and to catch any time I might let slip through the cracks.
My main time tracker is a software called Time Doctor. It’s a fairly simple tool that I open in the morning and it keeps a clock running all day and as I jump between tasks I just type what I’m working on and it keeps a running total. If I step away from my desk for a period it will prompt me and ask if I was on a break or still working on x. If I jump on twitter it will prompt me if I’m still working on x. At the end of the day or week I can look back and see what I spent my time on each day and use that for billing.
I know there are a number of other software tools out there that are more robust, especially for larger firms. I’ve looked at Tsheets, which integrates with a number of accounting programs to automatically generate invoices based on your time. For now I’m sticking with the simpler Time Doctor solution as it’s certainly a step up from our old method of using spreadsheets to track our time!
Thanks for sharing Chris! Will definitely take a look at Time Doctor as well! 🙂
– Michael
For smaller firms, Quickbooks is a nice way to do time tracking (clock feature or manual timesheet) that allows you to track time to a client and directly bill for it (no loss of data while you transpose or try to integrate time into invoicing software). You can then run all kinds of reports to see how your time is being spent, how profitable a client or job is, how much of you day is billable vs “administrative” work, how much time/revenue is attributable to new clients vs existing clients, etc. Tracking time into the CRM is less important to us and most CRMs split out less robust financial reports. Our CRM is only used to archived and record any client data and interaction. Time tracking is more related to revenue so I’d much rather have it integrated into our accounting software.
Hoan,
Thanks for sharing. Interesting point about tying time tracking back into accounting software versus CRM. I suppose to some extent that just depends on how you handle ‘management reporting’ for the advisory business, but good to know that Quickbooks has functionality for this built in directly. Is that via the web-based version of Quickbooks as well?
– Michael
It works with both versions, but we found that their web-based version lacks significant features and customization options for accounting purposes, so we use their desktop Enterprise version which allows remote web access if desired.
I think the preceding SS question also asked about Money Guide Pro; what are your thoughts about its SS calc engine, and how it stacks up against the others?
We use “BillPort” from Arcons Technology as a fully integrated billing solution that incorporates our AUM billing, Retainer Billing and Hourly billing. Data is exported from Portfolio Center for AUM, and the software tracks our hours. We still have to work with them to take full advantage of features to trigger the fee uploads to our custodian and then export the fees into QuickBooks.
I used QuickBooks before and found it incredibly cumbersome.
Great article, Michael. We use Manic Time to track our time. It runs in the background and tracks where you are on the computer. This feature enables you to tag your time for different clients. It also has a time sheet and consolidated report feature you can run based on whatever time frame you want per client. I use it to keep track of my own efficiency as well as a reliable way to show clients the time value of the “shadow work.” It also has a note section attached to the tags so you could use the reports to create a billing report if you were billing hourly.
Michael, I am a fee-only advisor and charge either by the hour or a flat fee. I use an online app called Harvest (www.getharvest.com). On the click of a button, I can track time for client work. We can automate invoicing via email and people can pay us online as well. This system has worked great for us.
Matthew,
Awesome, thanks for sharing!
Do you tie this activity back into your advisor CRM at all, or just handle the time-tracking and invoicing directly out of Harvest?
– Michael
We handle directly out of Harvest at this time. As with many programs, we wish it would integrate with our other tools (i.e. CRM). But it filled a significant void for us. Prior to Harvest, we weren’t invoicing in a timely manner or at all so $$$ for work performed vanished. It is my understanding that Harvest integrates with Forecast, Quickbooks, Quickbooks Online, and Xero. It will also export data via Excel or csv file and invoices may be exported in PDF. Like many programs, Harvest has features we are not using but we are really happy with the ease of use related to tracking client time and invoicing.