Financeware, Alleging Patent Infringement, Sues UBS To Go After MoneyGuide Pro

Wednesday, August 10, 2011 06:47
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Financeware, Alleging Patent Infringement, Sues UBS To Go After MoneyGuide Pro

Tags: Financial Planning Apps

 

Financeware, a wealth management system for financial advisors, yesterday issued a press release announcing it had sued UBS for patent infringement stemming from UBS’s use of MoneyGuide Pro, a financial planning software application for advisors.

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“We believe that our recently issued patents validate that our Wealthcare process is groundbreaking in the industry,” said David Loeper, the founder and Chief Investment Officer of Wealthcare Capital Management and Chairman of Financeware, Inc, in a press release. “It would be unfair for UBS, or any other organization or individual advisor, to use our intellectual property without our permission and without fairly compensating us. We filed suit today to protect the investment we have made in this intellectual property, and to protect the investments of our advisors, licensed users of the system and our advisory clients.”
 
Reached at his home last night, Bob Curtis, the founder and CEO of PIEtech, which makes MoneyGuide Pro, refused to comment on the record, other than to say, “We were not infringing on his (Loeper’s) patents and will vigorously and aggressively defend ourselves against these claims.”  
 
Loeper did not respond to a phone call last night seeking additional comment.
 
While Financeware sued UBS, the real target of the legal action is MoneyGuide Pro. UBS provides a version of MoneyGuide Pro to its advisors. Typically, broker-dealers and custodians in offering wealth management systems to their advisors require vendors to indemnify them against patent infringement and other claims related to use of a vendor’s systems. Assuming such a clause in PIEtech’s agreement with UBS, PIEtech will foot legal bills for the big brokerage.
 
The legal tussle has been simmering for several years. In April 2008, I became aware of the patent applications made by Loeper and contacted patent attorneys to assess the chances for success. At that time, patent attorneys said Financeware’s patent applications tracked with a growing by businesses to patent business methods. If Financeware’s infringement claims are upheld in court, it could have a chilling effect on development of financial planning software, since developers could not use some of the innovative goal-based financial planning techniques employed by these apps. I chose not to report on the simmering legal tangle because no lawsuit had been filed back then and the financial crisis rendered the story less newsworthy.
 
Financeware was the first web-based collaborative financial planning application made available to advisors. In recent years, Financeware shifted from selling its app to advisors to becoming a wealth manager using the software to apply its methodology.
 
PIEtech’s MoneyGuide Pro’s origin dates back to 1985 and is also extremely innovative. It’s the most reviewed software app in the A4A’s ratings database.
 
The lawsuit will likely take years to be settled.


 

 

Comments (10)

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timknotts
Thanks for the update Andy! We are avid users of MoneyGuide Pro - and our clients love it as well.
timknotts , August 10, 2011
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ericm205
Having used both of these programs, I thought the addition of the "needle" to MGP was very similar to how Financeware works
ericm205 , August 10, 2011
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brentb843
Is anyone going to ask the obvious question - how can a financial planning application be licensed to a broker-dealer? The simple answer is that MGP is not a financial planning application (that would run afoul of FINRA's rules on communication with public) and is instead an investment hypothetical generator.

This lawsuit is great. Not only will Curtis most likely get hammered by Loeper but he will be forced to reveal,on the record, that is calculations are simply illustrations.
brentb843 , August 10, 2011
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stvnrsmth
brent,

Are you saying that if an advisor/client uses the hpothetical illustration/output of MGP to say, increase their savings rate or abandon or add a goal this is a mirage?
stvnrsmth , August 11, 2011
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brentb843
Not sure what you mean by 'mirage.' Let me explain (and why I think Andy is right to be critical of the CFP).

The CFP/FPA folks are irrelevant because while they license CFPers, they have abdicated oversight of planning to FINRA. See http://www.climark.com/Documen...embers.pdf

Essentially, not to run afoul for a broker-dealer, there is no mathematically sound basis for his goal planner. That would imply performance, which FINRA does not allow.

If anyone watched the webex Bob Curtis did on A4A in Nov 2008, they saw his slieght of hand. Essentially, the only number he changed in the plan was the market value. Those are his calculations, high market value = meet goal. low market value = not meet goal.

This runs contrary to the concept of asset allocation and the logical fact an investor who saves more (principal value) is better off. All his calculations are flawed because you cannot'grow' market value, only principal.

email me at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or send Andy more thorough explaination. I would not advocate Rudd's system, it too is flawed, but his explaination of why his is different than MGP hits this point.

brentb843 , August 11, 2011
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brentb843
Andy, what is the link to Rudd's explaination on A4A why his application is different?
brentb843 , August 11, 2011
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agluck
Brent: story you're looking for was entitled "An Answer To An A4A Member's Question About How Advisor Software Inc's Approach To Goal-Based Planning Is Different From MoneyGuide Pro's. See http://bit.ly/Ruddsoftware
agluck , August 12, 2011
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agluck
To me, the obvious question is not how can a financial planning app be licensed by a B/D, but about how a wealth management process can be patented.

Call me naive, corrupt, or practical, but I don't see why a B/D cannot be involved in the financial planning process.

Brent, knowing a little about you, I believe you are a wealth manager and have created software for advisors, and we should put that out there. That's also an invitation to link to your app and say what it does.

You are passionate about this topic but most planners don't know your POV. You are welcome to explain it in a guest post.

My focus is how wealth managers are affected by the Wealthcare lawsuit.



agluck , August 12, 2011
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brentb843
First, we have not created any software for advisors, so this is not about trying to compete with MGP or Financeware.

We are creating an investor focused application that shows how broker/dealers are not involved in 'financial planning.'

Andy, if you were to call UBS compliance office and ask if MGP was 'financial planning,' they would say 'hell no.' Therein lies the problem - the client perceives it as financial planning when in reality to actually fit into a b/d compliance program, it is not.

Over the weekend I will link to a blog better explaining this. Or email you the whole.

I do agree with you however, that math cannot be patented, but the downside is that Bob Curtis' application does not do what he claims. I foresee TV ads similiar from attorneys "Did your advisor use MGP and make claims of 90% success rate? If so, you may have a case to win back your money..."
brentb843 , August 12, 2011
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brentb843
I actually got a call from Andrew Rudd last week give me an indepth look at his software. One of the flaws I mentioned was his use of S&P Indexes. Rudd says this can be corrected to accept better indexes for the job of asset allocation, ie Surz Indexes.
brentb843 , August 21, 2011

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