In 1974, rock critic Jon Landau, writing in Rolling Stone, said: "I've seen the future of rock 'n roll and its name is Bruce Springsteen." Well, I’ve seen the future of professional wealth management software and its name is inStream Solutions.
If Advisors4Advisors gave an award to the most innovative advisor application of the year, inStream would get it. In fact, inStream would win the Advisors4Advisors award as the most innovative professional wealth management software of the past decade.
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inStream was developed by Alex Murguia. Murguia came to McLean Asset Management
in 2001 right after completing his Ph.D. in psychology. His wife's uncle founded McLean. Murguia has taken the firm from $25 million of assets under management to $550 million today. Murguia is a visionary.
inStream totally reinvents an advice professional’s approach to wealth management. It aligns your value proposition with what you do for clients.
“Ask any financial planner or wealth manager what his value proposition is and he will tell you, ‘It’s helping people achieve their goals,’” says Murguia. “Yet on any given day advisors don’t know where each client stands with regard to achieving their goals. It’s a question that advisors can’t answer yet it’s core to their value proposition.”
Murguia says there are about 20 tasks advisors are asked to do by clients all the time—find me a new mortgage, help me buy life insurance, help find a long-term care insurance policy. Doing these little tasks day in and out for clients creates stickiness and enables advisors to fulfill their value proposition.
In contrast, Murguia says advisors now currently update a financial plan and then it’s put on the shelf for a year. Instead he says advisors should be updating financial plans every day and proactively monitoring them.
“When you create a goal-based plan for a client, there is no reason why it cannot be updated nightly and when a client falls below certain tolerance levels, the advisors should receive an alert about it,” Murguia says.
“We’re not making the math better or trying to make assumptions about what will happen 10 years from now more accurate,” he says. “We’re trying to help advisors use planning better every day.
“Right now, planning is reactive and event-driven,” says Murguia. “We should be beyond that. Clients pay us a lot of money and it’s not because we do a plan once a year. They pay us to guide them proactively through life cycle decisions.”
Murguia says advisors are going to Dinkytown.com and using non-professional calculators to find out if a client should lease or buy a car or refinance a mortgage, or they call their cousin Vinny, the mortgage broker, or research the answers on sites like BankRate.com. Instead inStream tackles these tasks alongside a goal-based financial plan.
When you calculate a whether a client should refinance his mortgage one time, you have that data in your system and can be notified when rates drop low enough for another round of refinancing. So you are proactively contacting the client to tell him to refinance and not simply waiting for a call.
“There is no reason why not to have these pre-calculated events tracked for each client so you can proactively call them with information when they cross a threshold. That’s advice that does not happen now proactively.”
“Right now, advisors have no way of providing that level of advice in a scalable manner,” says Murguia. “Advisors do a terrible job coordinating these additional services like insurance and taxes. You don’t need to do all of these things, but you need to quarterback them. We need to make our clients more informed consumers and help them with these things.
As if that is not revolutionary enough, Murguia is building a marketplace of solutions to provide products that will allow advisors to be at the center of advising on these every day financial decisions. When you go to look for a mortgage, there is a marketplace for you to shop and advise the client on.
What’s more amazing is that inStream makes all its money on the marketplace. It’s wealth management platform is free! Whatever you are now paying for financial planning software, you can keep.
Murguia, a fee-only advisor and member of the National Association of Personal Financial Advisors, says he knows that the marketplace he builds must be acceptable to a fiduciary.
Murguia says he opened up the system for a beta test three months ago and expect to get 100 firms using inStream in 12 months. He says inStream already has 450 firms on its platform and several more are coming aboard every day.
Murguia, who previously used MoneyGuide Pro for financial planning, says Junxure for CRM at McLean, says neither of those systems do exactly what wealth managers need to fulfill their core value proposition. A CRM, he says, is good at telling you helping a firm execute a sequence of events but neither proactively tells an advisor when to trigger an event.
inStream is addressing a flaw in the business model used by Certified Financial Planner professionals and other professional advisors. It’s taking common financial questions in clients’ lives and putting them into a system to be monitored and updated. It enables advisors to monitor and advise on practical financial decisions faced by the mass affluent and ultra-high-worth-net-worth.
In addition to rethinking the professionals can offer a scalable wealth management system and bolting on a marketplace for solutions, inStream includes social CRM aspects. It lets you track and view what's going on with each of your clients socially.
Murguia says he is also planning a way for advisors to use "crowdsourcing." It examines data about what all advisors on inStream are doing. So you can input "55-year old physician" and it will show you in composite what other advisors using inStream are doing for 55-year old physicians. This is not yet available, however.
Keep in mind, while inStream is innovative, other planning apps are not standing still. They will adopt the innovative ideas embraced by inStream. But this app has set a new standard and is a game-changer for financial advice professionals.
“It’s not financial planning,” says Murguia. “It’s every day wealth management.”
An earlier version of this article incorrectly identified the founder of McLean Asset Management. It was not Murguia's wife's father. It was her uncle.