A new generation of investors is shunning the traditional financial planning model for tools that give them more control over their investment decisions and financial future.
Millennials aren’t content to just hand over financial planning decisions to an advisor. Instead, they want to get hands on — using free personal financial planning software and online tools to help them make their own decisions.
Going it alone isn’t right for everyone, of course. But if you’re keen to take more control of your finances — or use personal financial planning software alongside an advisor – then this post on the best free personal financial software will help you find the right option for you.
Benefits of Using Financial Planning Software
Just about anyone can benefit from tracking their money. In fact, studies have shown that people who regularly monitor their finances end up richer than those who don’t, according to The Wall Street Journal.
Most types of personal finance software essentially act as a dashboard for your money, allowing you to see all your accounts in one place and providing you with reports that track where you’re at, money-wise.
Some personal financial planning software is all about your day-to-day money management, like tracking your spending and paying bills. Other programs give you a big picture view of your finances by showing if you’re on track for your goals and analyzing how you should invest your money — using so-called robo-advisors.
Does Personal Financial Planning Software Replace a Financial Advisor?
Personal financial planning software is a cheap alternative to visiting an advisor. And many tasks that an advisor does can also be performed by software — such as tracking the market, calculating your estimated return and figuring out how much you need to retire.
But personal finance software doesn’t mean the end of financial advisors just yet. For one thing, computer programs don’t yet have the ability to tap into our emotions. If you’re worried about a decision or confused about your options, the software won’t be able to discern that, like if you were sitting in front of an actual advisor.
However, financial planning software can be really effective when used alongside tailored financial advice. You could, for example, use a program that tracks your day-to-day finances and how your investments are going. An advisor, meanwhile, would help you make those big decisions – like whether you should downsize to a smaller house, or if you can retire early.
In fact, this two-tiered approach is increasingl favored by Gen Y. According to Ben Wacek, a financial advisor and founding member of the XY Planning Network, his clients favor using personal finance software and online tools to help them manage their money alongside his advice.
How to Choose Financial Planning Software
Not all programs offer the same features, and you may find some offer more bells and whistles than you want or need.
Generally when you choose free financial planning software, the tradeoff you’re making is giving the company access to your data for research purposes or for advertising. For example, FlexScore utilizes users’ data to refer products or services, and then it earns a commission if those offers are taken. Yodlee aggregates user data and sells it to banks and other financial institutions.
So, as with anything online service, before you hand over your data, make sure you know what security measures it has in place and what your information could be used for.
List of the Best Free Personal Financial Planning Software
FlexScore is an easy-to-use personal financial planning tool designed to give you a snapshot of your financial situation. It works by taking your personal data and spitting out a number up to 1,000 — known as your FlexScore — which represents how well you’re doing financially.
The program also offers tips on how you can improve your financial standing — and hence your FlexScore — by making specific changes to how you manage your money.
FlexScore is perfect if you want to gamify your personal finance. As you improve your financial situation, your score goes up. While FlexScore is a fun way to track your financial progress, it doesn’t offer much in the way of complex financial planning.
FutureAdvisor combines financial planning with investment management to help you reach your goals. Designed to help plan retirement and college savings, the software allows you to plug in your current financial position, timeline and goal, and then get recommendations on what you can do to get there.
FutureAdvisor is essentially a human-digital “hybrid” advisor, according to CEO Bo Lu. The software makes recommendations and automatically adjusts your investment mix based on factors established by the firm’s human analysts.
There’s no fee to use the basic financial planning software, but users are charged an annual 0.5 percent of assets that FutureAdvisor manages on their behalf.
Personal Capital is a free online financial software program designed to put the financial markets right in your hand. The software combines budgeting and investment tracking to give you a comprehensive overview of your finances. Personal Capital also offers an investment platform designed to automatically invest and rebalance your portfolio, according to your risk profile.
Personal Capital also has an investment checkup tool that analyzes your current holdings and goals then provides a risk assessment of your assets and a review of your retirement plan. For a fee, users can also get access to personal advice from a Personal Capital advisor to help you create an in-depth investment plan.
Yodlee is the grandfather of personal finance software programs. In fact, many other online personal finance apps and software utilize Yodlee in their back end to pull together data.
Its money center pulls together all your accounts — including investment, retirement, checking, savings, credit card, mortgage and reward programs. Users can track their spending, get bill reminders and see current balances and transactions on all their linked accounts. Yodlee also allows you to view your asset allocation across all your accounts to help you make informed decisions about your investments.
The interface isn’t as friendly as some other programs, but users may be able to forgive this in exchange for its functionality.