The financial planning software market, after a long period of stability, appears to be headed for some upheaval, in both ownership and avenues for distribution.

The Australian Financial Review reported yesterday that IWL, the biggest provider of planning software through its VisiPlan system, had had merger discussions with the online broker E*Trade. And last week, Danny Rodgers, the founder and managing director of Investment Data Technologies (IDT), a Brisbane-based software vendor, disclosed that he was looking for an alliance partner for his planner software, following the sale of IDT’s data supply business to a new company formed by Graham Rich’s brillient! and Ian Campbell’s InvestmentLink. For IDT, the future would be brighter if the firm had a close link to a major distributor, such as a bank network. All software systems have their supporters and detractors, as they have their advantages and disadvantages, but IDT’s software is said to be particularly good at risk calculations and complex commission tracking. VisiPlan has been a dominant force in planner software for several years, but in the last 12 months has come under increasing pressure from newcomers Coin, which was acquired by Macquarie Bank last year, and the Iress-owned Xplan, both of which have picked up big distribution contracts. If the talks between IWL and E*Trade progress to the point of merger, the company would be a broker big enough to challenge the online dominance of CommSec, first and foremost. The planning software arm, which got IWL through the travails of the dot-com crash, may no longer be considered a core business. It is interesting that VisiPlan and Coin also announced last week that they would be collaborating on development of standard interfaces for their respective software systems to link with platforms. If Visi was to be put on the market, Macquarie would have to consider another $30 million-plus purchase (what it paid for Coin) to really dominate the country’s planner desktops. The fortunes of financial software companies tend to ebb and flow. Unlike software providers for other industries, they are continually making revisions due to tax and regulatory changes each year – so their costs tend to be higher. And, more so than most industries, financial services has been through a period of mergers and consolidation. Whether or not this continues is open to argument. But unlike providers in other industries, the planner software firms at least operate within one of the fastest growing sectors of the economy, in terms of assets to be invested. And the financial planner numbers on which the software vendors depend, are likely to grow into the future with rising demand for advice as super fund balances increase. Also it may be that the recent trend to some disintermediation by planners, where they are splitting off from institution-owned arrangements, will outweigh the mergers and consolidation among the institutions themselves.

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