It’s Just a (Budgeting) Phase: Helping Clients with Expense Management

Nov 22, 2016


A few weeks ago, Missy Pohlig took us through different stages of budgeting. Today, I’m going to follow up with the technology that can be used in each of these phases, as well as the role of an advisor in each budgeting stage. Even if you don’t have an active role in implementation, you should know the latest options available to get your clients (or possibly their kids) up and running themselves.

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Forced budgeting

I’ll be straight with you: I am a terrible budgeter and it has caused me and our advisor problems. I don’t normally put myself into these posts, but I will here, as I think some of my mistakes will help the story.

Back in the days when dinosaurs roamed, I was 18 and at a university far from home. My knowledge of personal finance was zero. I had my new bank account and an ATM. This (unfortunately) was the pinnacle of my budgeting effectiveness: I used the paper ledger in my checkbook. Each transaction was jotted in, the balance went down and was reconciled to what the ATM told me I had. Forced budgeting at its most basic.

Today, there are some software tools and apps that help even this simple need. I’ve already blogged about a simple one: Digit. Digit’s ultimate goal is to help you save, but you can set it up to just report. It sits on your bank account and texts you as the amount in your bank account fluctuates. No need to even go to the ATM now – your phone pings if you have had transactions that have altered your account balance. It is really easy.

Another app in the same vein is Levelmoney. This app allows you to link your different accounts, and then identify your fixed expenses. What is left is your discretionary spending (or “Spendable”). The app helps you track and project how you are doing over the month against your Spendable. These apps are today’s technical checkbook ledgers.

In this stage, advisors can serve as a consultant, walking clients through the options, while leaving the implementation to the investor.


Awareness is the stage where investors have more flexibility. They have more accounts, credit card(s) and probably debt of some sort. Investors are in control and pull the information together themselves to pull off a more complex ledger (here again, you can be a consultative voice.) These investors have some simple financial questions to answer, such as, “Do I save for retirement or pay off my school loan?”

The 800-pound gorilla software application for this stage is Mint allows investors to operate at a high level and see their net worth (often not very much at this stage) or to get down into the details and pull together all the transactions occurring in their different accounts. Mint allows you to automate the linkage to your accounts using aggregation. This is the self-serve model (no advisor), but investors can use it to any level of detail.

My story: I was a huge user of Intuit’s Quicken and used it with a modem to link all my accounts together ( is now owned by Intuit). I diligently categorized all transactions and felt smug about my knowledge of my finances. However, I never went to the next step of creating a budget and then holding myself to it. As a result, I put up with the headache of keeping all the accounts linked for a couple of years and then gradually stopped using it. The key learning for me? Use technology to help you make financial decisions and alter the way you are spending. Everything else is just admiring the problem.

The robos have good solutions for this budgeting stage, such as Personal Capital and LearnVest. Personal Capital is a robo that also has virtual advisors. But you can use their system for free for aggregation and to see your net worth. Personal Capital has a good interface and in this trial mode, investors use the system in a similar mode to LearnVest excels in guiding users in straightforward advice, both through their platform and their content. Here they explain the 50/20/30 rule of budgeting.


This stage prioritizes the way investors use their money. This is the first stage where advisors have a serious role. Aggregation is key in enabling advisors to guide their clients. It is the automatic linking of all an investor’s accounts so that they can see them in one place. Aggregators have been gobbled up in a rash of fintech acquisitions – Yodlee was acquired by Envestnet, ByAllAccounts by Morningstar and CashEdge by Fiserv. The only independent aggregator currently is Quovo. The good news for advisors is that they typically don’t directly access aggregation from the vendor; they do it through software that offers additional functionality.

The best known example is eMoney, which created a well adopted investor portal for advisors’ clients by combining website, aggregation and a document vault. A newer version is Advizr, a financial planning company, who focuses on modular planning. They have a budgeting module (shown below) which allows an advisor and an investor to work on budgeting together.


The key for advisors is to know how to use the knowledge of a client’s expenses to guide the client into effective financial decisions. A failing proposition is to be the advisor who tries to keep a client to a budget. The better role is to bring a client’s real expenditures into the sunlight and then help the client make decisions based on that reality.

Most advice starts with clients entering their current expenses into software. In the majority of cases, they underestimate those expenses. Aggregation is a way to bring reality to the discussion and show the client how much they are actually spending.

So back to me. I admit it; I have a nasty little wine buying habit. I have been expounding for the past few years that a man can only have so much wine and that we can delete that ongoing expense. Yet strangely, that expense item has stayed constant. Our advisor has been highlighting this, and pointing out that other goals are suffering. I don’t think this issue will continue as my darling wife, “she who must be obeyed,” is about to rule on the case.

Goals-based planning

When advisors are servicing the ultra high net worth (UHNW) investor, client expenses become more complex. The problem with aggregation, whether the investor or the advisor is managing it, is that links break and become stale. Keeping everything up to date is a lesson in frustration. It is the reason that investors give up on and advisors only offer aggregation to select clients.

But advisors are willing to put up with this frustration when dealing with a UHNW client. These clients often have multiple properties, and it is useful for them to see all the expenses for their properties separately. The full-service advisor, who manages the aggregation for them, has to weed through bills and categorize that the PECO Energy bill is for the main Philadelphia house and the Florida Power & Light bill is for the Miami Beach condo. UHNW advisors typically bring all the expense information into other software and service their client like a company, presenting them with reporting similar to a general ledger accounting system. (And me? No, I’m not one of those clients.)

Expenses and budgeting

For the investor, some go to the extent of running a budget (often when they are forced to), but most use an awareness of their expenses to guide their financial decisions. For the advisor, although the term we use is budgeting, it is much more about expense management, and using the knowledge to guide clients to prioritize their financial decisions. Today’s technology makes it a much easier process, whether investors are managing their own finances or advisors are guiding them.

SEI is not affiliated with Digit, Levelmoney,, Personal Capital, LearnVest, Quovo, eMoney, or Advizr.

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Raef Lee

Raef Lee

Raef Lee is the technology contributor for Practically Speaking and also serves as a managing director for the SEI Advisor Network.

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