December 8, 2009
LISTEN: mp3 audio (6:08 min)
In a very short time electronic communication, specifically the Internet, has effected a sea change in the way people conduct their basic financial transactions. Beginning with direct deposit and automatic withdrawals, then progressing to account transfers and online payments – for everything from utility bills to credit cards – much of our individual financial life is conducted instantly in a paperless environment. We don’t have to go to the bank, put the check in the mail, or wait for a monthly statement. Almost everything we want to know about our money, and want to do with it, can be accessed and executed with a computer keystroke.
Taking this blink-of-an-eye technology one step further, a number of businesses have developed online programs to aggregate, organize and update your financial information. Your bank accounts, credit cards, mortgages, investments, insurance policies – even your legal documents – can each be accessed on a unique, password-protected website. Constantly updated, this data can be formatted to provide all sorts of up-to-date consolidated financial information, such as personal financial statements, performance reports on investments, lists of assets for estate planning, etc.
Some of these management programs are offered by banks and other financial institutions for their customers. Others are independent online ventures marketed to the general public. Depending on the features and/or your customer relationship, the institution offering the management service may or may not charge a fee. Even if you don’t pay a fee, understand that every management program has some profit incentives for the provider. In-house programs will attempt to find products that match your financial data (“We noticed you have $10,000 in your checking account. Have you considered our SuperSavers program?”), while most online programs for the general public are supported by affiliations with retailers and merchants (“Want to maximize your grocery savings at FoodWay? Why not use our in-store SuperSavers program?”).
In theory, these tools allow a person to take immediate, accurate financial snapshots of their financial condition at will, and help answer questions like, “Can you afford that big-ticket purchase? Are your investments due for a rebalancing? Did you have positive cash flow this month?” Questions that might take a few days to answer (or often get resolved with little more than a “guesstimate”) can be addressed with a high degree of certainty in the time it takes to log in, configure some report variables, and hit “Enter.” That’s powerful stuff.
Ah yes, but remember the previous paragraph begins with the words “In theory…” The bane of every computer program is user error, also known as “garbage in, garbage out.” These financial management programs deliver on their promises only if the information is correctly configured. And in spite of the best intentions of programmers to make their products idiot-proof, the biggest hurdle in making online financial management programs work their magic is getting them set up correctly.
And even the techno-geeks admit this can be a problem. Here are snippets of an online review-and-comment thread regarding a problem of a highly-recommended online financial management program, started by a computer science graduate working in the financial services industry. (Specific company and institutional names have been deleted.)
Reviewer: (The program) lets you put transactions in buckets – and naturally it will get a few wrong to start with – but you can set up rules to classify new transactions how you like.
Comment: I just tried (the program) and it’s not really simple to use.
Comment: I tried to setup an account at (the program site). I found out that (my bank) and (investment company) did not support the (program) site/ software. What to do, what to do?…. could someone suggest another software that is better?
Comment: (The program) does support (investment company), you just have to set it up after 8pm EST and before 8am EST, because (investment company) doesn’t want the access to slow down the site for others.
Keep in mind this is a program that receives overall positive reviews from the reviewer and many of those commenting. Still, user error is a definite possibility, even for computer- and financially-literate individuals. And the greatest likelihood of user error is right at the beginning; if you don’t set it up correctly, the program may not update correctly, and all you’ll get is bad information in an instant.
Getting Technical Assistance
People who really care about their automobiles have always known the value of a good mechanic. And as the personal computer has become a fixture in our lives, many of us have developed our own “tech support,” whether it’s a friend who works in IT, a local computer company, or even the service department of the big-box retailers. In the same way, the real value of an online financial management program might be the personal assistance that comes with it.
Financial Technical Assistance
One of the value-added aspects of working with financial professionals can be their assistance in helping you establish and operate an online financial management program. From formatting the accounts and the initial data entry to the generation of regular reports, the knowledgeable assistance and support from a financial specialist can make a big difference in the benefits you receive from online financial management.
Filed Under: CONTROL, FLOW, MULTIPLY, SEE, THINK | Leave a Comment
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