I usually avoid non-technology posts, but I just read an excellent pair of articles in the NY Times that I’d like to share. The first article is The End of the Financial World As We Know It, which discusses some of the more glaring flaws in the US financial system. The follow-up article is How to Repair a Broken Financial World, which lays out some obvious steps to fix the problems, none of which are currently being implemented.

The articles go deeper than other analyses I’ve read, pointing the finger at systemic problems like the payment structure for credit ratings agencies, and the revolving door between the SEC and high-paying executive positions on Wall Street.

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I’m fairly critical of most software and web sites I see. I go into software demos with low expectations and I love it when I get surprised by something cool. This happened a few months ago when a friend of mine invited me over to Trust Company of America (TCA) for a demo of their portfolio modeling and rebalancing software.

It was one of the better demos I’ve seen. I like their lightweight Java app/SOA layer and their “models within models” concept matches the way advisors actually think about their trading strategies. My first question after their demo was why weren’t they out in the press showing this off? It’s better than anything I’ve seen from their competitors and I’d never heard of it.

So I was happy to see them get a big hit recently in Virtual Office News. David Drucker has been keeping an eye on our two smaller advisor custodians for a while now and has been highly complimentary of both Shareholder Services Group (SSG) and TCA. In the case of TCA, they have an internal development team responsible for their entire advisor platform and, so far, they’ve been keeping up with the big boys.

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Last year, Joel Bruckenstein did the first annual software survey for Financial Planning Magazine, and he just followed up with the 2008 Software Survey (pdf). It’s a fascinating analysis of how advisors and planners use technology. As somebody who recently threw his hat back into the software vendor ring, it’s an invaluable tool for determining where we should be headed.

He puts a high level of importance on CRM software, calling it “the single-most important factor in establishing and maintaining a successful financial advisory practice.” Shortly after we sold Techfi to Advent, Advent had a focus group on our software that I attended. My biggest surprise was how many advisors were using their portfolio management software as a contact management system.

That seems to have changed in the last few years, as only 16% of the survey respondents are using “other” which could include their portfolio management system. Of course, Microsoft Outlook is the top-rated choice and I suppose may of those advisors could be leaning heavily on their portfolio management system.

Another surprising statistic is the tiny penetration in the “rebalancing” segment. Only 7% of the respondents are using a 3rd party package and 78% use nothing at all. This bodes well for Tamarac, iRebal, and the many recent newcomers to the very new rebalancing market.

Of course, I’m mainly interested in portfolio management software. It’s even more fragmented than it was ten years ago, with no one vendor having more than an 18% market share. In fact, the biggest category is “None” at 28% which rose from 24% last year. And only 62% of the respondents are satisfied with their portfolio management systems, most of those are only “somewhat satisfied”. The only category with fewer positive responses was document management.

You can read the survey (as an Adobe Acrobat file) here.

FinFolio released its alpha last week and I had a slew of requests for online demos. So I spent some time analyzing web conferencing software. This is *not* a thorough review, but I did look at a some packages I don’t see mentioned in other reviews that I read. In particular, I looked at two free packages that I’d love to see get some more exposure.

I talked to several advisors who have been using presentation software to conduct meetings with out-of-state clients. The technology has been around for ten years, but I heard my parents mention it for the first time this year. That’s usually my indicator that a particular technology is getting close to the widespread adoption point. This could be the right time for advisors to start experimenting.

I took a look at TeamViewer (free for personal use), DimDim (free), WebEx, and GoToMeeting. There are two things that FinFolio needs, the first is remote support. We need an application that our users can run on their desktops that lets us log in remotely and see what’s going on. And we also need something that lets me give online demos to one or more prospects. I was hopeful we could find one solution that could do both.

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Traditionally, the financial services industry has rooted for and endorsed Republicans. Their support for capital gains and upper-income tax cuts has helped us personally and the financial services industry in general. But with the mismanagement of the last eight years and subsequent collapse of our nation’s economy, I’ve been wondering how many financial professionals have been reconsidering their support of the GOP.

The Financial Times just endorsed Obama for president.

They think Obama ran a better campaign, and say that “McCain’s [campaign] has often looked a shambles.” They acknowledge his “way with a crowd,” saying “Good presidents engage the country’s attention; great ones inspire.” They like his comprehensive health care reform and chastise McCain’s health care plan as “too timid.” The FT gives Obama points  for responding to the economic emergency and call’s McCain’s plan “a hasty half-baked intervention". They like his even temperament on foreign policy.

Their sole objection is not doubts about Sarah Palin’s ability to assume the presidency, as is the case with most of the other endorsement defections I’ve read. The Financial Times’ sole objection is Obama’s trade policies:

He pandered to protectionists during the primaries, and has not rowed back. He may be sincere, which is troubling. Should he win the election, a Democratic Congress will expect him to keep those trade-thumping promises. Mr. McCain has been bravely and consistently pro-trade, much to his credit.

They don’t mention taxes.

Bail-out got you down? Are you worried about the death of the free market? I’ve got something that will restore some confidence in deregulated private markets. A private US company called SpaceX just made it to orbit with a fully reusable launch vehicle that they built.

Elon Musk, founder of PayPal, has used his dot com fortune to found SpaceX, one of a few private companies who have been trying various methods to achieve orbit. I’ve been watching this segment for a few years now and even drove down to watch Spaceship One make the first privately funded manned flight to space in 2004.

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I just discovered QuantLib, which is a free open-source library for quantitative finance. Those of you who aren’t financial software developers may not realize there’s a small group of companies making financial libraries for developers of financial software. The biggest of these is TIPS, a comprehensive library used by hundreds of financial institutions, including Advent and Schwab; they charge hundreds of thousands of dollars, plus additional fees for each software sale.

What has always amazed me is that these are formulas you can find in countless finance books. So it came as no surprise that there is now an effort to create a general-purpose financial library for all companies. According to the web site, QuantLib already handles bonds, options, greeks, and numerous mathematical methods for solving things like internal rates of returns. It does Monte Carlo analysis and has pricing engines for exotic options and fixed income types. That’s as much or more as the other financial libraries I’ve looked at.

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This news is a bit dated, but it means that we hit our portfolio management acquisition trifecta. B-Ready joins the recently acquired list along with dbCAMS and Investigo.

B-Ready is an outsourcing solution that uses Schwab PortfolioCenter as the back-end. It was founded by Linda Bready (oh, I get it) in 1998.

From the press release:

The Open Finance Network is a leading provider of front and back office technology and service solutions for family offices and fee-only advisors. OFN’s end-to-end solutions empower trusted advisors to fulfill and amplify their vision by eliminating the administrative and financial friction involved in delivering best of class approaches across their business, wealth and portfolio management processes. OFN is based in Charlotte, N.C., one of the nation’s leading financial technology and services centers. The company has a full-time staff of approximately 100 people and has over $14 billion in assets under administration.

You don’t need to be a geek to appreciate it–Chrome is *fast*. Download Chrome here, then run the JavaScript Benchmark Suite.

My JavaScript Benchmark scores (bigger is better):

• Internet Explorer 8 Beta: 28
• FireFox 3.0: 144
• Chrome 1.0: 1,418

Two orders of magnitude faster than Internet Explorer. If Chrome makes it to the end of the day without crashing, I’m dropping FireFox.

Google announced today that they’re launching a web browser called Chrome. Their announcement discussed numerous features but the important ones all revolve around making the browser a more stable development platform for web applications.

There are some really good JavaScript web apps out there right now, many written by Google themselves (Gmail, Google Reader, Google Apps). Some of these web apps are very sophisticated and really push the boundaries of what browsers and JavaScript can do. But they’re all hampered by one serious limitation–today’s web browsers are not serious application platforms.

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