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I
recently had the chance to participate in an all-day hands-on StockOpter®
training session (you bring yourself, they supply Dell Laptops with
the software installed) presented by Net Worth Strategies (www.NetWorthStrategies.com)
As some of you may remember, I reviewed the initial version of StockOpter®
and was favorably impressed by the depth and flexibility of this
Excel-based planning tool.
Now
that I’m fully trained, I’m even more impressed. What
we see here is a case study in how a software vendor with a complex
product can both ’’raise the bar’’ among its
users and add significant value at a reasonable price.
As
I’ve said before, StockOpter® is a very good program for handling
the most complicated stock option planning issues for your clients.
But (this is the irony of the software world) its very comprehensiveness
presents somewhat of a marketing challenge for its vendor. The more
features you add, the more time it takes to learn how to use them.
The more complicated problems the software handles, the more knowledge
you have to have to derive the maximum benefit from the program.
In the case of StockOpter®, this learning curve branches off in a
few directions. To get the most out of the program, you need an
intermediate understanding of MS Excel; familiarity with a number
of income tax forms; specific knowledge of employee stock options;
and, finally, an understanding of how StockOpter® works and what
it does.
No,
you don’t need all of the above to use the program, but I think
it’s fair to say that if you want to be a ’’master
user,’’ and get the most out of the program, that’s
what you need.
The
solution? Executives at Net Worth Strategies decided that the best
way to get you to the top of this learning curve is a training class
similar to the ones that Morningstar pioneered for Principia (disclosure:
the author also writes for MorningstarAdvisor.com). Principia is
not a perfect comparison product, because most people can use it
at an ’’intermediate’’ level without additional
training, but the class certainly adds to your ability to get the
most out of the program.
 StockOpter®,
which demands more of the user at the outset, the seminars are an
extremely effective productivity tool. My seminar was hosted by
Bill Summers, a CPA who heads up Net Worth Strategies’ Planning
and Taxation Group. He offered good information on stock option
fundamentals and stock option planning opportunities, then moved
to the mechanics of using the program and performing stock option
analysis. Along the way, he offered StockOpter® power user tips,
advanced planning issues, and marketing support.
Other
attendees that I talked to were favorably impressed. Bill Muth,
PA, CFP with First Union in Richmond, VA, felt that it was a day
well spent. Although Mr. Muth was well informed about employee stock
options going in, he felt that the seminar gave him a much better
understanding of how to use the program, and he found the marketing
and support materials useful.
Reflecting
back on the day’s events, two things in particular struck me
as worthy of further discussion. First, even though this seminar
will be most beneficial to potential or current StockOpter® users,
it has educational value even for advisors who happen to live where
the training session is held, who simply want to get on top of stock
option issues. In fact, the session qualified for 6 CFP Board CE
credits.
Second,
particularly in the area of training and marketing, this is a value
added method of selling software. The marketing support comes at
two levels. First, Net Worth Strategies offers some statistics on
a potential niche market. For those of you familiar with the second
Undiscovered Managers paper advocating a niche strategy, consider
the following statistics from an OppenheimerFunds study that was
cited during the seminar:
•
74% of employees stock options holders know little about them
• 34% don’t know what kind of options they own
• 11% allow “in the money” options to expire worthless
 Doesn’t
this sound like a niche worth investigating? Second, as part of
the seminar package, Net Worth Strategies provides its seminar attendees
with a CD ROM that contains support and marketing materials. The
support portion of the disk includes a detailed reference guide,
sample analysis files, and a “data gathering checklist.”
This “checklist” cross-references data required in the
analysis with the corresponding form and line of your client’s
Federal tax return. The form is a real time-saver, and it eliminates
any question as to what data the program requires.
The
marketing materials include a copy of all the PowerPoint slides
from the seminar, many of which can be easily adapted for use with
clients or prospects. There is also a full-page color ad layout
that can be used as is, or modified for use as a brochure.
In
addition to the companion CD, there was a brief discussion about
how to target potential clients with stock options and the best
ways to market to them. This included a discussion of direct mail
and targeting individual company plans. Attendees were encouraged
to share their thoughts on pricing methods. The discussion didn’t
center on what price to charge, but on which compensation method.
Two of the more interesting ideas that came out of that discussion
were that perhaps the number of grants should go into the pricing
equation, and perhaps the volatility of the underlying stock should
also play a role.
The
Net Worth Strategies approach to selling software is appealing,
particularly for niche products with a high learning curve. Identify
a need, build the software, bring the niche to the attention of
financial planners, and then partner with the planner to exploit
the niche. In theory, this sounds like a great idea, but the devil
is in the details. Net Worth Strategies does a good job, but there
is always room for improvement. One avenue that they are exploring
is web-based training, which might bring many of the same benefits
to the user, but at a lower cost. The tradeoff is that the instruction
would lose some of the personal touch that you get from meeting
the instructors and other attendees face to face.
We
hope that Net Worth Strategies succeeds with this model, because
the benefits to the financial planner are obvious. This approach
represents a real partnership between the financial planner and
the vendor; one that benefits both parties.
A
Cautionary Note: Please don’t get the mistaken impression that
we are advocating that software vendors charge for basic customer
service or technical support. We are all too aware that some companies
offer “seminars” that are primarily designed to market
their product, and nothing more. The type of seminar that impresses
us is one that adds value at the advanced level. Support materials,
such as the seminar CD ROM that Net Worth Strategies supplies, sweeten
the deal. Ultimately, the market will dictate how useful these seminars
are. We encourage you to share your experiences, both good and bad,
for the benefit of all readers.
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