This might seem like an odd question to ask. However, I get this question two to three times a week from various Advisors. Frustrated with what is available on the market and the price of the big boys products; many Advisors think that they can create their own PMS and sell it.

My knee jerk answer is always no. It’s not as easy as you think and if you think the big products are expensive wait until you write your own. Once you start putting this all down on paper in the form of a business plan you will see that it is generally not a good plan.

First you need to scope (define) the product. Most Advisors think they know what to build. however, if you take your definition of PMS functionality and pass that by ten Advisors you will find that all Advisors do business differently and their way is always the best. Oddly enough, they are all correct. The Advisor grows their business to suit their personality so their really is no wrong way (as long as they are making money).

Lets assume you have scoped the product. You need to hire some developers, up to a point you generally get what you pay for in this area. If you want someone who can take you ideas and turn them into code quickly with minimal input from you and they know some form of development process… think high five to low six figures. If you can dedicate a lot of time to manage the person and understand the development process think mid-to-high five figures. In reality you will need at a minimum of one of each of these developers.

Now you need some hardware infrastructure. You will need powerful development machines, at least two good servers and software. You can expect to put at least 20k a year into this area.

Finally, it’s time to build the product. You might do like Matt did starting Techfi, lock your developer in, set the timer and wait 9 months. However, most developers you hire won’t put up with this (unlike Matt did with Techfi, they don’t have the ownership stake). Expect it to take 12-18 months before you have the first beta product.

So now you release your product, you have clients calling with feature requests and support requests. They want to know when the next release will be. This is the ongoing cost, you can expect this thing to cost around 200k a year until you really get moving.

Now, don’t forget your financial planning practice.

The closest I have seen this come to working was when a group of Advisors got together and were talking about funding a software company. They would act as the core product advisers and let the software company do it’s thing. It sounded pretty good and everyone was excited until it came time to really define the product. There were disagreements on feature priority, database platform, development language etc… For a while there I actually thought it was going to work, but it eventually fell apart.

In the end I tend to think of it like this, if you want to build a PMS for internal use only fine. Just expect to pay two to three times what you pay for one of the big solutions. If you want to sell it to make money, you are going to have to decide between your financial planning business and your software business. You really cannot do both and will have to hire someone to take on the one you can no longer manage.