BACKGROUND AND MOTIVATION OF THE AUTHOR
My name is Larry Russell, and I am the editor and publisher of The Skilled Investor and the principal architect of VeriPlan. I am an experienced executive with expertise in management, investments, economics, statistics, and accounting. I hold a BS from MIT, an MA from Brandeis University, and an MBA from Stanford University. For fifteen years of my twenty-year corporate career, I managed strategic initiatives at Hewlett-Packard and at Sun Microsystems in Silicon Valley. Subsequently, I provided leadership for two early stage software companies in Southern California. (See: Background of the author)
In 1999, I co-founded Codexa Corporation in Altadena, California, which provided advanced information services to Wall Street securities industry professionals. I developed Codexa’s information service provider business plan and hired the management team. We raised an $8M Series A venture round secured $2M in revenues from Wall Street clients. Although we delivered a robust technology, needed new capital was unavailable, and we shut down. In 2001, I established Lawrence Russell and Company and began an in-depth and systematic reading of the scientific finance literature. I wanted to find out what was true, false, and ambiguous about personal financial planning and investing. These activities lead to the development of VeriPlan, a sophisticated, fully-integrated, and inexpensive financial planner, which enables individuals to do their own lifetime family financial planning.
I was impressed by how much useful, but obscurely written, financial information was scattered around the academic world. It seemed to me that many individuals and families are starved for objective financial planning and investment information, while they drown in a sea of self-interested industry sales pitches. The securities industry generates a deluge of information, which leaves people with little systematic or durable understanding of what works and what does not. Without valid guideposts to screen out the noise and the hype, individuals cannot be expected to plan the lifetime course of their financial affairs properly. (See: How can individual investors trust, when so much information about investing is rubbish?)
Returning to my academic roots, I read finance and investment journals, visited finance professors’ websites, and searched the Internet for publications and working papers. By the middle of 2003, I was convinced that I understood more efficient and scientifically verifiable pathways for individuals to optimize their financial planning and investment strategies. My firm, Lawrence Russell and Company, became a Registered Investment Adviser in California, and I hold an NASD Series 65 adviser license.*
In 2003, I began to develop an automated and highly customizable lifecycle planning model. This software application, which became VeriPlan, was designed initially to serve as a decision support toolset for hands-on advisory clients who wanted to develop coherent, lifetime financial plans. I also gave educational presentations on what I had learned to Southern California organizations, including Rotary Clubs, CPA groups, financial planning groups, etc. Giving these presentations and getting feedback has been very helpful in developing VeriPlan and the written materials for The Skilled Investor website.
As I spoke with individuals and groups about their needs, it became clear that everyone has similar, yet distinct, financial planning needs for their families’ futures. While more wealthy people have greater complexity to their financial affairs (caused largely by our incredibly convoluted U.S. personal tax codes), everyone needs sophisticated financial lifecycle planning. Whether wealthy or not-yet-wealthy, families need a personalized way to understand how their current financial behaviors could affect their families in the future. However, few people already own enough assets to justify the high cost of a competent and objective advisor.
Before starting my development of VeriPlan, I searched for a sophisticated and customizable lifecycle financial planning tool to use myself. Quickly, it became clear that all computerized financial planning technology of any sophistication was focused on the needs of professional advisors. Instead of providing an interactive and personalized modeling environment that a client could use alone or interactively with an advisor, most professional tools had significant limitations and required extensive training for proper use. Worse, professional tools just cost too much. These applications are only economical, when their high cost is bundled into the high fee structure of an advisory practice. Most individuals could never afford these professional planning tools.
Furthermore, many professional planning tools are designed to channel clients toward the selection of more expensive financial, securities, and insurance products. After extensive scientific study of what works and what does not, it is very clear that there are scientifically verifiable selection criteria for financial and investment products. Reducing the cost of any financial or investment product is at the very top of this list of criteria. Financial product selection should always be separated entirely from any truly objective lifecycle planning and analysis application. Integrating financial product sales functions distorts financial planning, because the financial interests of the client, the advisor, and the industry are simply not the same.
These realizations prompted me to focus significant resources on developing VeriPlan as a standalone personal financial planning software product. I realized that the mass of Americans would never have access to a personalized lifecycle planning application, unless an inexpensive, sophisticated, and fully integrated software product was developed. Since I already had developed earlier versions of VeriPlan for use by clients, I decided to develop a product that individuals could operate themselves. Moreover, I decided that it must be priced under $100, so that almost anyone could afford it.
For these reasons, I have dedicated significant time and effort to provide The Skilled Investor and VeriPlan to those who want to improve their personal financial planning and investing practices.
Larry Russell, Managing Director
Lawrence Russell and Company