“Computers themselves, and software yet to be developed, will revolutionize the way we learn.” – Steve Jobs 
Paper, Pencil, & Calculator
Just how difficult was the art of financial planning in 1977? Consider the time required to calculate and prepare a thirty-five year retirement capital asset projection report that considers savings, growth, taxes, and withdrawals. Now change it for additional savings. Now change it for higher returns. Now change it for lower withdrawals. Wow! That’s lots of clicks on my HP-12C.
From a professional standpoint; quantity, quality, and innovation in financial planning were significantly limited by the time and cost of accounting. While there were banks and insurance firms with some projection technology available to financial planners, it was pretty limited, and the reports were really designed to help sell products, not answer important retirement questions.
Simple Technology for Everyone
Steve Jobs and Steve Wozniak first built computers for their own satisfaction. They were part of the Palo Alto Homebrew Computer Club. Small computers were constructed by hobbyists from parts and kits. Homebuilt computers were complex and fun, but didn’t have many advanced uses.
When Jobs and Wozniak founded Apple, the fundamental idea was to make relatively affordable computers that anyone could use. It was designed to be a home appliance. The Apple II was ready to go right out of the box. It set a standard. Suddenly there was a market for computer programs. For the first time it was all about the software.
Killer App: VisiCalc
While the Apple II was the first really useful personal computer, it was not inexpensive. In 1977 the 64K version sold for $2,638, or about $7,200 in today’s dollars. Fifty thousand Apple II computers were sold in the first two years.
In 1979 a software program arrived on the market that would bring turn the home computer into an office machine. VisiCalc was the first spreadsheet calculation program, and businesspeople almost immediately embraced its power and flexibility. The possibilities were as varied as the business and individuals who used it. Seven hundred thousand copies were sold in six years.
Financial Planning Innovation
An early VisiCalc pioneer was Michael Vitkauskas CFP. Using the new spreadsheet technology on an Apple II, Michael set up financial planning models he had previously done by hand. Learning the technology, he was able to expand planning models, and find answers to questions that had previously been out of reach. Vitkauskas shared his software creations with other professionals, and ultimately founded Money Tree Software to continue supporting and expanding planning technology for the benefit of both the industry and the country.
Bringing the power of desktop computers to financial mathematics changed the discussion of what was possible. Programmed systems saved time and gave advisors more answers and more time for clients. New technology pushed back the limits of thought and allowed remarkable innovation, which continues today.
All because a couple of guys in Palo Alto thought computers were so cool that everyone should have one.
Mark Snodgrass is President of Money Tree Software, Corvallis Oregon. Money Tree provides advanced professional financial planning software systems to help advisors successfully address the complex and varied needs of their clients. Read more at www.moneytree.com.
