The Customer Effect

Personal Capital links with employers to grow user base

  • Personal Capital is linking with employers to grow its visibility among new sets of clients
  • Personal Capital's technology allows employers to further personalize 401 (k) offerings based on an employee's life circumstances
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Personal Capital links with employers to grow user base
Explore the future of finance at the Tearsheet Forum: Bank of the Future on June 21 in New York. Early-bird rates are still available; details here. Digital wealth adviser Personal Capital is offering its financial advice platform to employers to grow its user base beyond its core group of investors. The company last week inked an agreement with benefits provider Alight and investment firm AllianceBernstein to use Personal Capital's tech platform to help participating employers select personalized 401(k) offerings for their staff members. Co-branding with Personal Capital exposes large swaths of new users to the platform. The move amounts to a marketing strategy for Personal Capital to expand its platform's utility beyond its direct-to-consumer offering, and give employees a tool to aggregate their investment and retirement assets, said Aite senior research analyst Greg O'Gara. Marketing to employers is yet another means for a digital adviser to differentiate in a crowded market. Finding a sustainable business model is an ongoing challenge for direct-to-consumer digital financial advisers. With a market that includes 200 platforms in North America alone and incumbents copying the robo model, the pressure is on for these platforms to seek additional revenue sources. Some are launching niche features like investment products aimed at Muslim investors, as Wealthsimple rolled out last year, or socially responsible portfolios, as Personal Capital did in February, and Betterment and Wealthsimple debuted last year. Personal Capital offers two products: a free digital financial dashboard which tracks $500 billion for 1.6 million registered users, along with a paid product that includes human advice. Personal Capital currently holds $6.5 billion in assets under management. While the corporate offering, Wealthspark, generates fee revenue (neither Alight nor Personal Capital would share employer pricing details), it offers two key marketing levers: growing its user base to new sets of users from participating companies, and the collection of customer data to fuel outreach efforts. Alight currently partners with 100 large firms, many of which are Fortune 500 companies. “Historically, we’ve focused on our direct-to-consumer model, but we’re very interested in working with folks who need our technology and want to help us grow our business,” said Mark Goines, vice chairman at Personal Capital. Despite the move into the 401(k) space, AllianceBernstein will construct the 401 (k) portfolios. Employers will pre-fill the Personal Capital platform with information they know about employees, and the employees can add additional financial accounts and goals. Personal Capital's digital platform will recommend a portfolio based on what it knows about the customer, while Alight will be the 401 (k) adviser. Personal Capital uses a hybrid advice model for its investment advisory services. At 0.89 percent of assets under management for the first million invested, it's pricier than many robo-advisers, but it offers dedicated human advice for paying customers. The enterprise product adds another revenue stream from a different type of user. As the enterprise platform scales, managing perceptions around use of customer data may be a challenge. While some of Personal Capital’s free investment dashboard users reportedly receive marketing calls nudging them to upgrade to the paid service, marketing other products to WealthSpark participants based on customer data is off the table for now, the company said, adding that it's something that will be discussed in the future. "The human RIA side cherry-picks free users that are of a certain [asset] threshold for marketing calls; this could expose them to more people than they would naturally get with their [free] tools, like older professionals," said wealth management consultant Davis Janowski.

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