10 years on: Once a first mover, Mint must work to stay relevant
App of the Week: HelloWallet
As much as we talk about the advances in investing technologies/platforms on Tradestreaming, personal finance tools are really kicking it.
One of the most popular is HelloWallet. Like the model that its predecessor Mint.com pioneered, HelloWallet is meant to not only track and manage personal spending/budgets, but optimize them as well.
Visualizing your financial life
If you’re like me, you’re a visual person. One of the hardest things to tackle with personal finance is to really understand all the ins-and-outs, money-in/money-out.
Our lives are complex. Spending on individual items needs to be put into the larger context of everything going on in our financial lives.
HelloWallet does a powerful job representing data with useable visuals and the entire service is centered around goals, the guideposts that help determine what we should — and shouldn’t — be doing financially.
After hooking up your bank account and credit cards and filling out simple budgetary items, HelloWallet begins spitting out personalized daily guidance. These zen-like tips are comprised of ways to address lowering spending, reorganizing debt, saving more, etc.
Social benchmarking and conflict-free
HelloWallet also provides social benchmarking by explaining what others in your social/geographic group spend on particular items so you can tell whether you’re overspending or not.
One of the gripes people have with Mint is that its revenue model is to refer its users to 3rd party sites and receive remuneration for any money spent on that new relationship.
HelloWallet doesn’t do that and makes a point of emphasizing that it’s conflict-free. The app comes with a free, no-credit-card-needed 30 day trial. It’s generally $8.95 per month.
Check out HelloWallet.
How to make Betterment better (Hint: truth in marketing)
Sometimes, it’s worth reading the fine print — especially, when it comes to financial products.
I was interviewed by Mint.com recently about my thoughts on Betterment, a startup that performed pretty well at recent tech conference, TechCrunch Disrupt (see, Betterment wants to be your new, higher-yield savings account).
What is Betterment?
Well, it’s really an investment advisory service that masquerades as being a better savings account. By removing much of the jargon (the site doesn’t even mention securities by name), Betterment removes many of the barriers to putting money in the market. As I said in the Mint interview:
For most people, opening an online trading account and figuring out what to buy and who to listen to, there’s so much noise out there.
And that’s true: how many individuals really understand asset allocation, diversification, risk when professionals 
have such a hard time defining them? It’s kind of like I know it when I see it. Betterment provides a usability layer that requires only one decision point: what percentage of my money do I want in the market? That’s it.
Removing the confusing jargon and the pain points associated with complicated concepts is ultimately a good thing. I can just picture my grandparents trying to navigate an E*Trade account trading screen.
Oops, it’s not actually a bank account
While pursuing a noble end (making investing easier for the mass majority), Betterment stumbles when it positions itself as an alternative to a savings account. It is most definitely NOT a savings account. Money in Betterment is split between Exchange Traded Funds (ETFs), one of which will include U.S. Treasury Bonds if you allocated to that. That means, an account holder
- risks losing some, if not all, his money
- will see fluctuations in the account
- will have investment-level taxes on gains
I was quoted in the interview:
“They took a process that’s inherently scary and overwhelming for people and used technology to simplify it,” says Miller. “I think that’s an honorable thing. But to market it again and again, to talk about a savings account, is just disreputable. It’s scary, actually.”
Though it appears that they’ve toned it down recently, there’s still just too much talk/discussion on the Betterment website about safety and savings. Betterment may be a great product to *invest* spare cash just sitting in a savings account (much like ShareBuilder used to be).
Just don’t compare it to the savings account. At 90 basis points (.9%), it’s also expensive.
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Source
A Better Savings Account? (Mint.com Blog)
Looking to make a Mint in financial planning
So, top-dog personal finance website, Mint.com, just announced a further step into financial planning with some goals-based tools to help users plan financially for the future.
From the release:
Mint’s new Goals feature seeks to take the difficulty out of both setting goals and regularly tracking your progress towards those goals. With a few clicks of the mouse, you can set up a savings goal, and then use Mint.com to help you achieve that goal.
Using Goals for Saving for the Future
So, if a Mint user wanted to save for something like home improvements, they’d use Goals to:
- Set funding source
- Set goal dollar amount
- Blend in financing options
- Establish target date
- Specify monthly savings target
Makes perfect sense, right?
So, the move from helping people track to helping them plan is an obvious one and a good move for Mint.
And Mint’s revenue model/value proposition work well for this foray into planning. I assume Mint will begin to gain referral fees as they recommend loans, travel services — anything that helps assist in the savings and planning process.
According to the NY Times:
The new feature comes as Mint.com is facing increasing competition in the online financial software space. New entrants like HelloWallet have started attacking Mint.com’s business model and have emphasized how they offer more financial planning advice services.
The trend
We’ve seen investment platforms begin to automate professional grade services to their client in an effort to round out their offering and attract full-service clients (see my review of E*Trade’s Online Adviser). Now, we’re seeing personal finance sites begin to creep into the financial planning/investing/future-oriented space.
What get’s me juiced is that sites like Mint have a TON of information about their users — the type of information the investment portals and online brokers drool over. This positions them better for a move into investing — much like the much ballyhooed-TechCrunch Disrupt-winner Betterment is focused on.
Additional Resources
- Mint.com Expands Into Financial Planning Tools (NY Times)
- How To Set and Track Financial Goals With Mint (Mint blog)
- Goal Keeping Gets Easier at Mint.com (All Things Digital)
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