Beyond Budgeting: The New Generation of Personal Finance Tools

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27 October 2014
Ashley Globerman
Beyond Budgeting: The New Generation of Personal Finance Tools is the second of a series of reports focusing on the delivery of online financial advice. This study focuses on the North American market and examines a range of firms. Celent’s research on the PFM space includes, but is not limited to, the following vendors:
  • BillGuard
  • Finovera
  • Geezeo
  • HelloWallet
  • Level Money
  • Mint
  • MX (formerly MoneyDesktop)
  • Moneytree
  • Prism (formerly Mobilligy)
  • Yodlee
This list is by no means exhaustive, but it does portray an array of relevant wealth management players. A broader overview of PFM players is provided in an earlier Celent report, Personal Financial Management: The Devil Is in the Details. The goal is to focus on those adding value from a broader wealth management perspective. Celent defines PFM as a platform of online money management tools offered at a low cost that aim to allow the retail investor to control his or her financial future through account tracking and budgeting features. The core features of a PFM solution include: consolidation of accounts, bill payment reminders, credit score checks, and short-term cash flow management. In more complex PFM solutions, an even more holistic view is offered through investment tracking, data visualization, social capabilities, financial goal planning, and advanced analytical capabilities. In short, PFM solutions provide the retail investor with a relatively independent, transparent, and holistic view of his or her financial position at any given point in time, thereby facilitating the financial management process. Celent focuses more on the segment’s position within the advice continuum, which extends from PFM to investment management to financial planning, and less on the functional aspects of PFM, which are closely aligned with online banking. “This macro-level approach is designed to highlight the utility of PFM as a starting point for the delivery of advice generally, and financial planning advice in particular,” says William Trout, a senior analyst with Celent’s Securities & Investments practice and coauthor of the report. Over the past several years, PFM providers have worked to alter their images and perceptions from a simple budgeting tool to a forward-looking, actionable financial planning tool. Celent considers modern PFM solutions as a steppingstone to financial planning, particularly given its transformation from a reactive, backwards-looking tool to a predictive instrument capable of providing cash flow projections and actionable recommendations around spending and saving. Celent explores drivers for PFM tools, charts the evolution of their functionality, and examines the challenges and opportunities these firms pose to the traditional wealth management industry. “There has been a surge in the number online financial advice providers to the US retail investor market,” says Ashley Globerman, an analyst with Celent’s Wealth Management practice and coauthor of the report. “The target client is tech-savvy, cost-sensitive, skeptical of financial institutions, and willing to use nontraditional wealth management services that speak to their digital lifestyles.”

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