Beyond Budgeting: The New Generation of Personal Finance Tools

by Ashley Globerman,  William Trout, October 24, 2014
Vendor Reviews
North America

Abstract

Celent focuses on the North American personal financial management (PFM) space.

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 in 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.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

4

 

Defining PFM

4

 

Evolution of PFM Tools

5

 

PFM Tools and the Wealth Management Industry

6

 

Categorizing PFM Tools

7

 

Drivers for Adoption

7

Background

11

 

Research Methodology

11

 

Criteria for Vendor Inclusion

12

Vendor Overview

13

 

Vendor Landscape

13

 

Target Market

16

 

Functionality

16

Looking Forward

18

 

Expectations of Technology Development

18

 

Account Aggregation

18

 

Personalization and Customization: “One Size Does Not Fit All”

18

 

Conclusions on the North American PFM Market

19

Leveraging Celent’s Expertise

21

 

Support for Financial Institutions

21

 

Support for Vendors

21

Related Celent Research

22

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