Competitive Intelligence: New Consumer Financial App Offers "The Complete Financial Plan" For $349

Tuesday, January 03, 2012 13:32
Competitive Intelligence: New Consumer Financial App Offers

Tags: competitors | online financial advice | Wealth Management


Another web-based competitor to advisors has popped up — “a women-centered company with the mission of educating readers about money and how it affects all aspects of her life, from where to shop, what to buy and how to save. LearnVest publishes information about personal finance, time management, organization, career and relationships to enable every woman to lead a full life.”
Here’s the topper: LearnVest’s top solution is “Complete Financial Plan” created by a team of CFPs for $349.
Most advisors will dismiss LearnVest as low-quality, saying it does not even approach the depth of their client relationships.
That’s how disruption works. The business being disrupted doesn’t know it is happening.
These are not my ideas, by the way, but those of Harvard Business School’s Clayton Christiansen.
LearnVest is targeting investors that the vast majority of advisors are not interested in as clients: ranging from women just starting a career to working moms and who may have as little as a few thousand dollars to invest. Most of LearnVest’s membership would not be able to meet a $250,000 minimum investment requirement that most investment advisors would impose.
However, LearnVest — and those that will copy it if it’s successful — will become adept at serving this market and eventually move to more upscale clientele, and then it will clearly encroach on advisors. Advisors might not realize these services are competitors for another five or 10 years, but the cycle is under way.
LearnVest is part of a growing wave of disruptive innovation unfolding across the financial advice business. Another example comes from Wealthfront.
To succeed despite growing competition from Web-based financial advice apps like LearnVest, Wealthfront, and the online brokers, advisors might want to think about embracing these tools. Why not create a solution that works with these new markets?


This Website Is For Financial Professionals Only

Comments (2)

I agree, and the online tools MUST meet the needs of both the advisor and the client. The "collaborative" tools that I looked at in the past, including some that no longer exist, seemed to be too complicated for the client to understand (and I did try them out with clients). For consumers/potential clients trying to manage their spending and savings habits, goals based solutions aren't always helpful, and cash flow based solutions are complex. Perhaps the interface can be "simple" for the client-facing part and more complex for the advisor-facing part, with a "meeting space" in the middle where they can each interact with the data to affect the I dreaming?
Patricia , January 03, 2012
Clearly some of these offerings are more mature than previous attempts. But might it not be helpful to compare these to some of the failures that came before? It might help us have a productive conversation about why some of those things did or did not work, and whether these attempts are any different. What about going concerns like Kevin Condon's service, based out of Denver? Maybe a more important question, or topic for ongoing discussion, is "Where does this leave us?" Can the Web really serve our clients? Will we really have to do plans for $349, and manage assets for .25bps? Side question: will MoneyGuide Pro, Morningstar, and all our other vendors a)compete against us? or b) keep us at a disadvantage to these disruptive technologies by continuing to increase our prices? Or will they lower their prices since we cannot (potentially?) maintain our prices at current levels for those of us that serve less-than-millionaire clients? Or will we be like and other retail-oriented services that have to "recommend" product to make any money? Does that mean that commissioned sales come full-circle and become a major component of revenue in this space? Is our personal input really not worth a damn? Because the only way to make a profit at $349, or at 25bps, is VOLUME, not service. Back to the example: every day I get 5 "recommendations" on how to save money from whichever vendor is willing to pay to be a sponsor. I ignore them, but obviously LargestBank in the World pays-to-play because there is enough commission (equivalent) business there to offset "FREE!" Is that really objective "advice"? Or, is that a sales pitch to which the perennial wisdom of Caveat Emptor applies, just like everywhere else in life? Personally, I'd like to see more constructive and proactive discussions, reviews, thoughts from you and others, etc., on what's right with our profession and how we can keep our profession healthy and strong, rather than just looking at all the potential threats. Where do we go from here? Do we all move upstream and leave the little guy to the mass-marketers of "free" and might-as-well-be free? Should 80% of our practitioners get another job flipping burgers and leave less competition for the rest of us? Do we professionals cheapen our advice and service so we can say "us too"? Since none of us on this forum can compete with marketing dollars of large firms from the Wirehouses to the Web, do we just throw in the towel? Is who's that guy from Undiscovered Whatever back in 2000ish right about the direction of our industry that in a few years there will only be a couple BIG firms (and cheap online robots) available? Was he right? He certainly was Doom and Gloom. It's important to know what potential and real threats exist, but it seems that there is so much Doom and Gloom in the analysis - how can we ever overcome this, that, or the other thing? Personally, I cannot live without hope.
vguettlein , January 03, 2012

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.