Financial planning software startup closes its doors

Plumvo, a consumer-facing financial-planning software provider that also catered to financial advisers, announced to its users via email that it will be calling it quits Sept. 15, leaving industry participants to wonder what this means for the financial-planning technology market.

For one, it means advisers are still very much needed in order for clients to get a strong financial plan.

Plumvo did not respond to requests for comment, but based on messaging posted on its website, the company did make a point of offering its technology and services to advisers, including a widget that integrated with advisory firms’ own website.

The startup aspired to become “the first social finance community that connects individuals with friends and family, advisers, and leading financial institutions. Investors at all levels will for the first time have access to free, powerful tools to visualize their most important goals and dreams, then create and execute a plan to achieve them.” However, the harsh realities of the marketplace prevented Plumvo from achieving success.

“This is a different animal than investment advice,” said Grant Easterbrook, co-founder of DreamForward Financial, a 401(k) administrator. “With investment adviser tools, you ask 10 questions on risk tolerance, but with holistic financial planning, you have to get a lot of details.”

In recent years, as robo-advisers have automated and arguably commoditized investment advice, there has been a shift among many in the industry toward goals-based financial planning.

Now, even robo-advisers are jumping into that market.

This leaves the founders of financial-planning start-ups to wonder how they can tackle the service profitably.

Plumvo offered its online-brokerage, wealth-management and personal-finance software to investors and advisers for free in an attempt to boost adoption and usage levels, but ultimately it was unable to make its business model work.

Eugene Ting, the founder of MyPlanMap, an adviser-facing financial-planning software program, said that when his company was starting out, it considered going more or less the same route as Plumvo. Ultimately, it decided advisers would be better suited with a financial-planning tool that they can use with their clients.

“It really is something that requires some professional advice,” Mr. Ting said. “The added value in having advisers is all the stuff that’s not written on paper.”

It’s also in having accurate and actionable data.

Mr. Easterbrook said one of the many challenges direct-to-consumer financial planning platforms face is the inputting of important data and the seamlessness — or lack thereof — in linking numerous accounts. That’s something data-aggregation companies are working on, like Quovo, which just finished a round of funding with big names in the industry, and Yodlee, which was recently acquired by Envestnet.

Hussain Zaidi, the co-founder and chief executive of Advizr, another adviser-facing financial planning tool that recently integrated with wealth management technology provider Orion Advisor Services, said consumer-directed financial plans are just not valuable.

“It is the financial adviser that’s really keeping the client on track,” Mr. Zaidi said. “At this time, nobody has proven a financial-planning model that goes direct-to-consumer.”

But there are plenty of financial-planning alternatives in the industry. Aside from MyPlanMap and Advizr, there are top dogs like Fidelity’s eMoney Advisor and PIEtech Inc’s MoneyGuidePro; Envestnet’s newly acquired Finance Logix; LearnVest, which was acquired by Northwestern Mutual earlier this year; and iQuantifi, a robo-adviser focused on goals-based financial planning.

Mr. Zaidi said it would have been a best practice if Plumvo had made suggestions for other companies to which current users could transfer their plans and data, instead of simply stating that clients had until Sept. 15 to make copies of their information before the data was destroyed.

Just received notice that @plumvo is shutting down effective September 15. Is financial planning a hard sell? pic.twitter.com/FEMueaqMOC

— Bill Winterberg CFP® (@BillWinterberg) September 1, 2015

Either way, Plumvo closing its doors certainly opens another for other software providers and the advisers who partner with them.

“The opportunity is really for advisers to go beyond investment management and really partake in comprehensive financial planning,” Mr. Zaidi said. “That’s what the consumers want.”