What to copy from Personal Capital’s client experience

The rise of robo-advisers like Betterment and Wealthfront lit a fire under traditional advice firms to start modernizing their technologies to improve the client experience. Personal Capital may not be the largest of such firms but it’s the one that many look towards as a model for successfully combining digital tools and human advisers in a modern, user-friendly experience.

Orion Advisor Services CEO Eric Clarke recently called out Personal Capital specifically as the platform RIAs want to compete with on client experience.

Personal Capital’s model remains unique among digital advice platform. The Silicon Valley startup offers a free dashboard for investors to sync their accounts and get a single view of their cash, investments and liabilities, and to receive basic financial planning around retirement or other savings goals. Those tools have helped bring roughly $10 billion to its wealth management business, where more than 140 financial advisers help provide digital and human guidance to investors for a fee. The firm also now offers high-yield cash accounts.

A key to Personal Capital’s success has been a focus on user interface design and client experience from the beginning, according to chief product officer Jim Del Favero. He recently sat down with InvestmentNews to share his thoughts on adviser technology and how his firm has built a technology platform that resonates both with investors and its team of financial advisers.

Ryan W. Neal:​ When you look at the financial advice industry, where are firms still struggling when it comes to client experience and engagement?

Jim Del Favero: I think where the industry is still behind is in tools and delivering things in a manner people expect to consume them. The industry went in this direction of being thorough to the point of being unusable. A lot of the traditional financial planning software packages out there can do everything. But can you point to anything they do well?

I think financial advisers, because of the way they are trained and the broad experiences that they have, by nature tend to move towards the complex. So the tools out there aren’t really reflective of how people want to interact with them. How many financial advisers are providing mobile solutions where people can go in and see how they are doing?

RN: What does client experience for mean for Personal Capital, and how do you think you’re delivering it well?

JF: There’s the user side of it and business side of it. On the client side, it helps me understand how I’m doing, helps me understand where I’m going, it helps me feel good about it. There’s a lot of people who are actually probably going to be ok, but they don’t feel good about it. Part of the client experience is if you’re doing ok, help the client feel good about where they are and feel good about the level of risk they are taking, and feel good about hitting their goals, so they can worry less.

On the business side of it, we want the client to understand the value that we’re delivering.

(More:​ Making the future of financial advice as effortless as Uber will be no easy ride)

RN: Where do you think Personal Capital is doing a good job building consumer-facing tools? How have you been able to do it well?

JF: The original premise we had was that technology isn’t enough, that you need to have technology and people. So you need to solve for both of them working together. The typical RIA started as people first, and robo-advisers started as technology first. You’ve seen robo-advisers move towards looking at adding advisers. And you’ve seen advisers move towards adding technology to deliver a better client experience. They’re coming at it from different directions and landing in the same place. We started with this premise, and we’ve been executing on it since day one.

We have a younger workforce who is more steeped in technology and has different expectations. You have a technology-oriented company, and then product people and design people who come out of consumer software and don’t come out of financial services. We’re a consumer software company that’s also a financial services company — and that’s the difference. We’re not a financial services company first and foremost.

RN: How do you balance building new features and solving more consumers’ problems with still focusing on executing your core really well?

JF: Having worked on quicken for 17 years, I’ve seen a product that had a very good core of what it did well and then tried to solve every job in the world. The first casualty of that battle is new users. We manage $10 billion. Tiny. Our future is much bigger. If you lose sight that the next 2 million users are just as important and that they need to have an even easier experience than the first 2 million, you’re screwed.

So focusing on what that new user experience is like is key. But it’s hard. I worry all the time that the bigger we get, the more it’ll spiral out of control. How do I maintain the simplicity? That’s probably the number one thing that keeps me up at night.

RN: Where are you looking to improve the product?

JF: We’ve been doing a lot of work on financial planning aspects, and we’re still trying to finish weaving the story of how you connect the day-to-day actions with long-term results.

What’s the next thing I need to do as a free user or as a client that is going to have the most impact on improving my financial outcomes. I think we’re close, but we’re not where I think we can get.

RN: Why did Personal Capital want to move towards cash management products?

JF: We originally intended to be a bank and we couldn’t get a bank charter. We view at our core that we’re a financial technology company, not just a wealth manager. What we saw on our platform is we have all these users that are linking all these accounts … people are tracking $40 billion in cash on our platform. Very little of it was in a high-yield accounts and we thought, we could do better than this. It’s the ability to say, we see where your money is and here’s what your money is doing and if you move your money to us, here’s what your money can do.

RN: Is an IPO in the future?

JF: I think its more about controlling our own destiny. We want to build a company that lasts, and the decisions we make every day are about how to build something that’s going be around for 50 years, 75 years, 100 years — or at least until the next wave of disruption comes along and makes our technology look antiquated.

It could be an IPO, it could be something else. Whatever vehicle we need to go with to make sure can be around, is what we should do.

(More: Advice industry leaders focused on improving the digital client experience)

RN: What’s a piece of advice you can give traditional advisers out there looking modernize their practice?

JF: I think they need to move to a model where they can deliver more value at greater scale. So much of advice today is hand-to-hand combat. We see that with our own advisers. It’s just getting someone on the phone, schedule alignment, and efficiency of how many people can you talk to?

My advice is you really think about what scale means to you. What if the fees you charged were cut in half? How many clients would you need to service? How would you do that? What are the services they can surround themselves with that allow them to deliver what their value is at scale to their clients.

Related Topics: Practice Management