A number of advisory firms and companies provide products and services aimed at the middle class, or the mass affluent market not reached by financial advisors with investment minimums of at least $1 million. A new player on the scene is Guide Financial, a San Francisco-based start-up that in February launched a Web-based service that shines the spotlight on cash flow analysis in the financial planning process. The company made a big splash in March when it forged a relationship to provide its service to the roughly 325 advisors in the Garrett Planning Network.
Guide was started by two thirtysomething entrepreneurs with international economic development chops who, through personal experience, know that people in the mass affluent crowd often can’t get the financial guidance they need. The company’s proprietary software enables advisors and clients to work collaboratively to track cash flow needs on a real-time basis and gauge whether clients are staying on track to meet their financial goals.
Thanks to a partnership with Intuit, whose suite of online consumer-focused financial products tap into financial accounts at 19,000 financial institutions in North America, Guide says it’s able to provide secure, encrypted access to individuals’ various accounts across a range of financial activities (banking, credit cards, loans, investments, etc.) and corral them into a tidy package.
Here’s how it works: An advisor invites a client to use Guide, which the client sees as an online portal branded with that advisor’s logo and contact info. The clients get a personalized Web site where they log in and automatically access at least three months’ worth of transactions for every account. Guide’s software organizes that data to tell users how much they’re spending on living expenses and fixed costs, how much is discretionary and how much is going toward other goals like paying off loans. This gives them a full picture of how they’re spending their money.
The financial advisor dashboard includes features such as enabling real-time collaboration with clients by providing the ability to write personal messages, track conversation threads over time and classify each conversation by folder/topic. An advisor can also build action plans for each client.
Guide says it plans to roll out a set of intelligent alerts—including features based on behavioral finance—to enable advisors to help their clients achieve their goals.
“It can quickly connect all accounts and turn a static financial planning process into a dynamic, living plan to track progress over time and help push you in the right direction,” says Uri Pomerantz, 32, Guide’s co-founder and CEO. “We’re focused on helping people achieve progress on their goals by boosting their allocation to their investments and savings accounts.”
Guide’s target market is people with investible assets of between $100,000 and $1 million, but that doesn’t mean it’s not useful for advisors serving wealthier clients. “We’ve talked to a number of RIAs who see cash-flow management as critical to clients even in the $1 million to $2 million range,” says Scott Burns, 34, co-founder and president.
Guide is offered as a subscription service to financial advisory firms, banks and insurers for $100 a month, with discounts available to companies with large volumes. The company says it’s had discussions to integrate its product with major custodial platforms and broker-dealers.
Pomerantz and Burns met six years ago at the Harvard Kennedy School of Government while studying economic development focused on developing countries. Pomerantz’s résumé includes co-founding a non-partisan, non-political microfinance fund working with Israelis and Palestinians, as well as stints working with venture capital firms in China, South Africa and Sierra Leone. He also did business development at Microsoft.
Burns served in the Peace Corps in Kazakhstan, where he led an NGO and taught university-level economics. In addition, he was an investment manager in Moscow and worked in retail banking in India. They got together stateside in San Francisco and kicked around ideas to start a company that could have an impact.
In a case of necessity being the mother of invention, they realized they could use some help with their finances. “Personal finance is an area we’re trying to figure out ourselves,” Pomerantz says. “We’re juggling how much to save for down payments, retirement and what’s the best approach for student loans. We have a lot of financial planning cash flow issues.”
So they developed an idea to help folks like themselves get financial guidance. “We’re trying to reach people like us––young professionals who don’t have the biggest bank accounts now but who need access to high-quality, comprehensive advice,” Burns says. “I think we have ideas to help advisors deliver that.”
Competitors within the advisor-focused data aggregation space include Blueleaf and the recently announced partnership between MoneyGuidePro and Yodlee. Guide sees these companies as potential partners—not competition. “We’re looking to be the main portal and technology that enables clients and advisors to work together and integrate with other software packages to pull in relevant data,” Pomerantz says.
That notion of integration with existing products is part of Guide’s appeal to Sheryl Garrett, founder of the Garrett Planning Network of advisors who offer hourly, as-needed financial planning aimed at Middle America. After she was introduced to the product, she tried it out herself and liked what she saw. And the product was warmly received by 70 of her network’s advisors during a demo webinar in early April.
“It’s not a silver bullet that does everything, but it’s a powerful tool that does some things very well,” Garrett says. “This is a complement to the financial planning tools we’re using.”