Financial Planning & Investing Analysis, Pt. 2

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Financial Planning & Investing Aggregators: Demographics

With the average American having $38,000 in debt, the use of financial planning and investing aggregators is on the rise. While it is at times unclear who uses these tools specifically, we can combine statements from the companies along with overall fintech trends to develop a picture of the end users of these tools.


  • More people in the millennial and Gen Z generations are likely to have heard of various financial planning and investing aggregators and hold a positive opinion of them.
  • Credit Karma cites millennials as one of their more "active segments" for their tools.
  • These types of aggregators fall into the category of "fintech." One study shows that roughly 20% of people between the ages of 18-44 use fintech tools already, compared to 2.7% of people over 65.
  • Baby Boomers are becoming more of a target for fintech firms now, though their adoption rates are still low.


  • Both men and women have positive views of financial aggregators according to surveys done on the leading providers.
  • However, most studies show that men are twice as likely to actively use a financial app than women.
  • Other studies also show women are one-third less likely to use financial aggregators because of overall anxiety around their financial knowledge.

Household Income

  • Tim Chen, the founder of NerdWallet, described two distinct sets of users for his financial aggregator: those who had lower incomes who wanted to better manage their money, and those with higher incomes looking to better understand all options available to them regarding their finances.
  • Most studies, however, show that the users of these tools are more likely to have higher incomes. One study specifically cited that fintech firms ignore the bottom third of income earners.
  • The main product offerings from financial planning and investing aggregators also tie into the notion that they target higher income users. Nerd Wallet, for example, presents options on its main page to save for travel and investing.


  • Adoption of any technology is less likely outside urban areas than rural areas generally. One study shows that rural Americans are, on average 12% less likely to have access to broadband internet and on roughly 11% less likely to have devices to connect to the internet.
  • Another study cited that in the US, 33% of urban residents make use of digital financial tools compared to 16% nationwide.
  • This implies that a similar trend exists with financial planning and investing aggregators, with more of their emphasis put on urban areas than rural ones.

Credit History

  • Credit Karma saw its success initially rise during the Great Recession by helping people with lower credit scores rebuild them.
  • However, the products advertised on sites like Nerd Wallet and Credit Sesame focus more on options for people with high credit scores such as travel cards, reward cards, or cash back cards. Credit Karma ranks by credit score ranges, but places the bad credit options further down the page.
  • People with lower incomes and lower credit scores are described as an "under served" market for different fintech companies generally.

Research Strategy

We first tried to find demographic data in standard business sources for financial aggergators such as Crunchbase, Craft, and the Fintech List. These sources did not provide information on the demographics of users, so we then looked into specific companies to see if they had issued press releases or annual reports on their user base. While they did not provide that information, we were able to find statements from company executives in news articles that gave information about their user base. These statements were non-specific, so we then researched more broadly into fintech trends and filled in specific demographic information. The studies on fintech supported what the executives at the financial aggregators claimed about their users.
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Financial Planning & Investing: Financial Wellness

From setting a basic household budget to preparing for a comfortable retirement, below are key elements of financial planning and investing that impact a consumer's overall financial wellness.


  • Creating a plan and proactively managing how dollars are working towards financial goals is a key step towards financial wellness. Proper budgeting can assist with adapting as one's financial situations alters, manage wasteful spending, and recognize their wants compared to their needs, helping to enhance their overall financial health.
  • However, a recent poll showed a 3% year-over-year decline in the number of Americans who maintain a household budget (from 70% in 2018 to 67% in 2019).
  • Nonetheless, improper budgeting can harm one's financial health if they fall into the "debt trap." In this situation, an individual neglects modifying their spending in order to live sensibly within their means.

Eliminating debt

  • Eliminating debt as quickly as possible frees up dollars to invest and make positive progress towards other financial goals and financial wellness. In a 2019 survey, nearly 80% of Americans said they have debt, with 5% owing over $250,000.
  • Another benefit of planning to eliminate (or lower) debt is the positive impact it has on an individual's debt-to-income (DTI) ratio. For any type of loan, lenders often look for a DTI of 36% or lower. Other ways to lower a DTI ratio would be to increase income or transfer debts to lower interest options.

Planning for the unexpected

  • A significant factor in a consumer's sense of financial wellness is confidence in knowing they're prepared for the unexpected. Experts often recommend saving three to six months living expenses in an emergency fund to cover any unexpected emergency expenses.
  • However, 69% of Americans report having less than $1,000 in savings and worse yet, 45% of Americans say they have $0. Setting up auto-deposits into an account dedicated for emergency savings offers a strong peace of mind and impacts financial wellness.

Credit score

  • There is a positive relationship between a consumer's credit score and their financial wellness. A 2019 report released by the Consumer Financial Protection Bureau established a correlation coefficient of 0.44 between an individual's credit score and a financial well-being scale, meaning individuals with high credit scores also tended to have high financial well-being scores and vice versa.
  • The Federal Trade Commission reports that one in five individuals have an error on their credit report. It is recommended that an individual pull their credit score once every 12 months to make sure there are no errors and report errors as quickly as possible if found.


  • Feeling confident that the appropriate steps have been taken and an individual will be able to live comfortably once they're done working is one of the most significant financial planning/investing steps fueling financial wellness. However, a recent Retirement Confidence Survey conducted by the Employee Benefit Research Institute (EBRI) revealed that up to 35% of adults in the United States have not saved money for retirement.
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Financial Planning & Investing: Notable Events

Notable events involving fintech aggregators in U.S. Bank's agreement with seven fintech companies to use a common API portal, Visa's acquisition of Plaid, JP Morgan's demand that fintech companies commit to an agreement, and Envestnet | Yodlee's acquisition of the East Asian aggregator Also, significant is the argument between PNC and Venmo, and the lawsuit of Bessemer System Federal Credit Union against FiServ.

U.S. Bank

  • On September 23, 2019, U.S. Bank announced agreements with seven fintech companies and data aggregators. The goal is to make it faster, easier, and "more secure for customers to connect their U.S. Bank account information with third-party applications."
  • U.S. Bank has a long term strategy to work with fintech aggregators, as shown in its Developer portal. This portal provides API's that let developers build services that, with the customer's approval, will connect securely to customer account information.
  • Some seven companies include DecisionLogic, eMoney Advisor, FileThis, Finicity, and MX Technologies.
  • U.S. Bank has now signed agreements with seven of the top fintechs and data aggregators, which has strengthened its API efforts.


  • In January 2020, Visa announced its acquisition of Plaid. Plaid provides the facility to connect payment apps like Venmo and Square Cash with user's bank accounts.
  • Visa paid $5.3 billion for the company.
  • Visa has two main reasons for buying Plaid. First, the company's technology currently works with the majority of the largest fintech apps in the United States. This infrastructure gives Visa access to an ever-increasing base of customers to whom it can sell other services.
  • Because Visa has a global network with an unparalleled infrastructure in financial technology, Visa will easily be able to take Plaid global.

JP Morgan

  • JP Morgan is attempting to maintain some control over its data by forcing fintechs to sign an agreement with the bank or be refused access to their data.
  • A letter, sent in January 2020, tells Fintech companies they must "commit to a concrete plan by July" 2020.
  • The bank wants these companies to stop using screenscraping and client passwords and start using the more secure bank's API's which limits the customer account data to which they have access, even with the customer's consent.
  • Companies that do not agree to use the API will be blocked any access to user data. Not having user data means the company cannot offer their services.
  • At the moment, most companies have agreed to follow JP Morgan's plan.
  • Even without an open-banking system managed by a regulator, this agreement is another step toward standardization of data transfer between banks and fintech companies.

Envestnet | Yodlee

  • Envestnet | Yodlee is a data aggregation and analytics platform with over 25 million users worldwide, over 1,200 partners and over 50 patents in the field of Fintech.
  • On February 25, 2020, it announced that it acquired, one of the top providers of platforms for data aggregation and analytics in the India and Asia market.
  • has a flagship product called Fin360, which uses A.I. and machine learning to analyze transaction data at scale.
  • The company already has several banks and FinTech companies using its advanced credit analytics with a scalable user interface and API.
  • Its innovative processes use bank data along with "mobile phone data, email, and consent-based data aggregation."
  • This M&A is seen as a win/win for both companies. The deal opens up strategically important geographies in India and Asia for Envestnet | Yodlee. At the same time,'s Founder and CEO and his team, with the knowledge of the environment and their existing relationships, will "lead Yodlee FinSoft, a wholly-owned subsidiary of Envestnet | Yodlee, to drive account aggregation business in India and other parts of Asia."

PNC Bank

  • PNC has been in a fight with Venmo, which has driven the more significant issue of who owns a customer's banking data to the forefront.
  • During the fall of 2019, PNC customers used Twitter to highlight the issues they had connecting with Venmo. Venmo suggested users should tweet to PNC Bank, saying, "let me use the financial service apps I need."
  • The Pittsburgh-based bank, instead of helping their customers, suggested they should switch to Zelle, an app owned by major Wall Street banks.
  • PNC's stated their rationale for not allowing access was based on security concerns. The bank complained that recent news coverage was a "missed opportunity to shed additional light on the real issue at hand, rising concern across the financial services industry and among regulators regarding the potential vulnerability to consumers of cyber fraud when using financial apps, and particularly ones that utilize data aggregators."
  • Paypal, which owns Venmo, stated that most banks were working with them to transfer data safely.
  • "We are ready to work with PNC and would like to be able to restore access quickly," stated a company rep.
  • The disagreement between the two parties highlights the divisiveness of the topic of who owns consumers' financial data and the difficulty in sharing that data in the U.S.

Bessemer System Federal Credit Union

  • Bessemer System Federal Credit Union of Greenville, PA, sued the web platform Fiserv Solutions for inaccurately reporting its member's account records and information. They alleged that Fiserv "failed to secure confidential member information and financial records against access by unauthorized third parties."
  • The lawsuit further stated that "Bessemer's member information has been subject to several instances of critical security vulnerabilities while in Fiserv's custody—each based on baffling and amateurish security lapses."
  • Allegedly, Fiserv's 2016 security breach exposed names, Tax ID numbers, and parts of account numbers to unauthorized parties.
  • The lawsuit also alleged that Fiserv silenced "its [Fiserv] clients from disclosing to other affected clients when there are security problems, and holding customers' data hostage when those customers seek to go to competitors."
  • Fiserv has thousands of global clients and a market share of 37%. It is, therefore, reasonable to assume that the same issue will impact other credit unions and small banks that rely on Finserv's technology.

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Financial Planning & Investing: Consumer Motivations

Customers of investment planning aggregators are motivated by the convenience and time savings provided by the platforms, and view the lower cost of entry and minimal fees as considerations when selecting these platforms.

Financial Aggregator Customer Profile

Convenience and Time Management as Motivator

Minimizing Fees as Consideration

  • Online investing platforms such as Betterment and Wealthfront have set management fees of 0.25%
  • Traditional financial advisory fees can range between 1% to 3%.

Lower Financial Barrier to Entry as Consideration

  • As compared to traditional financial advisory models, utilizing online financial management tools typically require no minimum balance (Ex. Robinhood and Betterment) or a significantly lower minimum balance ($500 for Wealthfront).
  • The average portfolio size for E*Trade customers is $70,000 compared to $900,000 for clients of Morgan Stanley.
  • Top rated advisors often cater to clients with over $1,000,000 in investable assets.
  • Companies such as Morgan Stanley are investing in online investing tools to specifically reach less affluent customers.

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From Part 01