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.
- 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 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.
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.