You’d think a guy who’s run both PayPal and Intuit (INTU) would know something about finances. On Tuesday, Bill Harris, a former chief executive of both companies, is set to unveil his latest venture: a startup that aims to help people better manage their money.
“This is the culmination of my career. It seriously is,” Harris said of Redwood City-based Personal Capital, which has been in beta mode and last month announced $25 million in backing from Institutional Venture Partners.
Lest that sound like mere CEO puffery, it’s worth noting that Harris walked away from both Intuit and PayPal when other company leaders didn’t share his vision for delivering financial services online.
But while the personal finance space would seem to be chock-full of competition, Harris and his staff of 40 want to combine the kinds of online tools provided by sites like Mint.com with a premium level of service that would give users one-on-one advice from professional advisers. That premium service would cost less than 1 percent of the value of the customer’s portfolio.
“He’s trying to address what’s been a screaming need in personal finance for a long time,” said Mark Schwanhausser, a senior analyst who covers the financial services industry for Javelin Strategy in Pleasanton.
“The problem Americans face is if you want advice about your money, you need to have money,” Schwanhausser said. “The industry can’t afford to provide it for the middle class.”
Of course, “middle class” is one of those phrases with a broad definition. Harris is targeting people with between $100,000 and $5 million in assets such as stocks and 401(k)s. People with less money, he says, can rely on mutual funds and off-the-shelf financial software, while people in the “ultra high net worth” stratum can get personalized money management from the likes of Goldman Sachs.
“What’s missing is the same kind of services for the rest of us,” he said.
While people who spring for Personal Capital’s premium service won’t get to sit down face to face with their dedicated financial advisers, they will have access to them via phone, email and video chat. Advisers also will make stock trades on clients’ behalf with no additional commission; Harris figures his customers will pay half the cost of a money management firm.
The challenge, Schwanhausser said, may be getting enough users to trust the site: Javelin’s surveys of thousands of consumers have found most are far more comfortable sharing financial data with banks and investment firms than with personal finance websites.
Dena Evans, a Redwood City running coach who was among 500 people who participated in Personal Capital’s beta test, speaks highly of the service, which she learned about from a friend who works for Harris. But thus far, she hasn’t opted for the premium level, choosing to focus on the site’s “dashboard” that pulls together bank, credit card and investment account information into one place.
“My husband and I are average people, so we’re not in a position to do a lot of adventurous investing,” she said. She likes how the software breaks down her monthly spending and tallies the gain or loss in her family’s net worth. “And if the day came when I wanted to talk with an investment adviser, they make it easy for you,” she said.
Contact Peter Delevett at 408-271-3638.
