What began as an effort to increase the efficiency and profitability of the wealth management process has grown into a personal finance app that helps all types of people manage their personal finances.
And while technology made the shift possible, the human element plays an equally important role, Wela cofounder and CEO Matt Reiner said.
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Mr. Reiner said Wela’s origins are in wealth management. Roughly four years ago the company began to focus its technology more on personal financial management, seeking to build intuition similar to the discussions one has in a normal meeting with an investment advisor.
Out of that came Benjamin, an AI-powered bot that tracks a user’s spending habits and provides personalized recommendations based on their financial needs and goals. After analyzing those metrics, Benjamin produces a “Daily Spend Limit” that serves as the basis for showing the user how well they are adhering to their goals. A rolling total, it adjusts based on future spends.
“The reason we wanted to develop Benjamin was we saw the value such advice provided the high net worth individuals,” Mr. Reiner said. “It was enlightening to them.”
Benjamin helps users with four financial goals – creating and maintaining a positive cash flow, developing an emergency reserve, preparing for retirement and managing credit card debt, Mr. Reiner said. Its design addresses one of the key flaws in the old school “set a budget and that’s it” method of personal finance.
“People set budgets but they don’t stick to them,” he stated.
The Wela app shows people the immediate impact that impulse buy has on both short and long-term goals. Users link all of their accounts so Wela can give them a personalized look into their finances and help them see the impact today’s decisions have on tomorrow. That extra $50 today may mean forgoing Starbucks next week, for example. With automatic recalculations, the evidence is clear and immediate.
Complementing the technology side is access to personal financial advisors whenever you need one. Both options resonate with millennials, Mr. Reiner said.
“Millennials still have a desire to talk to someone but they want access to information instantly. They want (the mobile app) to be integrated with human conversations to better understand things when they’re in the moment.”
Millennials can be a challenging lot as they have debt but also want to live today, Mr. Reiner said.
“The conversation has to be about change and to get them to understand, relate back and take action. They have to live life via experiences and be told how to do that without taking much action.
“They need a refreshing and relatable way to think about financial activity.”
When the topic is personal finance, striking the right balance between technology and the human element can be a tough call, Mr.Reiner said. As finances are such an emotional subject, we cannot rely on rational thinking to rule the day.
That’s where bots can play a key role, he explained, by provided more interactive and proactive insights to help alleviate emotions.
Technology also helps us make sense of the volumes of information we are bombarded with every day, Mr. Reiner added.
“We have more information but we’re not getting any richer.”
Present factual information in digestible formats. Immediately show us the short and long-term impacts of potential decisions. What will $100 each month into Junior’s college fund mean for Freedom 55?
“The education has to become granular down to the individual,” Mr. Reiner said. “We expect in the end that the customer can relate it to them. That’s hard to do when the information is complex.”
Because personal finance is usually a taboo subject we can fall into the trap of thinking our personal financial situation is unique, Mr. Reiner cautioned. But after many combined years talk to wealth management clients, the Wela team knows that’s not true.
“We’ve talked to thousands of people, and most of the time their situations are very similar to other people’s,” Mr. Reiner observed. “That’s where machine learning can play a role.
“The more information people tell us, the more insight we can provide.”
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