Silicon Valley Vets Aim to Bring Personal Financial Services to the Masses

Even though this Silicon Valley company’s dress code requires men to wear a shirt and tie to work (no jacket), the vibe is inherently high-tech.

Personal Capital’s CEO, Bill Harris, who headed up Intuit and PayPal previously, is unveiling his latest company today, which melds technology with financial advisory services.

He says the goal is to bring the decades-old business of managing money to the masses, by replacing fancy offices and golf club memberships with software and video chatting.

“I think we are going to see a radical deconstruction of financial services over the next decade that may be similar to what’s happened to the media or GM,” he said. “It doesn’t mean they will go away, but they will look astonishingly different. That spells tremendous opportunity. It’s really difficult to take a large company with established ways of doing business and change.”

On the surface, it doesn’t look like Personal Capital would have a chance against Merrill Lynch, Charles Schwab, Fidelity or Edward Jones.

It has zero clients, 40 employees, zero branches, $27 million in capital and obviously a long, long way to go. Harris admits: “I bet Wells Fargo or Schwab has 1,000 engineers for QA (quality assurance) alone,” but he counters, “We are better off than they are because we can move quickly.”

In a demonstration, Harris walked me through the site, where you can log in to all of your various bank accounts and brokerage accounts.

By doing so, Personal Capital will be able to see everything in one snapshot, so it can tell you that you are invested 79 percent in U.S. stocks, or if you have too much cash. You can even drill down to see how much money you spend at Amazon on a monthly basis, or on a category like groceries.

All of these tools are free, but users will have to pay for the advice — if they should want it.

Harris said the tools show you what you have, but the advice will tell you what to do if you are over-invested in U.S. stocks, or in a particular company.

“Most people have no idea and it’s the most important financial decision that you have to make,” he said.

The advisers will also help you eliminate fees that you are currently paying for mutual funds and come up with a long-term plan.

Personal Capital charges less than 1 percent of all the assets it is managing a year, which is below other brick-and-mortar businesses, he says. Additionally, the sales people don’t work on commission, so their interests are aligned with the client.

“I’m 55, and in some ways this is the culmination of my career,” Harris said. “I’ve done so much in financial technology over the past 20 years. … All of it has been pieces of the puzzle.”

Personal Capital is not the only one in Silicon Valley going after Wall Street.

Harris is also an adviser to Wikinvest and PageOnce.

PageOnce is building mobile applications to help people track their bills. Similar to Personal Invest, Wikinvest is building software to help users manage assets across multiple accounts. But instead of using advisers to make recommendations, it will eventually provide tips using algorithms to decide what is cheaper or more lucrative based on your holdings.

“I would argue that nowhere near enough is being done,” Harris said. “If you look at finance overall, it’s a huge and vital part of the American and global economy, and finance is one of the largest industries in the world. It’s up there with housing and autos and medicine. But when I think of all the industries where the Internet, or connectivity or mobile, has changed everything, it could be even more transformed.”

It’s easy to get Harris up on his soap box, but Michael Sha, the CEO of Wikinvest, will join him.

Sha says the irony in the industry is that the more you pay for financial services, the lower your return. Still, it’s not the aim of Wikinvest to replace the big brokerage houses. Its users will need them to make a trade.

Here’s a video of Harris, wearing a jacket and displaying the polish of Wall St.:

Bill Harris Overview from Personal Capital on Vimeo.


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