Product review - Plum (UK)

For many years now, I have been looking for help with my personal finances. This is something that I fret about daily, but I don't want to invest time in managing them nor have I been able to find a good solution. This is why plum caught my attention when I read the news about its fundraise. So, here is my assessment about the product. 

TL;DR

• Good for newbies to personal finance. 

• Personal finance has many interesting problems to solve. Plum is taking punt in all directions - income/ expense reporting, expense management, investment management  

• IMHO It may make sense to hone the focus on one area initially, and a good mature future app will tackle all the above areas. IIUC, Plum may be focusing on investment management, which is a good direction

Disclosure: I have used the product for a week in Nov-2021

User problem

1. Individuals / Families are not able to manage expenses & investments easily. 

2. It is getting complicated to manage investments due to complexities of existing instruments (and their risks) and the advent of alternative investments (e.g. crypto). 

3. The existing investment services are available for high net-worth individuals. 

4. Sometimes, there are agency problems with these services, as they may receive commission from financial investment firms. 

Plum is definitely tackling all, but i am not sure about #4. 

Metrics

• 1d or 7d active

• Paid subscriptions (I subscribed to the ultra plan)

• Revenue generated per user - it seems to have revenue sharing arrangements from its partners for investing through it. 

Plum solution

I have divided my assessment in the following 4 areas: 

• User on-boarding

• Revenue and expense reporting 

• Sourcing offers to optimize expenses

• Suggest & execute investments

User on-boarding 

It was simple and easy. The phone camera took pictures of me and my ID. All the docs were verified quickly and the login was created almost on the fly. Nothing unexpected here. 

There is a personalized assistant and sends out daily summaries and advice. Summaries are still basic (just gave me the balance of only one of my bank accounts). 

Revenue and expense reporting 

The first key feature was to give users income and expense insights.  This was done by getting transaction data from the banks and credit cards. The backend was enabled by true layer. There were some stability issues, but the data was imported without much problems. 

The auto classification of data was basic and this area begs for major improvements

• Income was not identified though the HSBC account gets regular credits on a specified day with specified details  

• “Regulars” - this does not helps much, i was hoping to divide the expenses into categories

• Transactions, which are neither income or expense, were just shown and not classified. Eg  “investments” outflows, interbank transfers, credit card payments etc

Sourcing offers to optimize expenses 

The offers were shown for major expenses like phone, broadband, electricity and gas. I guess they would expand to insurances, auto etc in the future. However, none of these seem personalized, which is hard to do without getting to more details (than just the amount)

Suggest & execute investments

I am being slightly injudicious here. The Plum team has made a lot of good effort, but this is really a hard problem. I am the wrong user segment for Plum, as I am not a novice investor. A sound investment strategy needs to understand

• Your current income, expenses and investments. This is possible as the data from banks, credit cards is available to it. Few other integrations with funds, ISAs etc can help generate this data. 

• Your long term goals and requirements, including retirement plan. There is no such feature

• Your risk appetite, so that the investment suggestions can be tailored to you. 

None of this was available to “Plum”. Therefore, I think the recommendations were generic, but still good for first time investors (ISAs, savings, etc). There was a decent  introduction to different investment types and easy ways to invest (by partnerships) within the app. One could also create ISA, GIAs, but they were managed by 3p partners of Plum. 

There is an effort to get paid subscription, where plum lets you invest. It puts money in an interest account. There is a “brain” function, where you could specify rules for savings. That looked pretty good from a quick look. Long term, I hope Plum automates this based on my income, savings and investments. This can be overwhelming for newbies.