Financial Planning Adoption Barriers

Alexa Von Tobel reflects on the inherent challenges of building and selling financial planning products, particularly compared to more straightforward e-commerce businesses. Her experience with LearnVest highlighted the unique difficulties in getting people to engage with financial planning services.

• Building Financial Planning Products is Uniquely Challenging:

  • "Getting people to financially plan is really hard"
  • "Nobody walks down the street and says 'oh I can't wait to go get a financial plan today'"
  • Compared to selling shoes online: "holy smokes how much fun would that be... that's an easy business to build"

• Customer Acquisition Dynamics:

  • Signed up 40-200 households per day for financial plans
  • Customers were "super sticky" once they tried the service
  • Had to actively convince people that "financial plan's gonna make you better"

• Product Evolution Strategy:

  • Started with content in 2007 to build brand and engage users
  • Expanded to tools (budgeting app)
  • Added advice component based on customer demand
  • Built proprietary financial planning software with 8 patents

• Key Innovation:

  • Created cash flow based financial planning software
  • Addressed needs of 95% of country (78% living paycheck to paycheck)
  • Previous solutions only focused on wealthy individuals
  • Software could analyze 60 data points to create "GPS for your money"

• Business Model:

  • Transparent pricing: $500/year for unlimited advice
  • No hidden product fees (unlike traditional 2% annual fees)
  • Served customers from $30,000 to $30,000,000 in income
  • Eventually expanded to B2B, offering software to companies as employee benefits

The experience made her "an even scrappier entrepreneur" due to the inherent difficulty of the product category and customer adoption challenges.