Brad Matthews had an "aha" moment while visiting a bank in Tennessee.
The bank had more than a million consumer checking accounts, but only 50,000 were using its wealth management services. Upon investigation, it turned out that the minimum investable assets required for the wealth management product was $100,000, while the median household income in Tennessee is $43,000 per year. "They didn't have a cost effective way to manage those with less than $100,000 to invest," Matthews says. "So what they were doing, which seems crazy, is they were steering valuable banking clients over to Fidelity or Schwab." Then the bank would want the customer to come back when they were ready for a mortgage or higher-level wealth management talk. "What kind of message are you sending your client when you send them to Fidelity or Schwab?"
Matthews, a former banker with JP Morgan, is launching Trizic Portfolio Manager, a site banks can white label and offer to their mass affluent customers, hosted by his San Francisco startup, Trizic.
"We felt there was something missing for the mainstream or mass affluent investor," Matthews says. "Banks are really good at core banking products for retail consumers, and they're becoming increasingly good at wealth management for affluent clients. But there's a huge gap we call it the chasm in products or services to meet needs of the mass affluent: young families with emerging wealth that need something more than just checking, credit cards and savings."
The site Trizic offers is a simple, do-it-yourself online investing site that includes a bank's branding and customer service support.
The software asks the customer several questions about his risk appetite, goals and time horizon, the way a financial adviser would quiz a new client. The software gives the customer a score, which is matched up to an appropriate model produced by the bank. The customer receives back a very basic suggestion for allocating his assets.
"Customers want the convenience of an Expedia for their investments, but they want it from a firm that's been there for 100 years, that has a branch on Main Street, and that they've heard of before," Matthews says.
Some clients with negligible investable assets may grow into high-net-worth clients, he notes.
"There's a great transfer of wealth going on $41 trillion is going to exchange hands," Matthews says. "If they can build those relationships with clients now, banks can sell them other products, or they may become more profitable clients later."
A future feature will let Trizic aggregate all of a customer's accounts onto the site, so that the bank will be able to see all the assets its clients have and the client will be able to view his complete financial picture.