The term "wealth management" typically brings to mind high-net-worth clients and meetings with "relationship managers" in classy meeting rooms. Expert financial planning and advisory services have always been marketed toward wealthier individuals, many of whom are willing to pay top dollar to have someone else take care of their money.
Adjie Wicaksana thinks there’s an untapped market for financial planning among young professionals and millennials who may not yet be high-net-worth, but who are earning more money than their parents did and are looking to invest. Instead of investing to grow their wealth, however, they’re looking to fund major purchases or expenses and achieve life goals: buying a car, going on vacation or saving up for their children’s education.
To help time-strapped millennials manage their money and achieve such targets, Wicaksana and veteran investor Eko Pratomo have developed Halofina, a service that helps clients pick investment products based on their goals or life plans. Since soft-launching its app in 2018, Halofina has attracted 15,000 registered users and is in talks to raise funds that would help it grow faster.
Goal-based investing
New users are initially asked what they are investing for. They are then asked the current price of that expenditure, and how long they plan to invest for that goal. Based on these questions and answers, Halofina suggests an amount to invest each month and the products that the user should buy.
Clients can invest in mutual funds, in P2P lending, or the can save their money in gold. Halofina does not actually offer such products itself, however. Rather, the company partners with fintech providers and customers invest their money with these companies. Halofina facilitates the transactions through their app's integrated API, which means customers can complete their transactions via Halofina.
Besides bringing more customers and transactions to each of the partners, Halofina’s platform also encourages customers to make investments every month, increasing engagement frequency and value for each customer. Most importantly, Halofina provides insights into customer profiles and investment preferences – valuable data for companies that want to tailor their products to fit their clientele.
"We can learn about the user's life plans, i.e. planned expenditures, which can help to understand their pain points and interests," Wicaksana, the company's CEO, explained. "Based on those things, financial institutions can develop products that can better cater to their customers’ needs." He added that financial institutions need to move away from a product-pushing approach and towards developing products that actually fit their customers’ needs.
Digital-first approach
Wicaksana says Halofina’s digital-first pipeline incurs little or no variable cost acquiring each new client. Hence the company can offer their services for free – at least, right now. Halofina is planning to add premium features for paying subscribers, such as financial news updates and direct consultation. The subscription will be priced very affordably at IDR 10,000 (less than US$1) a month.
"You'd probably be willing to pay IDR 120,000 a year – the equivalent of a cup or two of coffee a month – to get such benefits," Wicaksana said. “We are quite confident that when people are aware of the benefits of financial management and planning, they will find the price for such services should be higher.”
Building a digital-first infrastructure meant that Halofina needed to work with partners who are also digital-first. All of their current partners are fintech companies: mutual fund distributor Tanamduit; gold distributors Tamasia, and IndoGold; and P2P lenders Mekar and danaIN.
"While we don't exclude non-fintech companies, modern fintech firms tend to have an infrastructure that works with us. Bank-based mutual fund distributors might still require a physical signature or other documents, and that doesn’t work for online onboarding.”
Customer-centric solution
Halofina might be all-digital now, but it grew from decidedly "analog" origins. Wicaksana recalled that when he and Pratomo founded their company in 2017, it was geared more toward offline financial literacy education. It was only at the end of that year that they decided to build an app, soft-launching an early version of Halofina in August 2018.
Speaking about the pivot, Wicaksana said: “I learned that when we want to promote certain values to our stakeholders, sometimes we have to find common ground between our ideals and reality, without becoming too jaded or purely pragmatic.”
Wicaksana had believed that he could increase financial literacy by creating books and encouraging people to read them, but he learned that the approach did not fit the character of his audience.
"[Millennials] might pay for a monthly Spotify subscription instead of buying a book at the same price," he said. "This [realization] is what guided us to building the solution we have today."
Despite the change in approach, Wicaksana is certain that Halofina is still a “mission-driven company.” It plans to involve many different stakeholders, from their current partner organizations to employers, in an effort to build awareness about personal finance management and to build traction for its own product.
"We want to push the idea that financial literacy is something we must develop together," said Wicaksana.
