For many consumers, personal finance continues to be a challenging and inefficient part of the financial world. While forums like Reddit personal finance and Bogleheads provide ample advice on investing and aggregating wealth, they are unable to offer individualized guidance on the deployment of accumulated capital. Similarly, modern wealth managers focus on growing their client’s nest egg to the detriment of teaching them how to responsibly spend their hard-earned money.
The age-old question remains: How do you know when you have enough to retire?
Colby Ross and the team at Project Finance are attacking this issue head on by providing users with a singular application that speaks to both the aggregation and distribution phases of savings. While other apps like Mint and Wally only allow users to track their spending, Project Finance goes one step further by projecting future cash flows and capturing expenses, income, and investments through a unique machine learning algorithm. Using their platform, it is possible to project the future impact of major purchases like buying a car, a house, or even an engagement ring.
Read on as I chat with Colby Ross, the co-founder and CEO of Project Finance.
DO: You previously worked at BAML with the Strategy and Business Development teams and developed Merrill Lynch Clear, a wealth management platform that helps people manage their money through retirement. What led you to found Project Finance, and how have your previous experiences contributed to your work?
CR: I joined BAML in 2010 and left my role at an institutional investment consulting firm because I wanted to work in Boston. I was also looking to get out of the investment management space and into more strategy and business development work.
I consider the six years I spent at BAML to be the defining years of my career. As part of the product team, I enjoyed my work and met a lot of great people who shaped how I think about business. The biggest project I focused on was called Merrill Lynch Clear, a completely redefined wealth management platform that advisors used to help clients manage retirement.
Because the wealth management industry serves an aging population, our team at BAML realized that our technology needed to expand from focusing solely on the accumulation of wealth. While generating alpha is important, retirees also have to focus on the distribution phase and understand how long their money will last. A lot of the systems that Merrill Lynch had in place were based around accumulation and failed to help clients get comfortable with the fact that they had enough money to maintain their desired lifestyle.
My experience at BAML helped me immensely. That being said, my motivation for starting Project Finance was much more personal.
As somewhat of a personal finance guru, I was always diligent about budgeting and making the correct financial decisions in my own life. I used Excel to project my future finances based on decisions that I made today, like buying the newest iPhone or taking a vacation. I tried apps like Mint but found that I outgrew them as my life progressed and my finances became more complex. I didn’t need to optimize today’s budget. I needed to know how present decisions would impact my future cash flows. I assumed there was a better program out there that I just hadn’t found.
Over time I spent frequenting websites like Reddit Personal Finance, Rockstar Finance, and Bogleheads, I realized that lots of people encountered the same issue as me. They might use an app like Mint for aggregation, but they needed Excel for their modeling and projections.
My interest reached a peak after I got married and began working at an insurance company that offered me an equity compensation plan. I simply had no time to maintain my spreadsheet manually.
I knew I was onto something but needed people to help me. This is when I reached out to Jeff and Peter Cole at BAML and they became co-founders.
We started to build out an app that could solve this problem. Screenshots of our work began to generate excitement in the online personal finance community, and we knew we were on the right track when 3,000 people alone signed up for a product that had not been built yet!
DO: How would you define Project Finance’s mission?
CR: Our mission is to empower people to achieve their financial goals in the fastest, most efficient way possible. Everyone has different priorities and aspirations in life, as well as their own unique definitions of success. At Project Finance, we identify the financial decisions that can accelerate their path and structure their financial resources in the most optimal manner possible.
We’re able to achieve this because personal finances come down to simple math. There is usually a right and wrong answer in every financial scenario, regardless of how complex the situation might seem.
DO: Given the popular demand for personal finance managers like Mint, You Need a Budget, and Wally, where does Project Finance fit within the larger money management ecosystem? When creating Project Finance, did you tailor it to a specific type of user?
CR: Our biggest differentiator is the ability to combine budgeting with future projections, offering our clients the ability to completely plan their finances. I’ve tried the apps you mentioned, and each one is great at focusing on one specific aspect.
With Project Finance, you have a modern financial planning tool. We offer the same account aggregation tools similar to a company like Mint, but we go one step further and add the planning aspect on top of that. Using our website, you can plug in future expenses, add life goals, and even manipulate your future cash flows. Our users add big purchases like vacations, and even engagement rings! Our tools also illustrate the effect of contributing more or less to student loans, retirement accounts, and 401ks.
These were all things I was doing myself in Excel that I thought would work perfectly in a web based planning tool.
DO: I love the fact that Project Finance allows you to project cash flows and see the impact that big expenses can have on future financial health. Can you talk about the machine learning systems and analyses you use to make such amazing projections?
CR: Absolutely. Peter Cole, one of our co-founders, has developed the machine learning models. He joined Project Finance with a lot of prior business experience in the machine learning space.
Essentially, we use an algorithm that runs every time someone links an account. It identifies the user’s income, recurring bills, and can identify all other types of spending. For example, the model knows when particular bills have been paid or when paychecks have been received. This model is used not only to identify critical financial activity that needs to be understood but also to mark line items as paid or received. As a result, the model is able to forecast where a user is going to be in the future based on the given expenses maintaining a similar rate in the future.
For example, our model might calculate that you will have $10,000 in your bank account based on current assumptions. But if you raise your student loan payment to $700/month, the model will pick up on this and pivot to present you a re-calculated value. This all happens automatically based on our model’s ability to learn user trends.
DO: How has Project Finance been received by consumers to date?
CR: Really well. We have a number of users who have logged into our site more than me, which is a really heartwarming statistic to see this early in the game!
Although we’re still in a beta phase soliciting and collecting feedback, the comments we’ve received have been really positive. We’re using user opinions to prioritize a roadmap going forward and are constantly making changes to our software. It’s one of those aspects that can never truly be finished.
We’ve also incorporated a community aspect into our product itself. A section of our website is reserved for feature requests, reporting on bugs, and general discussions about personal finance. This has allowed us to collect feedback a lot faster than we could have otherwise.
DO: You and your team participated in the DCU Fintech Center Winter 2017-2018 which runs through Winter 2018. What was that experience like, and how do you see Project Finance growing in the future?
CR: Working with the DCU Center has been an awesome experience. I truly view the center as an extension of our team. The entrepreneurs and staff members on site provide a level of support and feedback that we wouldn’t have been able to get anywhere else. At a business level, everyone is genuinely interested in each other’s success. The executives are available at least once per week, and the free office space is a huge perk.
On a personal level, I can say that the friends I’ve made and conversations I’ve had have really refined the way I talk about our company. The DCU Center challenges you to talk about your company’s progress and distill the way you want consumers to view your product. Compared to when we started back in January of this year, the way that we talk about our company has evolved very quickly.
Lastly, the center exposes you to other business models and opportunities by putting you in close proximity with other entrepreneurs. There are so many ways to grow a business and acquire customers. I myself was very focused on the direct consumer space when I first started Project Finance. In the future, I see us continuing with the consumer approach but also hope to add in white label opportunities.
DO: Given the privacy risk that comes with online payment solutions, what systems are in place to protect user data and transaction/loan history?
CR: Great question. Protecting user data is obviously a huge concern for us.
For starters, we don’t store any of our user account data. We use an external company called Quovo for account history and data aggregation. They have a significant information security policy and private cloud and do not sell to third party vendors. We felt incredibly comfortable with their privacy standards after running a significant security review.
From our perspective, we only know the bare minimum of information about our clients that allows us to serve them. We don’t know names or social security numbers. We know broad information like user country and zip code, as location has direct tax implications that impact cash flows. We also ask for date of birth to ensure that our users are over the age of 13. Simply put, every piece of information that we do collect serves a clear purpose that allows us to best serve our users.
DO: From your perspective, if you could provide one tip to someone considering starting up, what would it be and why?
CR: I think back to one moment early on in my development of Project Finance. While I was still working a full-time role at an insurance company, I hired an outside design firm to take my vision for Project Finance and build out an application. I didn’t have a lot of details around how the app would look, where support would sit, or even what it would look like.
I wrote a $10,000 check, and the company started to build out an entirely different app. All because I lacked the clarity in my own head for what I wanted the product to become. I thought I could cut the check and outsource the work to someone else.
My one tip would be to literally map out the entire product you envision inside of your head. Do this before you try to raise capital, before you a hire a developer, and before you seek a patent. Before you spend any money on the product, you should have your product documented and fully mapped out on paper.
In the end, money means little if you are unable to spend it on the things you love. Project Finance understands this, and the team has successfully created an application that can be tailored to the unique lifestyle goals of its users.
As a founder, Colby exemplifies what we at SIC love about fintech. His personal motivation behind Project Finance preserves the integrity of the team’s mission. With their combination of passion, innovation, and drive, it is only a matter of time before modern wealth managers take notice and begin to pivot their practices.
A big thank you to Colby and the entire team at Project Finance for investing in Simple Innovative Change!