By: Carolyn Said
March 9, 2010
In an effort to make San Franciscans more financially fit, the city today plans to announce a partnership with a Web site called HelloWallet.com that offers independent advice on money matters.
"It's audacious to provide an entire city this financial framework," said San Francisco Mayor Gavin Newsom, who learned of HelloWallet through the Clinton Global Initiative, former President Bill Clinton's social-change organization. "It's a tool for people to build financial muscle, so they can have the courage to say to the credit card company on the phone, 'Isn't that a bit high?' or 'Don't you offer this?' To democratize this basic information is so significant; it could be life-changing."
Matt Fellowes, formerly a consumer-finance expert at the Brookings Institute, said he started HelloWallet after realizing that "Americans are losing literally tens of billons of dollars every year because of basic financial missteps."
For instance, last year U.S. consumers spent $38 billion on overdraft fees - although 70 percent of those charged had enough savings at their banks to potentially cover the bounced checks, he said.
"There is an enormous amount of money being left on the table unnecessarily by consumers," said Fellowes, who got a planning grant from the Rockefeller Foundation to develop a sustainable business model for mass-market financial guidance. HelloWallet, based in Washington, D.C., is a for-profit business. However, unlike other Web sites offering financial advice, it receives no commissions or other fees from banks.
HelloWallet costs $4 a month for an annual contract and $5 a month for shorter-term use. San Franciscans will have a discounted rate of $3.20 a month, and many low-income residents will be able to use it for free.
Inserts in utility bills and with city workers' paychecks will tell local households about HelloWallet.
"We were intrigued by the scale, sophistication of technology and accessibility to financial services for folks who don't have private bankers or stockbrokers," said Pam David, executive director of the Walter & Elise Haas Fund in San Francisco, which made a $25,000 grant to give low-income San Franciscans access to the site. This can "help people make the most out of the money they have and get good advice about saving, buying a home, investing in a business."
At the same time, she noted, "This is not just a service for poor people. This is a service for everybody. My staff is signing up for it; city workers and nonprofit workers can take advantage of it. When you tell a client about it, it's really different when it's a tool you use yourself and find helpful."
HelloWallet uses analytics and market data to craft personalized advice on a range of matters, such as shopping for a bank account, identifying savings opportunities and warning of financial-health threats. It can assist consumers with specific goals such as saving for their children's college education.
San Francisco has championed other initiatives to help combat poverty and improve financial literacy, including Bank on San Francisco, which helps low-income families open checking accounts, and a crack-down on payday lenders, who charge exorbitant interest rates for short-term cash advances.
HelloWallet also has a partnership with the California State University system to provide guidance to its staff, faculty and students, and will be rolling out other partnerships nationwide with employers, unions and others to bring its services to their employees, members and customers.