Wednesday, July 5, 2017

Mint, Still the King of Aggregators

An aggregator is a piece of software that takes data from multiple sources and provides centralized access to it. When it comes to personal finance aggregators, Mint has been the best game in town for several years now, despite some stagnation.  In fact, Mint.com looks pretty much the same as it did in 2009 when the company was bought by Intuit, the makers of QuickBooks and TurboTax.  This is a familiar story:  big company sees meteoric rise of upstart innovator, big company buys innovator, innovator cashes out and walks away, big company milks the cash cow for as long as it can while not rocking the boat by making any significant changes.  Still, despite the fact that the number of user-visible changes in the last few years can be counted on one hand, no rival has managed to unseat the champion.  This is an analysis of how Mint changed the game and why you should be using it, until something better comes along.

The average person has 15 different financial accounts: checking and savings, credit cards, student loans, investment accounts, and more. To keep your financial future on track, the simplicity of being able to see everything in one place has obvious benefits.  However, there are unique challenges to this space that explain why Mint has been the undisputed leader for so long.

Is Mint Safe?

An aggregator like Mint has to integrate with many different financial institutions.  Some of them are technically advanced, and provide systems for faciliting this integration like APIs.  Getting data from less enlightened instutions requires more radical solutions like "scraping", or extracting data from the institution's own web interface.  Regardless, the aggregator must keep authentication information that allows access to your data across different accounts and different organizations.  The first question people ask when considering Mint is often, "Is it safe for Mint to have all my financial passwords?"

There are three ways the risk is mitigated, and in my opinion, acceptable.

First, some financial institutions offer a way to use read-only authentication credentials.  This is sometimes called a "token", and is separate from the main password that gives full access to your accounts.  By providing Mint (or any other aggregator) a read-only login token rather than your primary credentials, you can be assured that nothing bad can happen if the credentials are stolen.  Institutions like Capital One 360 offer this kind of access for Mint to use.

Secondly, Mint is now owned by Intuit, which is the software company that creates and manages QuickBooks, TurboTax, and other financial products.  Identity theft is a serious issue in the 21st century, and if you think a hacker having access to your bank account is worrisome, imagine what the hacker could do with your tax returns and social security information.  The point here is that Intuit has a history of managing mission-critical financial software products and systems, and if TurboTax has been safe to use for over a decade, you can trust that Intuit will also be as vigilant in keeping Mint safe and secure.  Of course, nothing is guaranteed in this world, but you can be sure that if a security breach of Mint does occur you would hear about it and so far their track record has been spotless.

Finally, your accounts are protected in other ways.  Both VISA and MasterCard have a zero-liability fraud policy, which means as long as you report fraudulent activity without delay once it's discovered, you will not be held liable for fraudulent charges.  This protects not only your credit cards, but also your debit cards and other accounts where the VISA or MasterCard logos are displayed.  Also, bank accounts are strictly regulated by law, and your liability for fraudulent activity there is also severely limited if you report it promptly.  It would be big news if someone lost a lot of money, or even any money, as a result of using an aggregator like Mint.  Although they are a relatively new concept, they have been around for a few years now and you can be sure the negative publicity would be hard to miss if a breach did occur.

Yes, It is This Easy

Mint provides a birds-eye view of all of your money.  It tracks cash accounts (checking and savings), credit cards, student loans, investment accounts, and assets like real estate and vehicles.  Of course, you don't have to include every account you own, but the more you include the closer you'll be to seeing the total picture of your finances.  Once configured, Mint will periodically and automatically download your financial data so that you're always seeing accurate information.  There is even a nice mobile app for Android and iOS so you can always know where you stand even while on the go.

Transactions are automatically categorized based on the description as they are downloaded (which you can correct if it's wrong), so you don't have to spend time organizing your information.  There are configurable alerts for various situations that might occur, such as spending more than usual in a category, or having a large transaction occur.  There are secondary features for tracking bill due dates, budgeting, and tracking savings goals.  These secondary features do a decent job, but they're not the primary focus, so if you really want the best there you should also consider competitors like YNAB or Personal Capital.  You can also get your credit score, updated every 3 months, which is nice to see but not as detailed as the free information you can get from CreditKarma.

Mint also has a Trends feature that provides charts and graphs for all the common ways to track your financial progress:  net income over time, net worth over time, etc.  Whether you're trying to get out of debt, or trying to accelerate your retirement savings, having a chart you can look at every day or every hour if you want to can really keep you focused.  In the end, you don't really use Mint to actually do anything — the whole point is to see everything at a glance, all in one place, without having to spend time gathering it or categorizing it.  That's where Mint excels.

Limitations and Alternatives

Mint is far from perfect, so you'd think there would be healthy competition.  The auxiliary features like budgeting do the job, but are somewhat lackluster.  Because Mint needs to connect with and talk to each of your financial instituations, the failure rate is magnified by the number of accounts you have:  with a couple dozen accounts, it starts to become rare that you don't have at least one account that isn't up-to-date because of a communication failure (though it usually does get fixed eventually and go back to realtime data). And of course there's the old adage, "If it's free, then you are the product."  Mint.com is totally free, so it makes money by showing you offers for financial products like credit cards.

Competitors are on the horizon like Personal Capital and You Need a Budget.  YNAB requires that you enter your transactions manually, which is great for those in debt or in dire need of a strict budget but a dealbreaker for those with limited time.  Although the tracking and charting features of Personal Capital seem to be roughly on par with Mint, it's a newer service focused on investing and their budgeting features are lacking.  Also, Personal Capital makes money from managing your portfolio, so there is some upsell pressure which doesn't exist with Mint.  Right now, the king of free personal financial aggregators is Mint.com, and that doesn't seem to be changing anytime soon.