Financial planning can be more complicated when you work for yourself; will the Multiply app make a difference?
It feels like with every week that passes, a new financial app is launched which will somehow change my world. I’m not exactly an early-adopter when it comes to money apps - it took me years to give mobile banking a go, long after everyone else my age was a fan.
But one app that I heard about recently caught my attention a little more. Multiply is a financial planning app, aimed at contractors and freelancers, and aims to help them put together a personalised plan to meet their money goals.
So I thought I’d find out a little more.
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Why freelancers need help
Multiply co-founder Vivek Madlani told me that one of the key motivations for aiming the app at the self-employed was that they are faced with variable incomes but fixed outgoings in terms of their monthly bills and other financial commitments.
That certainly speaks to me - last month I wrote about my own struggles with pension contributions - and Multiply helps work out the right pension plan for you.
Things are a little easier when you are employed. Your boss opens a pension on your behalf - you don’t need to worry about whether it should be with NEST or Now: Pensions or whoever is - and the money is put into a default fund.
You can be as involved, or as hands-off, as you want to be.
If you are self-employed, the sheer range of options can be a bit paralysing, and cause you to put off doing anything at all.
It’s worth noting that while Multiply reckons the self-employed are the perfect target market, you don’t have to be a sole trader to use it. It’s open for use by anyone that earns less than £300,000 a year, employed or self-employed.
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How does Multiply work?
The first thing that Multiply wants to do is make sure that you are secure in the short term. That means running what Madlani calls a “financial health check”, which basically means making sure you have a decent emergency fund in place to help you cover those fixed outgoings should you fall ill or suffer a drop in income.
Not only does it work out what level of emergency fund is right for you, it will also point you in the direction of the best savings accounts to consider.
After that, the focus moves to ‘futureproofing’. That means pinpointing the right pension plan to suit your needs.
You can also set out your financial goals, with Multiply helping to get you and your finances in place for them.
A nice example is if you are a first-time buyer. Not only does Multiply help you work out how much you can afford to save, and where to keep that money, but there are plans for the app to even provide advice on how to discuss the issue with your parents, running through the different ways that they may be able to help, from acting as a guarantor to gifting you part of the deposit.
Madlani is keen to emphasise that education is at the heart of the app, and that stretches beyond simply finding the right products.
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The advice gap
It’s not exactly a secret that as a nation we don’t get as much financial advice as we probably should.
There are plenty of different reasons from that, ranging from an awkwardness about talking about our money, to the cost involved with getting advice.
Because we don’t get proper advice, that leads to an awful lot of poor decisions being made ranging from misplaced priorities - putting money into a pension before building an emergency savings pot for example - to plumping for financial products that don’t really meet our needs.
Finding a way to automate some of that advice process is something the Financial Conduct Authority has been focused on, setting up an Advice Unit to help firms like Multiply build the technology that can steer users in the right direction.
While advice used to be a face-to-face process, the truth is that for younger people there is now an expectation to be able to handle these sorts of matters online, and at a time that suits them, rather than during traditional business hours.
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How does Multiply make money?
The Multiply app is free, but it has attracted investment from some significant names, the former chief executives of Nutmeg and TransferWise among them. These aren’t the sort of people that chuck their money away on a whim.
The idea is that Multiply will be paid a referral or commission fee by the providers of the financial products it recommends. It’s no different to a price comparison site really.
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What next?
Multiply is currently going through the process of getting full regulation from the FCA. This will be a big change, as the firm will then be able to provide more comprehensive investment advice, where currently it is limited to the savings market.
The app is only available on iOS at the moment too, though there are plans to open this out to Android as well.
With any fintech innovation, only time will tell if it actually achieves its goals and helps significant numbers of users to build a proper financial plan - and follow through on it.
But I find it hugely encouraging that technology is being used in a more practical way to give people like you and me a helping hand in getting our finances in order, not just for the short term but for an entire lifetime.
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