Note: This is a sponsored post. I received compensation to provide an honest, accurate review of this product.
UPDATE: As of Oct. 2, 2018, Cinch has discontinued its individual accounts and shifted toward an institutional-based approach. Consumers may no longer sign up for Cinch on their own.
If you’re just starting to get your financial house in order — or you’d like to get started and don’t know where to begin — a new entrant in the financial technology space may be just what you’re looking for.
Cinch bills itself as “the future of autonomous personal finance,” a product that strives to serve its customers first and foremost by taking a fiduciary approach to its recommendations and analysis. I was asked to join a closed beta to take Cinch for a spin and see what it could do.
In order for Cinch to begin evaluating your personal financial situation, it asks you some rudimentary questions at sign-up:
- Whether you share finances with a partner
- Household income
- Personal income
- Number of kids
- Life insurance coverage
- Car ownership
- Car insurance company
- How you feel about your finances currently (choose from five faces – sad to happy)
After you’ve answered those questions, you give Cinch permission to perform a soft pull on your credit report to gather more information. Finally, similar to programs like Mint, you link your financial accounts to Cinch so it can pull your spending and saving patterns to create a profile of your financial life.
It looks at four categories in evaluating your overall financial health: credit and debt, consumption, cash reserves and protection.
By linking your savings, checking, credit cards, and investment accounts, and plugging in your life insurance coverage, you give Cinch enough data to generate recommendations about how you can improve your finances.
How it’s supposed to work
Cinch shared with me a demo video and literature showing how a typical young person might use the app to help get out of debt and make progress toward a solid financial footing. It could suggest making additional credit card payments, building an emergency fund, shopping for different car insurance, consolidating student loans, etc.
The promise of Cinch is to use a vast database of financial products and services to steer people toward the ones that best align with their individual needs. That could be a higher-interest savings account or a lower-interest credit card or loan. It could be an auto insurer with a cheaper price. In my initial assessment, the beta version doesn’t appear to get too prescriptive. Then again, it’s basing its recommendations on my personal situation, and I’ve already done quite a bit of optimizing up to this point.
My experience with Cinch
My financial situation is essentially the opposite of the demo personality. I wondered whether Cinch would kick into “advanced” mode when someone like me got involved. I pay off all my credit cards each month, except for a 0% interest card I’m on track to pay off before getting dinged for accumulated interest. I have several credit cards due to my newfound appreciation for travel hacking. I have no student loans, lots of savings, a fair number of investments, plenty of insurance, and a history of spending less than I earn.
Once I entered my information, Cinch did its best to make sense of what it found. I got three recommendations.
The first was that even though credit card debt isn’t a problem for me, I could pay off that 0% card right now.
Cinch gave me three options for what you want to do with that recommendation: Agree with it, say I need more time, or turn it down. I opted for the latter. I’m paying that card down on a timeline that will keep me from paying interest. I’m in no hurry to part with $9,000 today to save nothing.
What the app didn’t do was ask me why I declined. Instead, back on the main screen it just showed that I didn’t agree with that recommendation, but they still wanted me to know they thought it was something I could do.
The second recommendation was to “simplify my wallet.” This apparently means giving up the travel hacking and instead consolidating my spending to one card. In my case, it suggested an American Express card. Funny thing about that, though, is that’s not my card. I’m an authorized user on my parents’ card to buy presents or airfare sometimes, but I wouldn’t put anything else on there. Cinch knows about this card from my credit report, but it doesn’t give me a way to hide the card from its evaluation.
Like I said, this is a beta version. I expect the app will add these types of features upon go-live. There are too many people with unique circumstances who will need to customize what Cinch evaluates when weighing their financial health.
Again, I declined the recommendation. Again, Cinch didn’t ask me why. It simply kept the recommendation on the home page with the message to let it know when I was ready to change my ways.
Lastly, it asked me to check whether my car insurance is the best deal. It asked only three questions: my gender as assigned at birth, the number of drivers on my policy, and the number of cars on my policy. Turns out Cinch is not quite ready to handle multi-driver, multi-car policies yet, so it couldn’t make a recommendation. I assume this will also come in the future.
Aside from these recommendations, Cinch made some correct observations. It noted I don’t pay interest or fees. I have plenty of life insurance. I have adequate savings. My food spending is in check. I earn more than I spend.
There were no other recommendations or observations.
People who make great progress following Dave Ramsey’s baby steps to get out of debt find his advice is incredibly helpful — right up until they make the last debt payment. Once you reach that debt-free baseline, the entire game changes.
Cinch seems to be in much the same vein. I linked my Betterment and TIAA investment accounts to see whether it would have retirement savings recommendations. There were no questions about my retirement goals, investment philosophy, Social Security projections, etc. That appears to be by design. Retirement goals don’t fall into the four categories Cinch is evaluating (credit and debt, consumption, cash reserves and protection).
The protection bucket needs expansion. There are no questions about the level of auto coverage, short- and long-term disability, umbrella insurance, or special insurance (earthquake, flood, hurricane).
The program asked how many kids I have, but it didn’t ask their ages, whether they live with me or whether there are any savings goals related to them. I have a 5-year-old living at home and two young adults in college. Those circumstances should ideally change the advice a fiduciary would give me.
Cinch has ambitious plans for future development, with the ability to evaluate your auto loans, cell phone plans, mortgage rates, health insurance, cable or entertainment packages and more. The biggest bang for post-debt consumers will come down the line as those types of assessments are folded in.
I think Cinch has the potential to help a huge number of people who are overwhelmed with the thought of getting their finances together. It’s set up to take people who are struggling with debt or consumption and give them actionable steps to improve their situation. While that isn’t me, it does cover a major swath of people — there’s no shortage of market.
There are gamification elements built in to the app that should help drive behavior changes in users over time, and that’s a great thing. It’s all presented in an incredibly simple interface that won’t overwhelm the financially skittish.
Cinch’s greatest promise out of the gate should be that it makes common-sense financial action steps simple to understand, manageable and trackable for those new to truly managing their money.
That said, Cinch is not ready at this time to be a full-fledged financial automaton. It doesn’t probe deep enough into individual goals, habits, logic, or circumstances to offer individualized advice that takes into account each person’s nuances. The advice it offers at this point appears to be high-level and fairly generic.
Machine learning holds a ton of promise, and Cinch could harness that capability coupled with data that show which approaches work best and make more tailored recommendations based on past results.
If you’re already well-versed in personal finance concepts, Cinch isn’t likely to teach you anything you don’t know. That also could change as it matures, gleans more from user data, and adds investment analytics to evaluate things like diversification, fee structures, and rates of return.
Because it works as a fiduciary and isn’t making commissions by steering you toward specific products for profit, Cinch does cost money. As you may have heard, if you don’t pay for the product, you are the product.
Cinch will be free for a 90-day trial, then move to $4.99 per month after that. Considering how much you could save by following its advice, that seems quite reasonable. One good car insurance recommendation will pay for two full years of Cinch.
If you’re just starting out in adulthood or just trying to move in the right direction after going astray, you’ll probably find Cinch to be a good reminder of positive habits and an indicator of the areas you should educate yourself in the months ahead.
For most people, that’s far better than what they have today.
Find out more
If you would like to learn more about Cinch and check it out for yourself, head on over there with this link to get started.
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