I’ve been using Plum for about a month now and have explored the features they offer.
For this review I wanted to really get to the heart of what Plum were all about. I’ve spoken to people who work for Plum and also their users. I wanted to know what they are trying to do and how you could benefit from using them.
Let’s dive straight in.
Who or What is Plum?
It’s quite hard to describe Plum in terms of what the technology actually is.
They help you save money but they are not a bank and don’t have their own app in the true sense of the word.
Plum then pulls through data from your bank account and will update you on your bank balance every day through Messenger.
After a while it will work out what it thinks you can afford to save and will ask your permission to make this saving automatically. Your savings then get transferred to a separate Plum savings account. You don’t earn any interest on your savings currently but Plum are working on this.
If you want your money to work even harder, then you can opt to use Plum’s investment service rather than just save the money as cash.
How does it help? What problem does Plum solve?
Plum wants to help you save.
Here’s what Kevin Debien from the Plum marketing team says when I interviewed him….
“Our mission here at Plum is to make sure that everyone is better off using Plum. Being better off can mean different things for different people. For some that might mean a rainy day fund, house or just more holidays. For others it might mean investing for the first time or even getting better deals on unavoidable costs like energy bills. It’s our aim to make those things accessible and easy using smart tech, it shouldn’t be hard work to do any of these things.”
At first I was a bit sceptical about how useful Plum could be, especially only working via Facebook Messenger. I don’t use Messenger much myself and prefer logging into a separate app to access any money software, but after a while I started to get where Plum were coming from.
Kevin explained to me…
“Messenger allows us to have a very different relationship with the end user, we wanted people to be able to ask questions and have a more conversational relationship with their money. Rather than having to consciously download and open an app, we wanted Plum to fit seamlessly into your life, sending you messages when you wanted/needed but otherwise whirring away in the background.”
This is the key for Plum. They are trying to make things as effortless as possible. Rather than you consciously having to log into an app and make a decision about what to save, Plum is already making the decisions for you and you can just stop it if you want to.
After hearing from the Plum team what problem they think it solves I was interested to hear the reasons why their users use them.
I set up a poll in the Plum Savings Squad Facebook group asking what was the main reason they were using Plum. Out of 69 respondents here is how they answered:
- 87% said “to automate their saving”.
- 7% said “to invest for the first time”.
- 4% said “to see what the fuss was all about”.
- 2% said “to learn more about their spending habits”.
So clearly automating your saving is a big thing and Plum definitely does the job here.
Is Plum secure?
In terms of security, yes Plum will need to connect to your bank account but they only have read-only access. They can’t make any transactions on your behalf apart from the initial direct debit they need you to authorise to set up the savings automation.
They use state of the art encryption and their servers run on Amazon’s cloud solution.
So, so far so good.
I have a slight issue with it only working through Facebook though. I mean Facebook’s got a pretty bad reputation right now and what happens if Facebook ever shut down? Doesn’t this leave them exposed not having their own app? I put these questions to Kevin at Plum…
“As we scale across different consumer segments and in the wake of the data concerns over Facebook, we are seeing demand for a platform outside of Facebook increase and it is something we are exploring. If we decide to take this route we want to get it right and ensure it adds to the Plum experience rather than being a bolt on which may take some time!”
When exploring where my savings or investments would actually be held I found that Plum works with a few different partners.
For your savings they use an e-Money account provided through MangoPay who are EU licensed and registered. The savings are not Financial Services Compensation Scheme (FSCS) protected which could be an issue if MangoPay and Plum were to go bust, but being EU regulated they are under strict rules to keep everything secure.
The investments are held via Gaudi Regulated Services Ltd who are FCA registered and therefore qualify for FSCS protection.
I asked Kevin at Plum why these particular partners were chosen and why not someone more mainstream…
“Our partners chosen for the savings and investments are relatively mainstream. Savings are held as ‘e-money’ and is regulated via our partner MangoPay which is FCA approved and regulated. MangoPay are trusted by over 2,500 platforms and is one of the European leader for payments solutions.
Regarding investments, we work with QUAI, a fast-growing technologic administration platform which connect Plum users to funds from Vanguard or Legal & General – which are leaders in the asset management industry.”
How much does Plum cost?
If you want to get more serious about your long term saving and opt for the investment solutions then Plum charge a £1 a month fee. Plus you will also get charged by the investment managers and this ranges from 0.37% and 0.95% of the money you have invested.
There is a slight issue here because this means Plum can be quite expensive compared to other investment platforms.
If you take the average annual investment of £1,000, multiply it by 0.95% (being the highest overall investment management charge) = £9.50 then add 12 x the monthly £1 Plum fee you total costs would be £21.50. That’s 2.15% of your overall £1,000.
So in other words, your investment returns need to be over 2.15% before you start making any gains. There are plenty of cheaper platforms around.
Is Plum any good?
For me the beauty of Plum is the simplicity of it. It’s not trying to be all things money related. It just wants to help you save.
Once you set it up you don’t ever need to check it. It will message you if there is anything to say. So this truely does make saving effortless.
This is the way saving should be. The more you have to get involved and make decisions the more likely you are to end up not saving and spending instead.
But if you don’t like Facebook or rarely use Messenger then this probably isn’t going to be the service for you.
I also found the fact you could only link one account a bit annoying as my expenses come out of multiple accounts. I raised this with Kevin and asked him if there were plans to change this…
“We are planning on making multiple accounts available soon. In the meantime we recommend linking your most active account (the one you use for your day to day spending) for Plum to work best.”
When it comes to the investment side of things, whilst Plum clearly set out risks of each investment fund you can use, they don’t offer a service that allows you to test yourself on what sort of risk you should be taking based on your circumstances. They assume a certain level of knowledge.
Some sort of risk profiling feature would be useful I think.
Plum are very strong on the community aspect and have created a fanbase around the service. At the time of writing they have a combined 7,896 members of their Savings Squad, Investment Academy and Plum Squad Facebook Groups, and also 1,779 followers on Twitter.
It’s really nice to see users helping out other users with any questions. Also a clever idea and real time saver for Plum staff!
QUESTION: Are you using Plum? What do you think? Please share your story in the comments below.