When entrepreneur Stephen Chen’s mother started approaching retirement age, she was pressured to borrow cash from Chen — and Chen’s brother — to make ends meet. They wished to assist, however the siblings additionally wished to determine a extra sustainable, long-term answer that’d assist their mother retire with out having to fret about funds.
Chen tried to get steerage from a monetary adviser, however nobody would take his mom as a consumer as a result of her web value wasn’t thought-about excessive sufficient. So Chen began constructing spreadsheets and monetary fashions himself, doing his finest to determine how his mother may stay the retirement life-style that she wished.
“Individuals like my mother lack the instruments to have a look at their cash holistically and strategically to allow them to make knowledgeable selections, monitor their monetary state of affairs, perceive which levers to tug and when and make the connection between the alternatives they make at the moment and the long-term ramifications to their plan,” Chen informed Gadget Guru Weblog. “There’s a confluence of things that will alter the way forward for monetary planning and advising.”
It was after Chen helped his mother decrease her bills, work out when to assert Social Safety, resolve when to downsize and take different steps to turn out to be financially unbiased that Chen realized a number of different older Individuals had been going through the identical challenges.
So Chen based NewRetirement, a Mill Valley-based firm constructing software program to assist individuals create monetary retirement plans. Right this moment, NewRetirement’s direct-to-consumer merchandise energy monetary planning for 70,000 customers managing near $100 billion in their very own monetary plans, in keeping with Chen.
“Our fashions transcend financial savings and investments, taking into consideration the entire different elements in an individual’s life, from dwelling fairness, healthcare prices and taxes to Medicare and Social Safety,” Chen mentioned. “Each time a person makes a change, we run 1000’s of simulations with a purpose to assist them optimize their plan … We account for 1000’s of various situations, enabling customers to confidently map out accumulation and decumulation projections with digital steerage.”
NewRetirement is Chen’s second startup after Embark, an internet faculty search and admissions software he launched in 1995. And, like Embark, Chen sees NewRetirement as a digital answer to a transition confronted by thousands and thousands of Individuals.
“120 million Individuals over age 50 maintain 80% of the wealth on this nation,” Chen mentioned, “However operating out of cash stays a high 10 worry, with almost half of Individuals saying they’re nervous about it.”
Certainly, the vast majority of Individuals — as many as 65%, per Charles Schwab’s Fashionable Wealth Survey 2023 — haven’t any formal monetary plan. And whereas 37% of respondents say that they work with a monetary adviser, two-thirds of Individuals consider that their monetary planning wants enchancment, in keeping with Northwestern Mutual’s Planning and Progress Research 2023.
NewRetirement, which started as a shopper providing and in 2021 expanded to the enterprise, prices $120 per 12 months for entry to a collection of instruments, calculators, suggestions and situation comparisons and ~$1,500 per 12 months for check-ins with an authorized monetary planner. As well as, NewRetirement sells a subscription-based non-public label model of its instruments aimed toward monetary advisers.
Now, you may marvel, what makes NewRetirement completely different from startups like Retirable, which equally supplies an array of retirement planning instruments and entry to asset managers? Chen asserts that NewRetirement is among the few — and maybe solely — monetary planning platform that serves shoppers in addition to advisers and workplaces.
“Our core innovation is permitting anybody to create a plan with industrial-strength instruments, enabling advisers to collaborate with the tip person and making this obtainable at scale by way of enterprise companions who convey it to their clients,” Chen mentioned. “As extra monetary companies corporations see their choices like funding administration turn out to be commoditized, there’s enormous worth in serving to shoppers and prospects take into consideration their cash holistically. By providing self-directed digital planning to shoppers versus beginning with a human adviser, they will scale and serve any variety of customers, study them, assist them make good selections and place their services and products extra successfully.”
Chen says that about 70% of NewRetirement’s income is enterprise presently, with the remaining 30% coming from shopper clients. The platform has 20,000 particular person subscribers and “a number of” wealth administration shoppers in addition to “a number of” enterprise clients together with Nationwide, which just lately expanded an current partnership with NewRetirement.
That momentum little question helped NewRetirement to cinch its Collection A funding spherical this month.
The corporate raised $20 million in a tranche that brings its complete raised to $20.8 million, led by Allegis Capital with participation from Nationwide Ventures, Northwestern Mutual Future Ventures, Plug and Play Ventures, Motley Idiot Ventures and others. Chen says that the money infusion will likely be used to broaden 50-employee NewRetirement’s enterprise merchandise, scale up onboarding, speed up R&D efforts and construct capability to fulfill future demand.
“With this new capital, we can have three to 4 years of runway,” Chen mentioned. “That provides us time to proceed to scale our enterprise partnerships and improve our product. What’s extra, the present downturn is enabling us to usher in unbelievable expertise. We now have a powerful workforce in place and can broaden headcount additional this 12 months.”