New Retirement Wealth with Stephen Chen | E292
Providing financial planning tools to DIY investors.
On this episode of Fintech Impact, Jason talks to Stephen Chen, founder, and CEO of New Retirement. It is an online platform that facilitates financial institutions in offering DIY financial planning experiences to their existing or potential customers. The platform is designed to enhance and complement their existing financial services. Stephen describes New Retirement as essentially creating a "TurboTax for financial planning." Initially, the company began as a consumer-facing platform before transitioning into its current role of supporting financial institutions in providing comprehensive financial planning solutions.
Episode Highlights
00:59: Stephen shares the inspiration behind starting New Retirement. He recounts a personal experience with his mother's retirement planning, explaining that when she sought financial assistance, they struggled to find a financial advisor willing to take her on as a client due to her limited net worth.
02:38: Financial planning is complex and not something most people can handle on their own. While there may be simple cases where self-planning is feasible, Jason believes that, on a larger scale, people tend to reach a point where they feel uncomfortable and need professional guidance.
03:25: Jason acknowledges that Stephen Chen's approach with New Retirement is a much better approach compared to some other concepts he has encountered.
04:07: Stephen talks about the evolution of New Retirement's business model. Initially, the company was bootstrapped and started as a subscription service for consumers. However, it became evident that this model wasn't inherently scalable for venture capital investment.
05:36: This strategic shift from a consumer-centric model to enterprise partnerships has allowed New Retirement to scale and generate more revenue.
06:39: New Retirement's platform helps users become better prepared and informed when they eventually seek professional guidance, resulting in a more productive and efficient advisory process.
07:25: Stephen mentions their intention to license their platform to other advisors, allowing them to leverage the same tools and processes that have been effective for New Retirement. This approach enables them to help more people while maintaining efficiency and scalability.
08:06: Stephen Chen provides an overview of the numbers related to New Retirement's platform - 300,000 people have used the platform to start or build their initial financial plans. They have 50,000 active users, including both free and paid users. Currently, they have approximately 14,000 subscribers.
08:50: New Retirement effectively replaced one DIY tool with another but succeeded in getting users to pay for their services, which was a key challenge.
10:01: Jason highlights two key issues at play regarding financial planning. The first issue is the challenge of making financial planning more accessible to more people, as the economic model needs to support it.
11:08: Stephen emphasizes the importance of providing tools and education to help people gain a sense of financial control and visibility into their future financial security.
14:22: New Retirement's approach includes creating a community of users who share their experiences and financial journeys. This is particularly valuable for individuals who didn't grow up in households where money management was emphasized.
15:07: Stephen explains how the market informed the design of the software and the incentives behind creating a tool that serves the needs of individuals who may not have extensive financial expertise.
15:33: Stephen discusses the lack of transparency in the financial services industry, noting that it's challenging for consumers to understand how various financial professionals and services are compensated.
18:08: Stephen highlights the importance of design in the software's success, making it user-friendly and accessible to a broad audience.
19:06: Regarding the reception from large enterprises, Stephen explains that New Retirement was early to the market, and while they did experience some challenges and had to pivot, they eventually found success by partnering with organizations like Nationwide and Raytheon.
20:32: When New Retirement initially entered the market, they faced skepticism, with some people laughing at the idea of online financial planning and believing that only advisors would buy their services.
22:59: New Retirement is focusing on making financial planning more collaborative. They have started delivering Google Docs of planning, allowing for more efficient and collaborative financial planning at scale. This approach aims to improve productivity and ease of use.
24:30: Stephen highlights the challenges people face when it comes to retirement planning. Many individuals lack the knowledge and tools to make informed financial decisions for their retirement.
26:20: New Retirement also focuses on building a community of users who can share their experiences and learn from each other. Stephen believes that hearing real stories from people who have successfully managed their finances can be more impactful than traditional financial advice.
3 Key Points
Stephen shares individuals today are more educated and informed about their financial situations due to the internet. This increased knowledge enables them to have richer and more efficient conversations with financial advisors or coaches.
Just as travel agents still exist but coexist with online travel booking tools like Kayak, Stephen believes that financial advisors will continue to play a vital role. However, he emphasizes the need for more advisors and lower-cost options to make financial planning accessible to a broader audience.
Stephen discusses the importance of design in New Retirement's software, emphasizing that it needs to be intuitive and user-friendly, like the success of the iPhone with its consumer-grade design. He mentions that they are continually improving their software and focusing on data and AI to enhance the user experience.
Tweetable Quotes
“New Retirement collaborates with various players in the financial ecosystem to streamline and improve the efficiency of services offered to their target demographic.” – Stephen
“New Retirement had already made significant progress on the consumer side, with 300,000 people using the platform to build financial plans, 50,000 active users, and 14,000 subscribers. The turning point came when they met with Nationwide, a financial services company interested in integrating New Retirement's platform into their offerings for workplace users.” – Stephen
“There is significant value in financial planning, helping people manage their assets, improve financial literacy, and make informed decisions about their money to avoid costly mistakes over time.” – Stephen
“Behavioral coaching also plays a significant role in helping individuals avoid major financial mistakes and execute their financial decisions effectively.” – Stephen
“People often struggle to grasp concepts like compound interest or compound growth, making it essential to provide visual tools that allow users to see these principles in action.” – Stephen
“Large companies, including Fortune 100 firms, have now begun to appreciate the value of financial planning.” – Stephen
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