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 needed to assist, however the siblings additionally needed to determine a extra sustainable, long-term resolution that’d assist their mother retire with out having to fret about funds.
Chen tried to get steering from a monetary adviser, however nobody would take his mom as a consumer as a result of her internet price 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 needed.
“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 this time and the long-term ramifications to their plan,” Chen informed TechCrunch. “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, determine when to say Social Safety, resolve when to downsize and take different steps to turn out to be financially unbiased that Chen realized a lot of different older People 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. In the present day, NewRetirement’s direct-to-consumer merchandise energy monetary planning for 70,000 customers managing near $100 billion in their very own monetary plans, in line with Chen.
“Our fashions transcend financial savings and investments, making an allowance for the entire different components in an individual’s life, from dwelling fairness, healthcare prices and taxes to Medicare and Social Safety,” Chen stated. “Each time a consumer makes a change, we run hundreds of simulations as a way to assist them optimize their plan … We account for hundreds of various eventualities, enabling customers to confidently map out accumulation and decumulation projections with digital steering.”
NewRetirement is Chen’s second startup after Embark, a web based faculty search and admissions device he launched in 1995. And, like Embark, Chen sees NewRetirement as a digital resolution to a transition confronted by tens of millions of People.
“120 million People over age 50 maintain 80% of the wealth on this nation,” Chen stated, “However working out of cash stays a high 10 concern, with almost half of People saying they’re frightened about it.”
NewRetirement’s platform makes use of predictive modeling and information analytics to assist customers suss out the suitable financial savings approaches. Picture Credit: NewRetirement
Certainly, nearly all of People — as many as 65%, per Charles Schwab’s Modern Wealth Survey 2023 — don’t have any formal monetary plan. And whereas 37% of respondents say that they work with a monetary adviser, two-thirds of People consider that their monetary planning wants enchancment, in line with Northwestern Mutual’s Planning and Progress Study 2023.
NewRetirement, which started as a client providing and in 2021 expanded to the enterprise, prices $120 per yr for entry to a set of instruments, calculators, suggestions and situation comparisons and ~$1,500 per yr for check-ins with an authorized monetary planner. As well as, NewRetirement sells a subscription-based personal label model of its instruments geared toward monetary advisers.
Now, you would possibly marvel, what makes NewRetirement completely different from startups like Retirable, which equally offers 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 consumer and making this obtainable at scale via enterprise companions who carry it to their prospects,” Chen stated. “As extra monetary providers firms see their choices like funding administration turn out to be commoditized, there’s large worth in serving to purchasers and prospects take into consideration their cash holistically. By providing self-directed digital planning to purchasers 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 extra successfully.”
Chen says that about 70% of NewRetirement’s income is enterprise presently, with the remaining 30% coming from client prospects. The platform has 20,000 particular person subscribers and “a number of” wealth administration purchasers in addition to “a number of” enterprise prospects together with Nationwide, which not too long ago expanded an present 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 might be used to develop 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 stated. “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 herald unimaginable expertise. We’ve a robust crew in place and can develop headcount additional this yr.”
