MSIV Invests in Mill Valley’s NewRetirement
Q&A with Founder & CEO Stephen Chen
Friday, May 6, 2022 from Mill Valley, CA
In 2021, Marin Sonoma Impact Ventures launched the North Bay’s first regional venture capital fund and began deploying capital into Marin + Sonoma’s most promising startup companies.
Today, we are excited to publicly announce our investment in Mill Valley’s NewRetirement, a technology company that is making financial planning more understandable and effective for a growing number of Americans.
NewRetirement is pioneering self-directed financial planning and an overall planning-as-a-service model. They’ve built a comprehensive, intuitive platform that leverages AI and considers thousands of scenarios, allowing individuals to plan for their financial futures in a holistic manner and access human experts when they require to go even deeper.
The NewRetirement platform was voted best retirement solution by both Forbes and the American Association of Individual Investors (AAII), and the company is executing on its goal of helping “anyone get confident and achieve financial independence so they can make the most of their money and time.”
Why We Invested
NewRetirement’s direct-to-consumer product has now reached hundreds of thousands of users. This reach has served as an incredible laboratory for its AI-model to train, improve, and ultimately deepen its value-add for individuals on their journey to financial independence.
In a category that is generally crowded and obfuscated by the deep marketing spend of incumbents, the NewRetirement offering differentiates itself in two core ways.
First, NewRetirement splits financial planning from the dominant 1% wealth management model, where individuals pay 1% of their assets each year for proprietary investing and receive financial planning as an ancillary rather than core service. For a 65-year-old with $1,000,000 in retirement savings, that 1% amounts to $10,000 per year. The NewRetirement offering, by contrast, offers a free base service, a premium planning tool for $120/year, and access to real-time advice from a Certified Financial Planner starting at $1,500 per year.
Second, most financial platforms, from upstarts like Robinhood, Wealthfront, and Betterment to traditional players like Fidelity, Schwab, and Vanguard, focus mainly on accumulation (the appreciation of assets over time) and overlook how to smartly decumulate assets (the drawdown of assets in retirement). NewRetirement has spent years perfecting best practices for when you retire and its decumulation tools are among the most sophisticated in the marketplace.
Having built a passionate community of users and with its direct-to-consumer product earning awards and rave reviews, NewRetirement is now building a robust B2B distribution channel – across insurers, wealth managers, banks, mortgage providers, employers, and plan sponsors – to get its incredible tool in the hands of tens of millions of Americans.
MSIV is proud to be investing in this effort that is democratizing access to thoughtful, self-directed financial planning, and we are thrilled that key components of this effort are being driven out of Marin County.
NewRetirement team at recent all-company virtual meeting
MSIV Founder & Managing Partner Zachary Kushel sat down with NewRetirement Founder & CEO Stephen Chen, a resident of Mill Valley, to discuss all that is ahead on the company’s journey to help people achieve a sounder financial future.
ZK: Tell us about the moment when you knew you had to go launch NewRetirement.
SC: This is a very personal story for me. My mom came to my brother and me when she was in her early 60s, as she was transitioning from her main career as a small business owner and looking toward retirement. She had needed to borrow some money from us, so we dug in to see how we could help her. We started by looking around for a financial advisor but ran into two problems: first, we couldn’t find anyone that knew a lot about how to transition to retirement; second, so few quality advisors would give her the time of day since her net worth was no more than $500,000.
So we ended up doing the research and planning ourselves, and we quickly realized the problem wasn’t really about saving and investing. That was a small part of it, but it was really about expense management, healthcare, social security, and housing – how to decumulate your assets – and there were many levers we were needing to pull to get her on a sustainable path. We knew there had to be a way to apply software and technology coupled with humans to build a hybrid, social planning platform, and this became NewRetirement.
NewRetirement Founder & CEO Stephen Chen
ZK: What is broken today about the way the financial services industry works to solve the planning process?
SC: The business model of the financial services industry typically focuses on a percentage of assets or transaction fees, and so much of that is charged behind the scenes, in a way like healthcare, where too many end customers don’t know what things really cost or how they’re being charged.
We made a conscious decision to build NewRetirement for consumers and to ask them to pay us directly, which really is a fundamental difference. Our platform was built from the ground up with a holistic approach and the consumer front-and-center – we knew we could only convince consumers to pay us directly if there was true, incremental value in our planning tool, and it’s why were successful in building something differentiated.
ZK: You’re now looking to roll out NewRetirement across large enterprises – how is this being received?
SC: We’ve had very robust direct-to-consumer growth – 200,000+ people have used the free platform with thousands of new users signing up each month, and 7,000+ are now paying customers. Our community is thriving with 10,000+ people participating in our Facebook group, half a million podcast downloads, and 1,000+ interactions each month on our support line. That’s a nice little business, but we’ve certainly not come close to reaching critical mass.
This B2B channel allows us to rapidly accelerate that growth. We know this type of planning, with a focus on decumulation, is needed and is the future, and we’ve built a robust community of our own with consumers who love our product – our Net Promotor Score is 65, far above the financial services industry norm. So we’re working with large employers, banks, insurance companies, and financial services firms to roll the NewRetirement tool out to their built-in audiences, both under our brand and theirs, to get this tool in the hands of millions more people.
ZK: Let’s say five years from now NewRetirement is successful beyond your wildest dreams – paint the picture for what that could look like.
SC: We’d like our platform to be used by tens or, ideally, hundreds of millions of people directly through our platform and the experiences we will power across the financial services industry via APIs and white-labeled solutions. Once we achieve this scale, we will be contributing to financial literacy becoming more prevalent and people having much more control as they approach retirement. So many of our customers have told us that NewRetirement has been life-changing, and we have the potential to provide that experience for so many more.
ZK: What’s it like building NewRetirement in the North Bay, and what do you see as the future of the growing entrepreneurial community taking shape across Marin + Sonoma?
Steve and his son on the ski slopes
SC: The North Bay community has been so incredible to me personally – I so enjoy living here, raising my kids here, and love the incredible number of smart people working on such a diverse set of projects. You couple that with the natural beauty and proximity to San Francisco and Silicon Valley and it’s why I’m so excited for what Marin Sonoma Impact Ventures is doing to build a more robust startup community here and why we were so excited to receive this investment from MSIV.
The startup community here is strong, its growing, and it will become so much more cohesive as we push ahead because we have all the elements to create a virtuous cycle – a huge amount of intelligent, successful innovators who are community-minded coupled with a large amount of wealth in the community. We believe NewRetirement will be big, and we know MSIV will be big, and we all want to see this movement grow across Marin + Sonoma, and it will if members of the community pay it forward and reinvest in what comes next. I’m so very excited for all that is ahead and for NewRetirement to play a part in it.
Zachary Kushel is Founder & Managing Partner of Marin Sonoma Impact Ventures.
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