Note from the Founder: Hacking Retirement
photo credit: Sebastian Chen
I read a great post by Morgan Housel on Useful Hacks — the gist of it is that anything meaningful requires hard work, sacrifice and common sense. (Also got to meet up with Morgan at the Evidence Based Investing conference last week!)
Last month I went wake surfing in the freezing waters of Lake Tahoe. The good news? Unlike the first few times I tried it, this time I succeeded! I got up and rode a wave — for a really long time!
It reminded me of what we have been trying to do with NewRetirement — build a successful business that is aligned with our users and can scale. While we have been delivering tools that help people plan their retirement, we are only now starting to roll out premium tools and services that our users can pay for. After exploring different models we are on track to deliver a range of offerings that will allow us to be completely independent while serving as many people as possible efficiently and transparently.
The “Right” Business Model?
Contrast that with NewRetirement Planners (avg age is 50-60):
- only 15% report $0-100K
- 70% report $250k or more
- >30% report $1M or more (Only 5% of Americans are millionaires)
We also know that our users have a big range of choices out there including some “free” tools. However, we want a business model that aligns us with our users and puts them in control. So, we recently introduced PlannerPlus, a brand new premium subscription service offering you advanced tools that will help anyone achieve a secure future.
Why are we trying to get people to pay? Basically we believe that the market needs an independent firm that is completely aligned with its users. You’ve probably heard this quote — “if you’re not paying for it, you are the product”. Everything has a cost and people consuming financial services deserve transparency (and lower prices). If you want to go deeper on this topic read the Psychology of Money — also by Morgan Housel. Some insights include:
“Buffett made $90 billion. But he did it by reading SEC filings 12 hours a day for 70 years, often at the expense of paying attention to his family. Here too, a hidden cost……Every money reward has a price beyond the financial fee you can see and count. Accepting that is critical. Scott Adams once wrote: ‘One of the best pieces of advice I’ve ever heard goes something like this: If you want success, figure out the price, then pay it. It sounds trivial and obvious, but if you unpack the idea it has extraordinary power.’ Wonderful money advice.”
We are dedicated to helping as many people as we can, so our vision is to offer 4 ways to help our users:
1. The Best Free Online Retirement Planning Service
We are very proud of our free retirement planner. We believe it has developed into the best online retirement planning resource. It is comprehensive and detailed. We hope that our free users continue to see value, help spread the word and in some cases upgrade to PlannerPlus. (This has worked to get us to about 50,000 Planner users so far.)
2. PlannerPlus (Do it Yourself)
PlannerPlus was just introduced the other week. It is a low cost “Do it Yourself” subscription software product which will continue to evolve and get better over time.
In this initial release we’re delivering:
- A new home page that better summarizes our value proposition & vision
- A new Dashboard that helps people build a complete plan, discover & explore opportunities, and stay on track for a secure future.
- PlannerPlus Inspector that enables anyone to dive into the details of their plan across income, expenses, savings, returns, taxes and other metrics so they can validate and optimize their plans
- PlannerPlus Coach which contains hundreds of rules that allow people to “Audit” their plans and have it checked against the best practices that would likely be suggested by a financial planner. We’ll continue to add rules and ideas here from financial advisors and users.
- A better framework for more rapidly evolving our product and making it faster and mobile friendly. If you sign up for PlannerPlus you’ll be able to enjoy the benefits at a lower cost as we roll them out this year.
We’re offering Charter Memberships to PlannerPlus at $48/year – about the cost of a latte per month. Contrast that with an average advisor fee of 1% per year on $500K to $1M which is $5,000 to $10,000 per year. Note: we are supportive of advisors, but also think many users want to start on their own or are looking for a second opinion that puts them in control.
3. Collaborative Planning with an Advisor (Do it With Me)
We also are planning on offering hourly and/or flat fee “Do it With Me” financial advice – NewRetirement Advisors. We’re working on adding our own Certified Financial Planners who will provide collaborative planning around your NewRetirement Plan and/or PlannerPlus – you’ll see an option on our Pricing page soon..
4. Full Service Retirement Planning (Do it For Me)
For people with complicated situations or who would like a lot of help, we also offer a “Do it For Me” solution with access to the NewRetirement Advisor Network – we’ll be expanding our network of pre-screened providers if you want a higher level of service. Click Get Expert Help above if you want to talk with someone.
What Won’t We Do?
There are a lot of benefits to you of us having a clear and transparent business model for NewRetirement.
What sorts of thing won’t we be doing?:
- Sell you products – especially high priced complex ones that you might not need.
- Hide information that might help you. (If your provider makes money on your assets, then they might not want to share strategies that reduce your assets they manage or they might want to scare you into oversaving.)
- Churn you in and out of investments
- Get you into proprietary high fee funds that create tax lock in
If you like the work that we’ve been doing and believe in our mission & vision then we would love your support ideally as a paying customer, but also sharing your feedback or sharing our site with people you know if you think it’s helpful. Every new user we get helps build our case and helps us rally other resources from experts, investors and strategic partners – which we pour back into delivering a better solution that can help everyone get confident and make the most of their lives.