Video: The Need for Financial Planning, Why We Built NewRetirement

Video: The Need for Financial Planning, Why We Built NewRetirement

Recently NewRetirement’s founder, Steve Chen, gave a talk to a start up group in his community, the Marin Sonoma Impact Ventures group. 

Watch Steve’s talk (or scan the summary below) to learn why we started NewRetirement and the need for financial planning. The video is a short (under 11 minutes) overview of why planning is important.

Why We Started NewRetirement, A Summary

It All Started Because Steve’s Mom Needed Help

In her 60s, Steve’s mom came to him and his brother asking to borrow money. While they were willing to jump in with whatever she needed, they also wanted to solve the underlying problem and set her up for retirement success. He wanted to help her feel empowered and able to live a long life without constant worry about money.

He looked around for resources like a financial advisor to help solve the problem. But, there wasn’t anyone that offered the type of support that was needed. She didn’t have significant net worth and most of what she had was tied up in her house. And, no advisor really knew about decumulation and didn’t want to take her on as a client.

So, he used spreadsheets to figure out her situation. It involved Social Security, medicare and looking at other ways pay for healthcare, how to draw down existing assets, tap into home equity, gain tax efficiencies, and more. 

She didn’t need a loan. She didn’t need $1 million dollars. She needed a plan, but it was a really complicated problem to solve.

There is a Big Market of People Who Need Planning Help

When he solved the problem for his mom, Steve looked around and realized that there are 120 million people over the age of 50. And, this demographic has 80%, almost all of, the wealth in the United States.

His mom could not be alone in her need for help. And, everyone, especially those under 50 with more time to take action, needs a financial plan.

Getting to a Secure Retirement is Hard: There Are a Lot of Moving Pieces

The average person approaching retirement only has $150,000 in savings. And, they have to plan for this indefinite amount of time, hedge inflation, think about healthcare, and deal with a lot of financial complexity.

Every person has to become their own Chief Financial Officer. But, it that is a big difficult task and most people lack the expertise to take it on their own.

Financial Education is Lacking

Despite the financialization of most aspects of our lives, financial education is lacking. Autoshop is still taught to more kids than how to manage money.

And, research suggests that we aren’t learning on our own. On a financial literacy quiz from Fidelity, the average that people got right was a mere 30 percent – a solid “F.” And, absolutely NOBODY got ALL the questions correct – on the multiple choice quiz. And, the highest overall grade was a mere 79%.

Before NewRetirement there Were Not Solutions for Regular People

Before NewRetirement, there was not a great unified and affordable solution.

Even though, most people worry about money and there is a lot of money at stake.

Advice Can Be Expensive and Unavailable if You Don’t Have Lots of Assets

There are great advisors. And, there are advisors that cost too much money, no matter if they are good or bad. Finding an advisor that has the right expertise for the specifics of your situation can be another challenge.

Emotional Decision Making Compounds Issues of Poor Financial Education

The average investor gets an average return of 2-3% over their lives. That is barely keeping up with inflation. Why so low? Well, typically, emotions take over. People invest and then panic when things go down and sell at lows and they don’t keep investing and benefit from the overall upward trend of the markets.

The Solution? Giving People Tools to Build and Manage Their Own Financial Plan

What NewRetirement does is deliver financial planning to anyone who wants it. Why is this interesting? Financial planning works. People with a financial plan have three times the money of people without plans and that is because, when you have a financial plan you:

  • Develop better habits
  • Make better decisions
  • Set and achieve financial goals

It’s like exercise. We didn’t know exercise was important until the 1940s, and it took another 30 years for it to become a habit for most people. Now almost everyone exercises.

We think that a similar thing will happen with financial planning. When people realize the benefits, everyone will learn to do it.

Build or update your plan today.

More About NewRetirement

For people who want clarity about their choices today and their financial security tomorrow, NewRetirement is a financial planning platform that gives people the ability to discover, design and manage personalized paths to a secure future.

Our goal is to make high quality low cost financial guidance available to everyone. More than 200,000 people representing more than $200 Billion in wealth currently trust the system to make the most of their money and time. The platform can be co-branded or white labeled for partners. Additionally, the company provides API access to companies who wish to embed planning functionality within their own site.

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