HelloWallet founder Matt Fellowes is building digital financial planning tools again, but with some new twists. Instead of targeting companies to offer tools to help employees plan their personal budgets, United Income is looking at individuals who are getting close to, or have already reached retirement.
And, instead of starting out from scratch, Fellowes has already raised $5 million. While $3 million of that comes from Fellowes and his friends and family, the remaining $2 million comes directly from Morningstar, the investment research firm that paid $52.5 million to buy HelloWallet in 2014.
“No one is focused holistically on retirement finances,” Fellowes told DC Inno in an interview. “We have a hybrid of tech and human experts. It’s a comprehensive, holistic, TurboTax-like solution.”
Ads for retirement finances talk about saving for retirement, not managing money for retirement
Fellowes described his new company as virtually alone in the field. The usual business model for financial advice and services is built on the idea of growing businesses and assets. The market for helping people with the reverse process is almost empty. That struck Fellowes as absurd, especially, as he pointed out, since people over 50 in the U.S. represent around 80 percent of all assets and half of all the buying power.
“Ads for retirement finances spend most of the time talking about saving for retirement, not managing money for retirement,” Fellowes said. “It’s a very different problem for people.”
Fellowes, who had become chief innovation officer at Morningstar after the acquisition, decided this was the next big problem he wanted to tackle. Morningstar not only gave him its blessing, it let him take a few other HelloWallet alumni with him to get started in addition to the funding. Morningstar doesn’t see United Income as competition that way, and it’s not a redundant project, Fellowes said, because the target market is different in more than just age.
“HelloWallet is for companies where people are working but don’t always have a lot of money,” Fellowes said. “We’re now interested in people with assets from $300,000 to $3 million, which sounds like a lot but if you retire with less money, then Social Security makes up for a lot and if you’re north of $3 million you have a lot of advisors. Our biggest market is the middle class and upper middle class.”
This is not to say that a higher income erases all the potential problems. For one thing, there's an often justified stereotype of financial planning for the elderly often being a scam of some kind. The last decade or so hasn't improved the industry's image either, but that factors into the plan for United Income. It may not happen overnight, Fellowes acknowledged, but he maintained that he was confident United Income would earn trust.
"The financial services sector is one of least trusted service sectors in America for a reason. But [United Income] should generate more trust," Fellowes said. "We have the Morningstar brand backing, which has 30 years of independent services and and an extraordinary reputation for honesty and integrity."
The spending power of the Baby Boomers isn't going to decrease any time soon. Fellowes estimated that the large chunk of assets and spending power they represent will last for decades. At some point, a lot of his target market will realize they could use some expert help in planning financially as they age, even if individuals try to admit they aren't getting old.
"I hear over and over again that this is a population that refuses to admit aging is a reality," Fellowes said. "They never even thought of what would happen when they get older. Those are going to be people who need United Income to help figure their [finances] out."
