In today’s episode, Anirudh Singh sits down with Aaron Schumm of Vestwell.
Aaron started his career in financial services at Northern Trust. He later moved to New York looking to become an asset manager, and “fell into” the fintech world. After graduate school, Aaron built a wealth management platform called FolioDynamix, a company conceived on a bar napkin in Princeton New Jersey. During his time at FolioDynamix, Aaron saw how hard it was for small businesses to offer retirement savings plans for its employees. After selling FolioDynamix, Aaron took 6 days off prior to starting Vestwell.
In the United States, there are 32 million small businesses, but only 600,000 offer a workplace savings program. Historically, large U.S. corporations tend to offer retirement accounts or pension plans, but small businesses have been overlooked, and many of their employees don’t have enough retirement savings. Vestwell is trying to solve this problem.
Vestwell is the engine inside of anyone that wants to offer workplace savings, focused squarely on small businesses. Small businesses have been underserved because incumbent providers, built on legacy technology, don’t have the cost structure to target them. Vestwell has decreased its cost structure through technology, including in-house record keeping. The company further drives down costs by allowing financial advisors to engage with small businesses at a high scale, no overhead, flexible manner. Vestwell started with 401(k) and 403(b) plans and has since expanded into IRAs and 529s. The team eventually wants to “power all things payroll deducted”.
Vestwell has been positively impacted by the SECURE act, which gives small businesses tax credit for offering retirement plans. The act also includes an amendment for pooled employers, making it easier for businesses in different industries to work together to offer plans.
Vestwell is backed by leading fintech investors including Fin Venture Capital, Wells Fargo Strategic Capital, Point72 Ventures, Fintech Collective, and others. From the onset, Aaron prioritized investors that understood advisor-led initiatives, core infrastructure, and nuances in the investment space. This allowed him to build the company the right way, instead of the expedient way.
Fintech Industry Overall:
Aaron has seen large institutions shift their approach towards fintech startups, increasingly looking to partner with startups rather than compete with them. He’s excited to see the transformation this could create in financial services. He’s also happy to see ESG investing options become more mainstream.
Aaron is the founder & CEO of Vestwell, the engine powering modern-day workplace savings and investing programs, such as 401(k) and 403(b) plans. Our cloud-based digital recordkeeping platform provides the underlying architecture to support financial services and payroll partners, who are rapidly working to serve the 30M small businesses in the country.
Prior to founding Vestwell, Aaron co-founded FolioDynamix, a wealth management fintech platform. At FolioDynamix, Aaron oversaw the strategy, revenue, marketing, customers and product development. FolioDynamix was acquired by Envestnet (NYSE: ENV).
Outside of Vestwell, Aaron has served on the board of directors and the advisory board for several fintech companies, including Quovo (acquired by Plaid), Vestorly, OfColor, and Chalice Financial Network.
Aaron holds a B.S. degree in finance from the University of Illinois, Urbana-Champaign and an M.B.A. degree from Duke University’s Fuqua School of Business. He was included in InvestmentNews’ 40 Under 40 and WealthManagement.com’s “10 to Watch.”
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About the Author
Anirudh Singh is a second-year MBA Candidate at The Wharton School, where he is part of the Wharton FinTech Podcast team. He has a passion for economic development, venture capital, financial services, and all things FinTech. Don’t hesitate to reach out with questions, comments, feedback, and opportunities at [email protected]