Out of pandemic chaos has come at least one revelation for many companies: for a business to thrive, employees' financial wellbeing is as crucial as their physical health.
A Willis Towers Watson
Financial planning has a reputation as a perk only for those with millions in the bank — especially among advisors earning a percentage of their clients’ assets under management. But a growing crop of wealth management startups are targeting workers who make less than $200,000, a massive, but largely untouched, market. And they’re using workers’ own employers to reach these mass-affluent clients.
The universal need for financial planning has always been there, even if employers are only now realizing it, says Origin CEO and co-founder Matt Watson. Based in San-Francisco and founded a little over two years ago, the SEC-registered investment advisor offers its 2,500 corporate customers financial advising as an employee benefit.
“We’re trying to solve the problem created by the current system,” Watson adds, referring to the advice industry's traditional focus on the affluent. “Our mission as a company is to bring financial planning to every employee everywhere.”
Origin works with clients who make between $50,000 and $250,000 a year, and their advisors are paid a flat fee instead of a percentage of assets under management. Watson aims for the company to be a “safe place to go, where [clients] can get unbiased advice, where they’re not being sold to.”
Origin has seen a large uptick in business over the past year, Watson says estimating three to five more companies than average have been seeking their services this year. Many of their clients are mid-market tech companies, he added.
“What companies are realizing is that you can’t just take care of physical health, you can’t just take care of the mental health, you have to solve these primary drivers of stress [finances] in order to have a really healthy employee population,” he said, adding that many people experienced unemployment for the first time during the pandemic, or had to deal with finding new housing in new states with new tax laws.
Facet Wealth, a virtual RIA founded in 2015 and based in Baltimore, has a similar focus.
“We’re rebuilding financial planning the way that it should be,” says Facet Wealth CEO and co-founder Anders Jones. He kickstarted the company when the Department of Labor’s fiduciary rules failed to pass in 2015.
The rules would have required advisors and brokers to act as fiduciaries and put their clients’ best interests above their own when providing investment advice. Industry giants on Wall Street fought the proposal, fearing they could lose
“In our mind, this was the financial services industry very publicly admitting that they were screwing eight million of their clients, and this seemed like a huge opportunity to build a better model,” Jones says.
Like Origin, Facet Wealth saw a surge in 2020, quadrupling its client base from 1,700 at the end of 2019 to 5,000 by the end of 2020, Anders says. Although the company started out primarily with direct-to-consumer programs, Facet Wealth is starting to work with companies who want to offer financial wellness benefits to their employees, and Jones predicts this will soon become a core part of the business.
Facet Wealth caters to many who work in technology, but Jones said he has clients ranging from nurses, to teachers, to one man who mines uranium in Nevada.
Both Jones and Watson believe their advisors can form long-lasting relationships with clients. At Origin, employees’ packages include a period of service after they leave the company. After that, former employees who leave can start paying their own monthly subscription fee if they want to continue with their advisor.
Heather Comella, a lead financial planner at Origin, said many clients have asked to stay on with her after leaving their original companies.
“I’ve always worked in a non-commission role,” Comella says, “which is really important to me, to be able to objectively give advice and not have my clients question why I’m making that recommendation.”
She doesn’t see the need for planning as an employee benefit going away any time soon, especially as Millennial workers grow older.
“We have new things we have to deal with that generations before us didn’t,” she says, predicting that Millennials and Generation Z will not be able to rely on Social Security.
“Fingers crossed, [we’ll have] some access to Social Security, but not the numbers that are there now, that our parents had, unless something changes,” she says. “It’s really vital to do [financial planning] right from the beginning.”
