The Tesla of Planning: NewRetirement

Steve Chen

NewRetirement is a new approach for retirement planning – comprehensive, easy, personalized and designed for regular people. NewRetirement’s DIY Planning tool is designed for anyone who is worried about their retirement – especially people nearing the end of their careers who are in their 50s and 60s. It helps people figure out how to draw down their savings as well as think through things like Social Security, income streams, Medicare, work and phased retirement and how to manage debt, expenses and out-of-pocket medical costs to live as securely as possible.

While building a financial plan can often be expensive, NewRetirement offers their most popular online tools for free. And if you feel like you need extra help from a human being, you can pay for one-time or ongoing support from a NewRetirement Advisors CFP®.

We asked Stephen Chen, the co-founder of NewRetirement, several questions about the trends in retirement planning, the impact of COVID-19, and the product’s “secret sauce” that makes the company a success.

What is NewRetirement best for? What’s your product’s secret sauce?

Steve: We are creating a platform that allows anyone to build their own retirement plan on their own or with help from a financial coach or CFP. Today, most of our users are approaching retirement, and our secret sauce comes down to a few things:

• First, we’re super comprehensive and holistic. Many of our users have been looking for a platform that puts them in control and is much more than just a simple one dimensional calculator. Our user testimonials put it best.
• Second, we’re completely independent and aligned with our users. Most financial services firms make their money indirectly—from transactions or on fees on assets. We charge users directly and independently of how much they have or where they have it, so we aren’t influenced by what our users decide to do.
• Third, we chose to go direct to consumer first so that we could learn faster. So far over 90,000 people with $90 billion in savings have chosen to build plans organically. We are learning very quickly with them and feeding that back into our platform.
• Fourth, we are building a technology-led platform so we can deliver the highest value and lowest cost solution in the market, which we think will be disruptive. Today, unbiased, high-quality education and guidance is hard to find, and if you find it, it usually comes from relatively high-cost, white-glove providers.

We envision a future where everyone has access to great, low-cost, unbiased ongoing financial guidance that helps them achieve financial independence, so they can make the most of their money and time.

What is your personal and company’s achievement that you are most proud of? Why?

Steve: For the company, I’m most proud of the team and community of users that we have built. We are taking on a problem that is complicated and has huge entrenched competitors, so many people wouldn’t bother trying to take this on. It’s a big unsolved problem that presents the opportunity to help billions of people worldwide. I like this quote by Margaret Mead:

“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”

For myself, I’m getting to the point where I realize it’s all about being of service and creating value for other people, so I guess I’m proud of realizing that and taking steps to try to be a great father, husband, brother, son, friend, and leader in my community—it’s a journey.

What challenges does NewRetirement face the most, and how do you manage them?

Steve: The biggest challenge is staying focused on what matters because we operate in such a big space and there are always lots of opportunities and small problems to distract us. We are focused on creating a great, simple solution that works for millions of users. We need to be thoughtful about our business model and the appropriate exchange of value. We need to build a model that is scalable and sustainable. We also think a lot about the technical depth and robustness of what we’re building because we’re dealing with people’s life savings.

What’s inside NewRetirement—I mean, what is so special about the technical side of it? Which technology does your solution employ? What’s your solution’s architecture?

Steve: Our tech stack is AWS, Rails, Go, React, and WordPress. We are trying to achieve offering a rich, responsive, scalable, and secure solution. We’re also building a platform that can support third-party partners so our users can leverage market pricing if they decide to get bids on parts of their plan, like health care, long term care, annuities, and so on. We’re also building toward being able to deliver a “virtual financial advisor” experience that leverages artificial intelligence and machine learning.

What integrations with other platforms do you have? Is there any standardized approach while integrating platforms in NewRetirement? Do you provide other companies with an open API?

Steve: So far we have largely built solutions internally. For example, we have our own annuity modeling engine and social security engine. We’re now integrating with Plaid for account linking, and we leverage some APIs for health care/Medicare cost projections. We are looking at adding more third-party integration for things like social security, spending, and liabilities. We expose our services internally through APIs and have considered providing some of our modeling services to third-party firms.

Let’s discuss the NewRetirement team. How do you structure your teams? What development methodologies do you use across the teams—Scrum, Scaled Agile, others—and why?

Steve: We are a virtual team mostly in the Bay Area and in the US. We are an Agile team and use tools like Github, JIRA, Google Docs, Slack, Zoom, SmartSheet, Intercom, and others to get our work done.

How do you ensure the security of your platform and working processes? Do you use any specific tools and practices or hire security experts to check everything?

Steve: We factor security into our technical architecture and internal processes. We do third-party assessments and follow industry best practices, and we’re continually investing in improving security.

How quick are your releases, and what allows you to go to market so fast? How do you decide which implement to feature first? Do you ask your users about feedback while planning your roadmap?

Steve: We are continually releasing improvements and are now moving to a two-week sprint cycle. We follow the Lean Startup methodology where we create hypotheses, prioritize based on the market opportunity/need, design experiments, deploy, test, measure, learn, and iterate.

What features or integrations do you have in your roadmap for 2020?

Steve: Some of the big things are account linking (Plaid), Monte Carlo, social security, simplifying our UX and customer journey, asset allocation, and creating the framework for a virtual financial advisor—you can read more here.

How many users and transactions the platform can handle per day? What made it possible to provide this type of performance?

Steve: We have designed this to be infinitely scalable, but we do have to be thoughtful about how we architect and implement things like Monte Carlo, which is more compute-intensive. Bottom line, it’s a combination of good architecture, design, and the Cloud.

What has changed in your company’s routine since the quarantine started? How has it impacted your pricing plans? How do you help your teams provide your best-in-class service, and what special offers do you have for your clients?

Steve: We were already remote and providing online tele-guidance via Zoom, so we didn’t face too much of an impact. We have been investing to build out our customer experience team so we can learn faster with our community of users. We will be doing more online going forward across our Facebook group, online courses, and online events like Ask Me Anything.

What are the current trends in retirement planning and wealth management as a whole? Do you think that experts underestimate or overestimate some market trends and prospects?

• Steve: The big trends are these
• Low fees and fee awareness: These help us.
• Passive investing: We also agree with this.
• Fiduciary independent advice: This is super important, and there are many layers to this. one of our subscribers recently built his own retirement paycheck and felt that even RIAs were biased to keep assets under their management because that is how they make money, and the RIAs are the good guys—there are many more salespeople who can call themselves advisors who pose a big risk to less sophisticated people.
• Financial Automation: One way we think of ourselves is like the Tesla of Planning. Phase 1 is online planning and creating a large network of plans, and Phase 2 is building the virtual financial advisor (e.g., self-driving cars) based on learning from Phase 1.