Jack Sharry: Hello, everyone. Thank you for joining us on this week’s special edition of WealthTech on Deck. You may have noticed there’s a convergence underway of workplace retirement and wealth management. This includes a convergence of asset management, insurance and annuities, financial technology, and a whole bunch of stuff. These various ways of saving, investing, and growing and managing wealth and ultimately, distributing that wealth from multiple accounts, models, and products are enabled by technology that is ever improving. And of course, the real objective is to deal with the complexity in a way that makes it easier for the client, consumer, participant to make good choices over time. Our guest today is Aaron Schumm. Aaron is the CEO of Vestwell, which is one of the clear leaders in bringing all this together for their growing number of sponsors, participants and clients. Today, we’re going to talk about the vital role the workplace retirement business is playing in bringing on new investors, helping them with a host of tools and capabilities to make their retirement savings journey as productive as possible, and ultimately showing them how to maximize their financial results and peace of mind. Aaron, welcome back to WealthTech on Deck.

Aaron Schumm: Yes. Thank you. Appreciate it, Jack. Good to be back. Thanks for having me here again.

Jack Sharry: So there’s been many surveys that show workers want and expect their employers to provide them with more in terms of education and advice, or what’s often called financial wellness. How are you all responding at VestWell? I know you got a lot going on.

Aaron Schumm: Yeah. That’s a gross understatement. Most of my life. So I think first, it’s about the definition of wellness, right? And how people think about it, right? We all… wellness gets thrown around a lot.

Jack Sharry: Yeah.

Aaron Schumm: And it has different meanings to different people. The way we think about this, right, is from you know, there’s like the wellness 1.0/2.0 like kind of light tools that are incorporated, I think 3.0 is really comes to the actual path forward in implementation of that path, without needing to take explicit direction, right, and keeping it all within one experience. So, you know, we think about wellness as, it’s critical for a saver, regardless of who that is, right? It takes different forms and different levels of complexity, depending on where someone is in their life cycle of saving, but we look at our job as really providing that modern technology to help facilitate that path to whatever savings mechanism or multiple savings mechanisms that should be available to a particular individual. And it takes a lot of steps and a lot of forms to get there. But we’re excited to see this and I think we’re closer than ever to being able to bring this to fruition for our clients. You know, recently we acquired a company called Gratify out of Morgan Stanley. And we are looking at, at leveraging that solution, that technology that’s been built to incorporate directly into our platform as a seamless solution for a student loan, employer payment down to the employee on their behalf and so on. And I can unpack those things further. But that’s, that’s kind of one step of many that we’re taking in the, in the wellness world.

Jack Sharry: Why don’t you describe that? Because, frankly, every time I hear the term financial wellness, my eyes roll, because it just sounds like, sounds like BS. You just gave a specific example of something that someone, particularly a younger saver, who’s dealing with college debt, or an older saver, who’s still dealing with college debt of their kids. Tell me some more about some of the other sort of capabilities that you either have or would like to have, where’s that, all that going? What does financial wellness look like in specific? Is it budget? Is it investing help? What does that start to look like over time?

Aaron Schumm: So the way that we look at it, and the way that we engage, right, within Vestwell, right, is if an individual saver, right, could be a participant within a 401k plan saving, you know, within their employer’s plan. It could be an individual saver, you know, in a payroll deducted IRA scenario where the employer is maybe not matching, or maybe they have you know, college savings, 529, or disability savings through ABLE, right, we have all of these savings components that we make available to our partners and the end savers and the employers on the platform. So to give an example, let’s just say you have a small business, right, or, or a business and you have a 401k program, and the employer is offering a 401k, saver comes in, they start participating in that 401k program. And then we, through the data that we’re able to see ingested through payroll, can understand certain data points around that that person, right, where they live, how they get paid, when they get paid, so on. And then they’re inputting beneficiary information so on and all of the sudden, hey, your beneficiary is a minor, right? And one of your kids, and you live in a particular state, right? And does that state have a 529 savings Program? Right? And are you saving for that? Right? And a lot of people know, like, we all know these things that we should be doing, right. But when you ask someone to take explicit direction to go do something, it’s hard for a lot of people to do that. So we look at part of our role as making things like that available. Or is it an individual saying, hey, do you have student debt? Right? Yes. Okay. Is there a debt facility mechanism or debt payment facility that we can help make available to that individual, right, because you’re not saving in a 401k, possibly, with your employer because you’re saying, well, listen, I got a lot of debt. And every month, I gotta make these big payments to my student loan. Right? How do I do that, especially now that they get reenacted here. So, so we look at it as, you know, a dollar allocation that you could save every paycheck, right? It’s, you know, $50, $100, whatever it may be. Where should that dollar go? Right? Where’s that next best dollar go? Yeah, because sometimes maybe it’s not in a 401k, right. Maybe it’s in an IRA, maybe it’s an HSA, emergency savings, right, rainy days. So we look at our role is to help facilitate that and guide that next best dollar, and provide the experience to the end user that allows them to know what they’re doing and how they can best optimize to save for their future.

Jack Sharry: And tell me about where that stands now and where it’s going. Because that all sounds wonderful. If I’m a relatively new saver, and I’m trying to figure a whole bunch of things out, I may have some young kids and I want to save a 529 plan, and I got a health situation with my spouse, and they gotta be concerned about that. Whatever the issues are…

Aaron Schumm: Yeah.

Jack Sharry: How do you extract that from the data and then prioritize the recommendation? How does that all work? How does that play out?

Aaron Schumm: Yeah, great question. So I would, I would say we’re in the second, third inning of this, right. And it’s a multi year endeavor. Phase one was standing up the programs, right, so today, we have 401ks, 403bs, IRAs, 529 college, ABLE savings, we’re gonna roll out emergency savings here in the next like, two quarters. And that’s already in development now. And now we have the student loan repayment facility. And then after that, we’re gonna add health savings, right. So the first piece ESA, and HSA are not yet available, they will be available soon. But but we have the other six components available today. Then what we’ve done is we’ve created the personalized investing vehicle that becomes the baseline for saving, and kind of the, I’ll call it like a lightweight version of planning, if you will, that we can start to use to take the data in and then allocate the next dollar. We spent the last two years rebuilding the underlying architecture from the ground up. We deploy that earlier, early in the second quarter, we’ve re-platformed everything to that, that becomes the foundation for the future of this entire industry. And then with that now we’ll start to incorporate better logic to where those savings components get surfaced to an individual and when because not all of them are obviously relevant to everyone.

Jack Sharry: Sure.

Aaron Schumm: You don’t just want to throw it all out there and let them try to figure it out. So we have to start, what I’d say is we ask a couple of very light leading questions that give us indications of what could be or may be relevant to the individual to start saving. And then we’ll continue to refine those things as we test and mature the solution.

Jack Sharry: I’m assuming that over time, additional capabilities, whether it’s around savings, whether it’s around spending, whether it’s round investing, and you’re also picking up data as you go, you understand the habits and preferences of the people you’re dealing with and machine learning, I’m sure, is in there somewhere. Describe what what that future holds. What does that start to look like over time? It seems like an awfully good set of guidance, tools, and support.

Aaron Schumm: So the key to this in our view, and I think what we’re seeing play out with a lot of the testing that we do with users is you need to have one place for this, right. But it has to be distilled in a fashion that you can still make those decisions and not be burdened with complexities or, or confusion, or intimidation around what they are. Right. So that takes a lot of forms, right? It could be nomenclature. It could be, you know, clicks. It could be questions, it could be everything right?

Jack Sharry: Yep.

Aaron Schumm: And to… pre-Vestwell, these things have kind of existed, right. None of these programs are really new, right? You could argue like state IRAs are new or ABLE programs are relatively new. But at the end of the day, these savings programs have all been made available, but they’ve all been made available in individual offerings that are outside. If you have three savings accounts, or three different savings programs, you’re logging in to three different providers three different times to do each thing. And then you’re, as… you’re then responsible as the user make all those determinations of how much you can save, where am I putting dollars? You know, if you think back to the days right, you and I, we’re old enough for this, right. Remember the checkbooks we had, right. And think about how many people, I remember my mom, right. She always had like three different checkbooks, right?

Jack Sharry: Yep, sure.

Aaron Schumm: Like, why do you have three different check books? Like, well, this is for the mortgage, this is for other, you know, whatever, right? And that’s just not really needed, right? If you bring all this together in the right way. So that’s really what we’re focused. And then that becomes really powerful because you’re focusing on the right areas for the right individual versus just slamming something in their face and saying, this is what you need today.

Jack Sharry: Yeah, one of the things I find fascinating, whether it’s on the wealth management side or on the workplace retirement side, is the challenge, complexity, and importance of coordination, what you’ve just described, rather than have those three checkbooks, and then have to remember certain things between them and what have you, I imagine that where you’re headed is the prioritization schema is going to be in there helping you to make those determinations and will learn from you over time. And pretty soon, the next best action is what’s going to arise and, and over time, we’ll talk about this in a little bit, it’s going to connect over to that wealth management side where you may have your savings or investments that are separate from workplace, it’s all kind of converging. Am I, do I have that right?

Aaron Schumm: Absolutely, absolutely. Yeah, we’re already starting to pull in data through like third party like Plaid and whatnot, right? And, and surfacing those outside accounts from individuals so we have better datasets to work with, right. And a big role that we play is surfacing that information back to advisors, right, and allow advisors to give advice, right, and provide guidance around this and figure out how they can help… We serve a people, and I don’t have the stat in front of me, but I want to say it was upwards of 70% of individual savers want to speak with an advisor?

Jack Sharry: Sure, sure.

Aaron Schumm: And so you think of everyone in a 401k plan, they want to talk to an advisor. Not to say they’re all, you know, should be using an advisor every day or every quarter or whatnot. But hey, that’s pretty important. And relatives, you know, a stat that stands out when you think about it as an advisor, how they can be engaging, start in the workplace, and then carry someone into some sort of wealth solution over time.

Jack Sharry: Yeah. There’s no question about about that as sort of the, the natural path forward. And what happens if you’re that, that investor and you started out and you got, through Vestwell-type programs that are well coordinated and prioritized and all the rest of it, and there’s a connection to an advisor as your situation becomes increasingly complex, and you could capture kind of the big picture of it all and the detail of it all, an advisor can do a lot better work, because they don’t have to collect all that stuff. They don’t have to kind of wade through it all. It’s all sort of sitting there. And now, based on your very personal circumstances, the advisor can provide advice around what really matters that may not show up in what you might draw from a data aggregation tool, but rather what you draw from the conversation to that client.

Aaron Schumm: Absolutely. Spot on.

Jack Sharry: Yeah. That’s what I love about what our business is doing these days. I saw in June that you guys have expanded your pooled and multiple employer solutions. Tell us about that.

Aaron Schumm: We registered as a pool plan provider while back. And then there were some things that we wanted to build out to make sure it really held the water that that we thought it could. I would say personally, it has been surprising the level of interest we’ve seen with it. Actually last week, we just signed another big PEO that’s leveraging Vestwell in a pool planned contract. Because there’s some nuance on the back end for distribution… not to bore the listeners with the details behind it. But like how people can move from one… in a PEO that’s within one employer that moves to another that’s still under the same PEO, how does that data move back and forth and so on. So we built all of those things, rolled that out. And it’s been exciting to see, I think we’ll see more and more of these pooled plans come to market. But like I said, it’s been surprising that the, the interest level, if you had asked me at, I would have probably lost that as far as like what level of interest we would have around it.

Jack Sharry: So one of the things I’ve also been reading about, I’m sure you have thoughts, and probably are already on your way on this is similar but different. I think the number is the average worker has multiple jobs over the course of their career, 10 or 12 over time. So how do you serve these folks if they’re moving around, and they got rollovers here and there and what are your plans around helping people get the most out of their retirement savings?

Aaron Schumm: So we have a couple of ways we do it. Part of the re-architecture of the platform that we deployed earlier this year had a component of this built into it, right. So what we do today is facilitate rollovers in a streamlined fashion. I think, as an industry, I think we do a really horrible job of helping end savers facilitate rollovers, right. I think of previous jobs I’ve had and rolling out of a 401k, I was actually just helping, well I was trying to help my wife roll one out of out of one of her old accounts. And it took us months, months to make it happen. It was so many back and forths and conference calls and we had our financial advisor on the phone with her old previous employer and their benefits like it was just, it was such a horrible coordination, right, to make happen. There’s been a couple of initiatives put forth around, you know, creating, like a working group or a standardization around how these rollovers happen across the industry. But it’s been largely focused on the large, large employer market, I’m hopeful that it starts to seep into the smaller employer market and we make that available. I think what we’re doing just as our, within Vestwell, is we’re going to help facilitate really streamline you know, automatic what ACH is, or rollover processes within Vestwell and out to other parties if available. But a lot of it comes from the, who’s ever on the other side or on the legacy papers, legacy providers, right. Where they’re sending your paper forms, saying, fill out this PDF, fax it, snail mail it in.

Jack Sharry: They’re not slow walking it, are they?

Aaron Schumm: And a lot of these guys do it intentionally, right? Because they want to keep the cash on hand, especially with high interest rate environments. And, and I get that from like, their, their selfish manner, but it’s still not necessary. We have to do a better job of servicing people.

Jack Sharry: Yeah. Do you see that changing? I just, it just seems like…

Aaron Schumm: I think they’re gonna be forced to change.

Jack Sharry: Yeah.

Aaron Schumm: I don’t know if it’s gonna happen in the next year or two. But I think in the next five years, someone’s going to step in and force it.

Jack Sharry: Gotcha, gotcha. Every time I turn around, I hear wonderful things, read wonderful things around Vestwell. You guys seem to be right on top of what the market needs next, a lot of work to be done no, no easy task by any means. What are some of the things you’re excited about near term, longer term? What are some things that you guys working on that are gonna make for that better experience and that more seamless operation?

Aaron Schumm: Yeah, no, there’s no shortage of things for sure. So our focus right now, so we’re excited, we’re closing the Gratify acquisition here soon, we’re actively in the process of looking at how we take the core infrastructure and meld it into the Vestwell infrastructure. Thankfully, and part of our diligence process right before we got to the acquisition itself was making sure that architecturally things lined up, so we can make it work pretty easily. So what, that’s going to happen soon. And we’re building an emergency savings program, really excited, about find out, we have a couple big institutional partners that we’re going to work with initially on that as well as on the state side. And we’re also looking at building a lifetime income structure and incorporating that for users where it makes sense, I think, I think for most users, that makes sense, personally. And just continuing to enhance everything we’re doing around that, right, I think broadly, we look at it as like workplace savings, and you know, employer led savings, as well as individual savings, and how we can bring these worlds together, and then, you know, marry that over to a wealth structure over time, we don’t want to build, you know, I don’t want to build a wealth solution. But I think there’s a lot of great partners out there that we can work with in doing that, so.

Jack Sharry: And when you say wealth solution, what is that?

Aaron Schumm: What I would say is more taxable type structures, versus like tax preferred structures within the workplace or like a 529, or something that’s tax deferred.

Jack Sharry: Interesting. So any key takeaways you’d like to leave with our audience as we look to wrap up?

Aaron Schumm: I mean, there’s so many things. I think, first of all, what we’re seeing in the convergence of wealth, and health, and all of these things coming together in the wellness world is really exciting. I think a couple of big takeaways are, you know, expanding into the workplace offering is a core anchor for anyone who wants to engage in a future wealth program as well. That’s where you have to be, you got to be engaging there. I think the demand we’re seeing on the financial wellness side, right, on the whole, where people are just saying, hey, help me work through this, right, or help me think through this and create an actionable result is really important, right? And the key is that last piece, right, making it actionable, right. You can’t just say, hey, you should do all these things, go figure it out on your own, you have to allow them to actually do it. And then the third thing I would say is, is really on the with Secure Act, right, that officially goes live January 1, at least the first wave of it, that’s going to create a lot of opportunities for folks in the advisory world, and people already ramping behind it, we’re happy to be able to support all the initiatives that have been put forth within Secure, you know, student loans start again the beginning of September. So that’s gonna be another thing that was, you know, also a catalyst for the Gratify acquisition. So, endless opportunity. The growth in this space is really encouraging and we’re seeing you know, people just want to engage, which is something we haven’t really seen, you know, leading up to this.

Jack Sharry: That’s great. Congratulations, you guys are doing terrific job, fun to watch.

Aaron Schumm: Thank you.

Jack Sharry: Probably a little harder to do, but…

Aaron Schumm: I think a few more years off my life. No, it’s exciting. Listen, it’s meaningful things.

Jack Sharry: Sure.

Aaron Schumm: Impactful to everyone’s life, and we’re proud to to help catalyze that.

Jack Sharry: Yeah. And you’re doing it well. So congratulations. So, as always, Aaron, great to get caught up with you, spend a little bit of time, appreciate you taking time out. I know you’re busier than a one armed paper hanger as they used to say. As we do with each of our podcasts, my favorite question is coming up. Love to ask, what do you do outside of work, probably there is no outside of work, but what do you do outside work that you’re particularly excited or passionate about that some of us might find interesting or surprising?

Aaron Schumm: I don’t know if you’ll find it interesting. I’m very, I’m an active person. I will say this, so one interesting thing, we just got back from our first, I’ll call it, proper family vacation trip in seven years. Overdue. But it was fun to actually do that. I would say, you know, I was very uncomfortable and my wife is the same because she, she is cut from a similar vein to me and the way she… our work ethic. So we’re both like, we took 11 days and by like day six, we’re like, can we go to work for a few hours? So that was fun. But now we’re getting back in school season. I’m going to try to help coach or manage one of my my sons’ soccer team. Things like that. Nothing. Typical dad life, I guess.

Jack Sharry: Yeah. All good, all good. Well, that’s great. Well, I appreciate you sharing that, I can relate. I am not very good at sitting around. An hour or two maybe, and even that’s a little painful. But, for our audience, if you’ve enjoyed our podcast, please rate, review, subscribe, and share what we’re doing here at WealthTech on Deck. We’re available wherever you get your podcasts. Thanks again, Aaron. It’s been a real pleasure. I’ve really enjoyed it, as always.

Aaron Schumm: Yeah, thank you. Good to see, Jack.

Jack Sharry: Good to see you.