A Product Market Fit Show | Startup Podcast for Founders
00:14:58 · Aaron Schumm
[00:14:58] S0: It's a good question and it depends on the business, ultimately. But there's a few key things. I think, ultimately, for the business, it's about recruitment and retention of the employees. And it's also about their own security, right? In the US, pension plans don't really exist anymore. There's the big question mark over social security, whether that's going to continue to hold over the course of the next few decades. This is something where you can put the control of your future in your own hands and if you can do that and not make it burdensome, right? You don't want to spend hours doing this a week. You want to spend a couple minutes maximum, right? And it really has become table stakes for employees or people that are out there interviewing saying, hey, if I'm going to come to your company and work. What are you going to give me? What are your benefit packages, right? Your health insurance, your savings programs, and all of those. And through all of this, right? When we were starting the early days of Vestwell, there was a lot of legislation that was being proposed. At the time, there was a DOL fiduciary rule that was having a big weight on how advisors could engage. There was the notion of Secure 1.0 and then Secure 2.0, and now actually they're working on Secure 3.0. Those have become some of the largest legislative tailwinds that this industry's seen since the inception of ERISA law back in the mid 70s. So it's really transformed and it's shined a light on why people need this and you see it now. Even, you know, with the current administration. Some of the things they're rolling out are on the Trump accounts and child savings, and IRA programs, and all of these different things that people are looking at. And say, we have a systemic problem. There is a crack that persists financially in this country and if we don't start to fill that crack. It is going to widen and get deeper, and we're never going to get out of it. So people are just starting to take action on it and a lot of it ultimately in this country, you know, most businesses are small and mid sized businesses. Now we do everything up and down this. We do large businesses, we have a lot of large businesses but from a volume perspective, ninety five percent of the businesses in this country would be classified as that small to midmsized business.
00:16:59 · Pablo Srugo
[00:16:59] S1: When you're starting out, you're talking to donor advisors, financial advisors. What is the pitch you're giving them as to why they should pitch Vestwell to their clients?
00:17:07 · Aaron Schumm
[00:17:07] S0: So it depends on where they sit in the ecosystem. There's different types of advisors, right? So you have advisors that are primarily focused on wealth. So the pitch to them is like, hey, give this to your private wealth client, right? Who you're already managing your assets, right? And so, my financial advisor, it's like, if I said, OK, hey, you're already doing my assets. I need a solution for my employees. What can you do? And before that would be, they go take one of the providers off the shelf or whatever it is. That's kind of outside and they just say, hey, here's something. That's not the ideal thing, but it's something and you just have to deal with it. That's what I was told in my last business, right? I was like, this is all you got and he's like, it's kind of all I can do right now, sorry, and it was really expensive. So, from that side, it's like, hey, we can give the advisors in that realm something for all of their clients who are entrepreneurs or business owners. That is tailored for them, that fits their world. That really becomes a lead gen engine for the advisor to see then not only their private wealth client and their assets, but all the underlying employees that work for them and who could be a potential wealth client going forward. So for the advisor, it's very attractive. Because all of a sudden it's like, hey, I have almost a sales lead gen engine sitting here in front of me. That I can start to look and say, oh, hey, Susie or Lisa over here and they actually have a lot of assets. Maybe they should be a private wealth client and I should go have a conversation with them.
00:18:30 · Pablo Srugo, Aaron Schumm
[00:18:30] S1: Because the advisor, like, let's say I manage your wealth. You run a business, I'm like, hey, you should use Vestwell. Now I get to see the assets of everybody that you put on, all the employees. [00:18:38] S0: You see all the employees and you can drill into them. You could see, you know, beneficiary information. You can see a lot of information that they can aggregate outside accounts, their bank accounts, other investments they have, and pull it into the platform. And then we service all that up, back up to the advisor. And then on the other side of the equation, there's also advisors who only focus on retirement, right? So that is their bread and butter. That's what they do. They're deep in the weeds when it comes to ERISA and all the regulatory components. So from that aspect, what we do for them is we can give them a solution. Where we're doing everything from like signing the 5500 as a notion, it's called a 316 fiduciary and we could sign their tax filings. We can give them everything that's for them. We also give all that data back to the advisors, where a lot of other players out there in the industry won't give them data. They're like, no, no, it's our data. Because really what they're trying to do is siphon assets out of the program and bring it in house to themselves. We're not in that game at all. We want to make sure that we're providing the best service possible to all the users in our profile, right? Whether that's an advisor, a home office, an employer, a saver, and alike.
00:19:43 · Pablo Srugo, Aaron Schumm
[00:19:43] S1: So if I kind of say back to you, on the one side. You're creating effectively, like it's a new. It's like you said, lead gen. That's really the main ROI for the wealth advisors. You can get new clients by running this motion and on the other one, it's kind of time saving. It's efficiency, it's like, you're already doing this but a lot of the things are clunky. A lot of the things are inefficient. With this, it's just, your life's just going to be easier and you're going to keep doing what you're doing. [00:20:05] S0: Yes and also these programs, like workplace savings programs specifically. They tend to be much larger and grow much faster than an individual wealth client's assets, right? Because if you think about it, it's much easier to go sell a plan. A 401(k) plan that's going to, if let's say it starts at zero and grows past a million dollars. That's going to grow past a million dollars exponentially faster than an individual who shows up with say $100,000 and tries to grow that to a million. Because you have a base of employees underneath and you have payroll that's coming in and contributing to these programs every pay cycle, every week, every two weeks, whatever it may be. So you think about it and then you start to accrue that those assets on top of the investments. They're going to grow much larger and if for an advisor who's getting paid some element of a percentage of assets. It's a quite a lucrative business for them relative than just trying to knock on a bunch of doors to find some affluent clients.
00:20:05 · Aaron Schumm, Pablo Srugo
[00:20:05] S0: Yes and also these programs, like workplace savings programs specifically. They tend to be much larger and grow much faster than an individual wealth client's assets, right? Because if you think about it, it's much easier to go sell a plan. A 401(k) plan that's going to, if let's say it starts at zero and grows past a million dollars. That's going to grow past a million dollars exponentially faster than an individual who shows up with say $100,000 and tries to grow that to a million. Because you have a base of employees underneath and you have payroll that's coming in and contributing to these programs every pay cycle, every week, every two weeks, whatever it may be. So you think about it and then you start to accrue that those assets on top of the investments. They're going to grow much larger and if for an advisor who's getting paid some element of a percentage of assets. It's a quite a lucrative business for them relative than just trying to knock on a bunch of doors to find some affluent clients. [00:21:02] S1: So now kind of going back into that time. Now I kind of understand the problem solution and the pitch to the people that are ultimately selling this, right through your channel. Tell me a little bit more about what the product was, you know, over ten years you've built a lot of things. I'm sure, and you service more, and more kind of subtleties and more types of plans, and these sort of things. V1, like what was V1? What was the absolute core that you had to say, we have to deliver at least this for anybody to work with us? What was that?