An Interview With Jason Hartman
Understand Impact. It’s not enough to simply set up a program. As an employer, it’s important to reevaluate your workplace savings plan options and look to find new avenues for employee participation, such as auto-enrollment.
Most of us take it for granted that we can open a bank or a credit card. But the truth is, according to the World Bank, close to one-third of adults — 1.7 billion — are still unbanked, and have no access to a transaction account. About half of unbanked people include women in poor households in rural areas or out of the workforce. What can be done and what is being done to promote more financial inclusion? To address this Authority Magazine started a new series about Companies Helping To Promote Financial Inclusion. As part of this series I had the pleasure to interview Aaron Schumm.
Aaron Schumm is the founder and CEO of Vestwell, a recordkeeping company that is redefining the way workplace savings programs are powered. Aaron is responsible for the strategic vision and growth of the company, leading Vestwell’s incredible team to help close the retirement savings gap across the United States. Prior to founding Vestwell, Aaron co-founded FolioDynamix, a fintech platform that manages the full wealth advisory lifecycle, which was acquired in 2014 by Envestnet (NYSE: ENV). Earlier in his career, he spent time at The Northern Trust Company, FiServ, and Citi. He graduated from the University of Illinois with his Bachelors degree in finance and received his Masters from Duke University.
Thank you so much for doing this with us! Before we dig in, our readers would like to ‘get to know you’. Can you tell us a bit about how you grew up?
I gravitated towards finance from an early age. My dad was a carpenter, and every day when he came home from work, he would discuss the stock market with me. I had always found our conversations fascinating and made the bold decision to become a stockbroker in the eighth grade. It wasn’t until years later when I showed a stockbroker while I was in college that I realized it wasn’t the right job for me. From there, I explored other areas of the industry including investment management, which ultimately dovetailed into the financial software world. But I credit my father for introducing me to the world of finance and ended up where I did because of those daily conversations.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
I highly recommend Peter Thiel’s book, Zero to One: Notes on Startups, or How to Build the Future. There are countless lessons in this book, especially as it pertains to moving the needle forward in a business. The hardest part of running a business is determining how to make those initial, significant advances forward, and this book was incredibly helpful for me.
Unrelated to finance or business, is my favorite book, A Brief History of Time by Stephen Hawking. This book was instrumental in changing the way I perceive our world.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
I try to abide by three guiding principles in my life:
“It could always be worse.” This helps me keep perspective in my daily life.
“Always put yourself in the other person’s shoes.” To me, this lesson is often overlooked today.
“You are where you are because you need to be there right now.” Someone said this to me on a plane and I’ve never forgotten it. It helps me to remember to be in the moment and explore opportunities to learn from the situation.
How do you define “Leadership”? Can you explain what you mean or give an example?
I grew up playing sports, and my coaches were some of the most motivating people in my life at that time. I found that the best coaches were the ones who could bring a greater perspective to the situation and explain the “why” behind what we were doing. These coaches were invested in each of us as players, and they went through the exercises alongside us. Leadership to me is doing the hard work alongside your team, not simply demanding action or an outcome.
Can you share the most interesting story that happened to you since you began your career?
Unbeknownst to me at the time, there were two pivotal moments in my career.
In 2002, I had a decision to make: become a product manager for a leading established product or take a risk and work on something new. My boss at the time encouraged me to consider working on the new product, and it changed my career. At the time, the product was simply incubating the idea of unified managed portfolios. Of course, we had no idea how big this concept would become. It was a great lesson to get into the mindset of exploring something unknown, thinking creatively to solve industry problems, and later on, becoming an entrepreneur.
Later in my career, I had just received my MBA and decided to move to London. Right before I moved, a former boss called to discuss the idea of his next business venture. Together, we came up with the idea of FolioDynamix (now part of Envestnet (NYSE: ENV)) on the back of a bar napkin. This journey ultimately led to me starting Vestwell.
Ok, thank you for all that. Now let’s move to the main focus of our interview. Let’s start with a basic definition so that all of our readers are on the same page. What exactly is Financial Inclusion?
According to the World Bank, financial inclusion is when “individuals and businesses have access to useful and affordable financial products and services that meet their needs — transactions, payments, savings, credit, and insurance — delivered in a responsible and sustainable way.” However, I believe it goes beyond this definition, as financial inclusion to me is about financial understanding. It’s having the ability and resources to make educated, confident decisions, without being an expert in the field. Even if financial products and services were available to all, it does not directly imply everyone will utilize them. A major pain point I see across the financial services industry is that many of these tools are confusing, intimidating, and lead to an overall lack of understanding from the masses.
What does it mean to be “unbanked”?
To not have access to a financial institution is a standard definition of being unbanked. However, again, if the individual does not have an understanding of the financial institution they are using, I would consider them unbanked. There needs to be a clear goal in mind, whether you’re opening a savings account, a line of credit, or planning for the future. Without a clear understanding of the product or service, it leaves individuals in a vulnerable position of potentially putting themselves into financial hardship.
For the benefit of our readers, can you explain some of the typical reasons why a person might be unbanked? Why can’t they just walk into the local bank and open an account? Why can’t they simply open an account online?
There are several institutional and societal factors that lead to why a person might be unbanked, especially for Black Americans in the United States. In just retirement alone, we can see that only 44 percent of Black Americans have retirement savings accounts, compared to 65 percent of white Americans, according to the Federal Reserve 2019 Survey of Consumer Finances.
Continuing with the education piece, there is a significant lack of financial literacy and no coordinated effort to develop a plan that will break financial hardship cycles. We need systemic changes and new tools to help individuals understand their financial power along with the resources available to get them living beyond an immediate financial needs situation.
Can you tell our readers a bit about your work to promote Financial Inclusion? Without saying names, can you share a story about a person who was helped by your initiative?
At Vestwell, our mission is to close the savings gap in the United States. For the majority of Americans, the 401(k) is their first — if not only — invested asset. As such, we believe that focusing on workplace savings programs is the most effective way to save. The 401(k) is an entry point to saving, and our platform helps make 401(k)s more accessible to small business owners. Our technology platform sets us apart with smart learning, modern APIs, and a completely digital interface, allowing us to help anyone, regardless of their financial knowledge or the amount of their savings. And we offer employers the ability to offer their employees far more than just the 401(k). Saving vehicles like HSAs and college savings plans help employees understand the different options that are available to them, in turn increasing their financial knowledge.
This may be obvious to you, but it will be helpful to spell this out. Can you articulate to our readers a few reasons why it is so important for businesses to promote financial inclusion?
Business owners have an incredible opportunity to help close the savings gap. They can provide services and educational resources that reach all of their employees.
According to the 2021 PwC Employee Financial Wellness Survey, “employers can further support inclusion by making sure that any financial advice or education offered through the workplace is explicitly paired with thoughtful services, products, and opportunities (such as on-site tax prep clinics and auto-enrollment into programs) to ensure employees fully benefit.” Furthermore, “Financial stress is a major cause of lost productivity at work — thus greater employee financial security ultimately benefits employers, too.”
At my first job at Northern Trust, they placed a strong emphasis on the company’s 401(k) plan along with educating me and my colleagues on the importance of saving through a workplace savings plan. Had I not had the guidance from my employer, I may have not started saving for my retirement until much later in life.
Ok. Here is the main question of our discussion. You are an influential business leader. Can you please share your “5 Steps Businesses Should Take To Promote Financial Inclusion”. Kindly share a story or example for each.
Below is a high-level approach to financial inclusion from a business perspective.
Accessibility. Make sure your retirement plans are equally available to all team members.
Education. Provide learning opportunities directly or with the guidance of a financial advisor to help employees make the best decisions based on their personal needs.
Plan for Outcomes. Determine what success looks like for your organization, and develop pathways to achieve these goals. This can be anything from having 75% of your employees contributing to their 401(k) to 50% of employees signing up for automatic annual increases.
Understand Impact. It’s not enough to simply set up a program. As an employer, it’s important to reevaluate your workplace savings plan options and look to find new avenues for employee participation, such as auto-enrollment.
Pathway to Growth. Beyond the 401(k), how else can you support financial well-being? Offering an HSA, a college savings plan, and other savings accounts can significantly support your employees.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
If I could inspire a movement, it would be around improving financial literacy by providing accurate and consumable education to help people make better decisions with confidence. From a product development perspective, it’s not about telling individuals to make a given decision, but instead providing them with enough information to come to a logical concussion themselves.
Is there a person in the world, or in the US, with whom you would like to have a private breakfast or lunch, and why? He or she might just see this, especially if we tag them. 🙂
I truly admire and look up to Barack Obama. When I was in college, he was running for senator in Chicago. He came to my fraternity to have a discussion on the economy and I thought to myself, “this guy should be president!” I would love to have lunch with him and learn more from such a remarkable leader.
How can our readers further follow your work online?
Follow me on LinkedIn. You can also visit the Vestwell blog to learn more about our work, or better yet, visit our careers page and join us in working to close the savings gap!
This was very meaningful, thank you so much. We wish you only continued success on your great work!
Aaron Schumm of Vestwell On How They Are Helping To Promote Financial Inclusion was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.