With Bryan, I discussed global trends in wealth management, humans and robo components competing with one another, and expectations for the near future.> More details
Aspiration: How to Make Money Making a Difference
|AUM||$153 million of discretionary assets on the Aspiration platform, including Aspiration checking, investment, and retirement accounts (as of March 2017).|
|Value proposition||Do well, do good while planning your retirement, banking, and investing with Aspiration.
Operating on a 100% fossil fuel free basis, Aspiration has two expertly managed funds:
The latest WealthTech player we had the pleasure to interview is Aspiration. Aspiration chose to set up its hub right near the Pacific Ocean in the popular seaside community of Marina Del Rey, on Glencoe Ave. You can feel the warm breeze from the ocean right after you park your car. Anyone coming here would find plenty of spots to wine and dine within a few-minute drive. Those who need a short break from work but are not coffee junkies can take a short walk to the beach. Glencoe Ave is the place where the eco-friendly ideas of Aspiration are born.
To date, we at WealthTech Club have presented numerous ideas and the ways in which they are changing the landscape of wealth management. Today, we are pleased to showcase another personal story of a company that helps thousands of Americans to become healthier financially and to accelerate in a sustainable manner. Andrei Cherny, CEO of Aspiration, shared with us his story of success and the science behind it. We discussed the ethics at Aspiration, the main driving forces of the online financial firm, and how it became an iconic brand of conscious investments.
Andrei has worked on a number of consumer financial challenges and asset-building cases over the past 20 years. He began his career in the public policy space as part of Bill Clinton’s team back in the 1990s. After the White House job, Andrei held a number of other roles in public policy, wrote a variety of books, and ran a public policy journal. After that, Andrei worked as a financial fraud prosecutor for many years and then moved to a consulting business to advise some of the C-Suite executives working with some of the major financial institutions and banks.
This is where Andrei saw an opportunity to create a different kind of customer relationship by unlocking a lot of value, both for the company that he would build and for customers who needed better financial products and outcomes than they were being offered at that point of time. In 2013, with the customer’s best interests at heart, the story of Aspiration began.
Wired to make a difference
Although there are plenty of asset-management firms out there, Aspiration’s mission is quite different, for a number of reasons:
- First, the company strives to provide increasingly full-service financial solutions for citizens, offering banking, investment, and retirement accounts. Aspiration targets all spheres of consumers’ lives by offering comprehensive financial products.
- Second, Aspiration builds credence with the customer and sees its mission as centered on crafting long-term connections with clients initially built on trust. The existing business concept is known as a “pay what is fair” model, where the customer decides what they want to pay for the services provided. This pricing strategy fundamentally changes the traditional relationship and incentives.
- Furthermore, the financial firm has a strong charitable focus, giving 10% of its earnings to nonprofits to help with various initiatives and make a difference nationwide. “Dimes Worth of Difference” is the Aspiration reply to challenges financially impaired Americans are facing.
For instance, Aspiration’s core product is a bank account that offers 1% interest; this is 100 times higher than the interest people are getting from most other bank accounts out there. Aspiration charges no monthly fees, offers free access to every ATM in the world, and adds a personal sustainability score, so the customer can monitor his or her impact on the environment.
In a bid to make the investment landscape more ethical, the asset-management firm created The Aspiration Redwood Fund, which is 100% fossil fuel- and firearm-free. Aspiration invests only into companies with very strong environmental practices, employee diversity, and governance.
“More than 90% [of customers] are choosing to pay when given the option.”
Sustainable prosperity in mind
With their “name-your-own-price” approach, Aspiration’s clients range from lower income to middle income to wealthy. At the same time, the firm does not bypass financial advisors who are interested in serving people with hundreds of thousands of dollars. Its first priority, however, is to open the door to financial services for people who would otherwise be sitting on the sidelines.
“Aspiration: Putting the customer in the driver’s seat.”
Their unique way of analyzing data adds even more edge to the company’s offerings. For instance, on the banking side Aspiration Impact Measurement (AIM) looks at over 75,000 data points so that when making spending decisions people can see how the companies do and where they’re spending the dollars when it comes to the environment and employees.
Using Aspiration’s proprietary algorithm, which takes a close-up look at thousands of data points, AIM incorporates two scores:
- A people parameter score considers employee-to-CEO salary ratio, perks, equality at work, and the percentage of female executives versus overall headcount in the firm;
- A planet parameter score, which measures the company’s carbon footprint and greenhouse gas emissions.
This level of transparency offers customers an opportunity to understand day-to-day spending and make informed decisions based on the impact their spending choices have on the world around us.
Partnerships for all good reasons
Aspiration has a strong network of allies, partnering with the Iraq and Afghanistan veterans of America, and thus working with a lot of their members; as well as the Sierra Club, a large-scale pro-green organization. Additionally, Aspiration collaborates with Radius Bank as a key partner on the banking side, as well as UBS and Emerald Asset Management on the investing front.
Positive contribution through consistent teamwork
Creating a scalable backend infrastructure professionally using AWS components, the company has a team of like-minded people in its engineering and customer engagement teams who try to reduce the wealth gap and break the notion that only the rich are getting richer.
Technology and the people who put it to use
Utilizing an Agile approach, the associates hold daily and weekly stand-ups to monitor the velocity of the overall efforts. The company has adopted a microservices architecture, with each module serving the specific business goal. There are 25 people in development in total, who, along with a large marketing team, work daily to support the company’s goals and help everyone do better financially while making the world a better place.
Product development process
The company reinvents its products based on feedback from clients, as well as proposing ideas based on its industry expertise, existing market demands, and the challenges customers are facing. Seeing plenty of bank accounts of hundreds of customers, and thus interacting with them on a daily basis, allows Aspiration to gather myriad insights to further refine its present offerings.
Ordinary people and their extraordinary business vision
More than half of Aspiration clients are in their early 30s. This audience is extremely interested in conscious spending and wants to exercise its purchasing potential. Aspiration’s mission is to foresee what the prospects might need and build products that clients haven’t thought of yet. The company knows how to dazzle its audience. AIM is a great example of a pleasant surprise as it wasn’t something that clients were specifically asking for, but the company decided to create sustainable spending options in addition to its existing green investing solution.
When passion for doing good and financial expertise meet
As a group of social change advocates, Aspiration delivers on its promise and facilitates sustainable development on all fronts, including allowing clients to manage their funds from their smartphones. Creating a scalable backend infrastructure professionally using AWS components, the company has a team of like-minded people in its engineering and customer engagement teams who try to reduce the wealth gap and break the notion that only the rich are getting richer.
Spending money and shopping with consciousness is the passion that Aspiration brings to the masses, helping clients make better choices when evaluating vendors. With the majority of clients coming from social media engagement, Aspiration proposes innovative investing solutions with the environment in mind and taps into the unchartered waters of sustainable impact wealth—an industry with about $10 trillion in assets.
As its long-term strategy, Aspiration plans to continue creating best-in-class products that exceed customers’ expectations and build for wealth for everyone, with no exceptions. The daring “pay what is fair” concept has brought financial well-being to the fingertips of many who could only dream of such luxury before. The anti-Wall Street startup is steadily winning the trust of thousands of US citizens, adding more value to local communities and helping people to invest in a smart and sustainable way.