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Welcome back for another
episode of Count Me In.

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I'm your host Neha Lagoo Ratnakar.

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And this is IMA's podcast talking about
all things that affect the accounting

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and finance world.

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Our featured guest for today is the
CEO and co-founder at Northstar,

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Will Peng. Will co-founded Northstar,

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a financial wellness and benefits
platform because of his inspiration by the

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positive change FinTech
can have on people's lives.

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He set out to solve the inequality of
our financial guidance and shares his

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insights with us as he discusses
the inclusive and equitable support

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employees can receive from
FinTech related apps and products.

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To hear more about how FinTech
can improve financial stability,

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keep listening as we head
over to the conversation now.

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So Will, I know your history, right?

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That kind of led you into this FinTech
space and a lot of what you do is about

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financial guidance.

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So what I would like to first start
off our conversation with is asking you

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how will emerging FinTech really help
solve some of these financial problems

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that a lot of individuals
are facing today?

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Yeah, this,

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this is a really interesting
question because of my background.

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I started my career as a product designer.

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So thinking about the ways that
behavioral psychology influences or limits

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people from making change
with their finances,

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but also my time as a venture
capitalist, investing in startups,

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a lot of FinTech startups seeing the
new technology that enables us to

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solve a lot of these classic problems
I've been around for, for a long time.

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And first and foremost, I
think what's most exciting

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that technology can actually
influence personal finances is

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the idea of financial accessibility.

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So who has access to financial advisors,

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financial best practices
and for the longest

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time, financial advice has been mostly
limited to people who already have money,

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people who are wealthy already.

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And if you look at this
from first principles,

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the underlying reason is that
the ways in which we deliver

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financial advice, and this is
pretty broad definition, right?

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Financial advice can be financial
planning. It can be tax advice.

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It could be investment advice. The
ways that we have delivered this

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advice have primarily been a
hundred percent human driven.

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And when advice is human driven,

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you're limited kind of by the
number of hours in the day,

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you can do the math pretty
simply you have maybe a 40 hour

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work week. And if you're
a financial planner,

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you have 60 to 90 minute sessions,

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and pretty quickly you realize that
you need to charge a certain floor for

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your hourly rate. If you're
a fee only financial advisor,

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and then you also see new
business models around non

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fee only advisors who take
commissions who referral fees and

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asset management fees. And that's a
set for topic that we can talk about.

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But

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I'm generally a proponent of fee only
models because it most closely aligns the

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advisor with the client. But so,

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so if you think about
financial accessibility from
that perspective it's really

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exciting to think about the
ways that technology can more

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scalably deliver advice both
in the creation of the plans,

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as well as the delivery of the
plans. And once you do that,

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you actually lower the floor of
what you need to charge in order to

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stay in business. And so you
kind of see this in, for example,

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the robo advisor world low cost index
funds have been around for a while.

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But the emergence of robo advisors
has been a really interesting

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development because now
anybody can connect,

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get access to low cost index
funds with a great user experience

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and, and invest with,

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with low minimums and this all
came about because of technology.

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And so that market is relatively mature
now I dunno if you saw recently that

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UBS acquired wealth front so really
interesting thing about not only

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that specific vertical, but
across all different verticals,

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what are the ways in which technology
is making personal finances more

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accessible?

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Yeah, it's really interesting
because, you know,

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as we talk about making things
more accessible and, you know,

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you mentioned a lot of the opportunities
presented by technology for private

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finance and, you know,
obviously many of our listeners,

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more the corporate finance,

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but still technology enabling a
little bit more foresight and,

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and, you know, more data available,

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another theme in line with technology
and kind of the profession.

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And also what you're doing here
is making some of these resources

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essentially more inclusive
and equitable, right?

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So you talked a little bit about
kind of lowering that floor,

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but far as employees, you know,
specifically in the workforce,

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how is this you know,

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equitable and inclusive
relate to technology?

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Yeah. So well,

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this is I'm glad you asked this question
because this is a big part of what we

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do here at NorthStar.

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And we have this saying that
financial wellness starts at work,

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and it's this fundamental idea
that especially in the US,

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so much of our not only financial lives,

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but also our whole lives
center around work.

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And what I mean by that is that work is
the primary source of wealth creation

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for the majority of people. You get
your salary, your retirement accounts,

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but you also get your health
insurance plans through work.

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This whole idea of employer sponsored
plans and a whole set of perks.

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If you work at a tech company, for
example, you get equity compensation,

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and that's oftentimes really
difficult to understand.

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So there's an education
gap not only for equity,

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but just for personal finances in general.

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And if you look at it
from a macro perspective,

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we've really shifted away from
defined benefit pension plans

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where my father still has a pension plan

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and so hopefully he can retire
soon and he'll get a kind of

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predefined payout,

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but we you've moved into a world
of defined contribution plans like

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401k plans and HSAs and FSAs and

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the variety of things that you'd get
from your employer have increased.

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Whereas your total compensation package
was relatively simple in the past.

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Now it's really complicated. And

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our education system around finances
and the support systems through to

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help people make the best decisions,

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best financial decisions
have not caught up.

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And it's an unreasonable expectation
that employees individuals

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know how to choose the right
retirement plan or figure out how much

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you should put into your
retirement plan each month,

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or how to use an HSA or how what's
the best health insurance plan for me.

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I think the what's been really interesting
to see the rhetoric around policy

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has been around the
idea of choice where if

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you remember from

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the healthcare reform debates there is
this idea of choice and it's true that

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the HSAs are incredibly powerful.

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They have what's called triple tax
savings that most people don't know about.

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But it requires back to the point I made
earlier about behavioral psychology,

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because it is so complex. Most
people don't utilize them.

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And so even though it's a powerful
option, most people don't use it,

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which means that the choice is a
double-edged sword. So you need to,

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you need to pair choice
with education and advice on

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how to best utilize these new tools.

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So I think there's a really
interesting responsibility that

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employers have today to not
only give people the tools,

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but also the advice to make those
best decisions for themselves.

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And let's, you know,

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continue on this topic
and the conversation you
have going here as far as,

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you know, the education
and working towards change,

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how does this technology
ultimately work towards changing

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financial stability across the country?
I know you mentioned, you know,

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really the United States being,
you know, one main focus area,

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but whether it's domestically
or globally, you know,

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how does this work towards more stability
across you know, all individuals?

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Yeah.

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So if you look at the statistics
around kind of where Americans personal

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finances are

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you find that doing nothing is

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doing something and whether
it be around savings rates or

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retirement contribution rates or
the amount of debt that people are

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in. The reality is that if you don't
provide employees with education,

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they just most of the time do nothing.

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So this is because is if you face,

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if somebody's faced with a
ton of different choices,

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complex choices, and this is
my personal story, actually,

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when I graduated from college
was I had a ton of student debt.

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I had a retirement plan.
I had equity through work.

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I had to choose health insurance.

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I needed to save for the first time
all while living in New York City.

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And it was just so overwhelming.
And as an immigrant,

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I just didn't have anybody to turn to
either my parents didn't know what to do.

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So I just did nothing.

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And I was automatically enrolled in a 30
year payment plan on my student loans,

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which was designed to squeeze as
much interest out of me as possible.

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Didn't really save that much,
didn't enroll in my 401k plan.

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And so the reality is that that there's
this default state where if you don't do

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anything,

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you're actually making a decision
that's not in your own best interests.

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So it's,

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it's really important to provide
not only the education around

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what these different tools are,

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but also giving them access
to financial advisors,

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as well as new kind of FinTech apps to

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kind of break through that behavioral
psychology of not doing anything with your

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personal finances.

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It's interesting because I was in a very
similar situation coming outta school,

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not out a whole lot of
guidance. It's just,

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here's the real world and figure it out.

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So it took a while until I actually
did receive some education from,

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you know, individuals
at work and, you know,

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some guidance as far as
what I should be doing.

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And especially year over year
as things change financially.

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So I imagine, you know,

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technology you mentioned some
apps certainly probably accelerate

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the learning curve, I would assume, right.

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Enabling individuals to kind of
learn and, and see some, you know,

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different benefits and such, you know,
it is so mainstream at this point,

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but I would like to get your opinion
on that learning curve and whether it's

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from the employers or the
individuals educating themselves,

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how does FinTech and the
technology relating to

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personal finance and
different guidance like this?

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How does that look into the future?

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What do you expect as far as the gaps
in financial stability across the

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country and, and whatever else,

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what can we expect in the future
coming up from this space?

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Yeah, there are a few really
interesting trends here.

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I think underlying all of it
is the emergence of new FinTech

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infrastructure. So infrastructure
around consolidation

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of personal financial data
across different institutions.

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So previously you're kind of
locked in to one bank that you

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decide to bank with.

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And it's hard to get
information from another bank,

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if you use one bank for your checking
and saving then another one for

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investments. So consolidation of
personal financial information,

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and ultimately with the goal that you
can actually own your own financial

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information is really
interesting to think about.

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And almost being able
to use different point

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solutions across institutions
as almost like a commodity.

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So I think that's super interesting and

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enables much more
interesting FinTech apps.

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And the next step from that is the
ability to actually take actions on your

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advice and kind of the
two primary ways to do it.

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The types of actions are moving
money and opening and closing

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accounts. And

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we've talked about the
importance and difficulty

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around behavioral psychology,
of personal finances. It's like

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oftentimes eating, eating your
vegetables, or it's really,

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it's really difficult for
people to understand long
term impact with their short

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work term decision making.

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So by making it as easy as possible
to turn that advice into action,

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you can actually move money
between bank accounts,

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if you have your checking
at Bank of America,

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but your savings account is at
Ally Bank you should be able

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to move money based on a certain
schedule or intelligently based on

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how much you have in
your checking account.

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you should be able to sweep that into
different accounts automatically.

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So this idea of automating your finances
is really interesting to think about,

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to pay off your loans, pay your bills,
put money into an investment account.

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That's a really exciting
vision to think about.

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And the other is being able to open
and close bank accounts or different

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products.

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So if your financial advisor recommends
that you refinance your student debt and

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they give you a recommendation or
a few different recommendations,

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it'll be amazing to be able to
refinance that debt in a very

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seamless way instead of having
to go and Google it and look up,

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which one's the best one and then
file fill out the application.

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And another example of this is really
exciting is what does the intersection

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of financial planning tax
and investments look like?

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It never made sense to me
why these three types of

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advice are kind of separate.

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You go find a CFP and who's helping
with you with your financial plan,

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but then they say, okay, like,

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there's some tax question that you
have related to equity compensation,

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but I'm not your tax advisor,
go talk to your tax advisor.

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And maybe I don't have one.
And even if I did have one,

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how do you have this CFP and the
CPA communicate so that they're they

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have a context from what
I'm working on with them.

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And maybe I have a question about my
employee health plans. Well, like my,

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my CFP doesn't have that
information. So how do you,

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how do you pull that data in? So
it's, it's the intersection of advice,

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but also data that's really interesting.

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And I think that's a big part of
kind of where we're going as well,

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in addition to where the, where the
industry is going to almost have, like,

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if you're familiar with the term,
like the idea of a family office,

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family office is like the,

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the pinnacle of financial
advice for wealthy people.

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And back to how we
started this conversation,

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the reason why people don't have access
to that is because it's a lot of manual

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work. And so of course,
if you're a family office,

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you'll go after the most wealthy
individuals and manage your assets,

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but how do you take the fundamental idea
of combining all these different types

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of advice and make it
available to everyone?

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I think that's a really exciting vision
to, and future world to think about.

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It's very interesting and it
makes you think, you know,

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how have we come this far without
solutions like that in place,

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but it's you know, great topic.
I do have one last question,

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if I can before we wrap up here, you know,

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you were talking earlier about
the employer's role in some

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education and, you know,

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some of the individual's role in
personal growth, and just curious,

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based on, you know, today's
workforce really, and, you know,

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we've all heard the great
resignation and the freedom of

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choice and different options that
employees are seeking for one reason or

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another. So all these different
topics, it got me thinking, you know,

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how does this really,

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this idea of FinTech
solving financial inequity

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really ultimately equate to businesses,

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being able to keep some
of their top talent?

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Is there any correlation between an
individual's personal finances and some of

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the issues they're facing with, you know,

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employers keeping some of these
individuals in their workforce?

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Sure. Yeah. It's

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a really great question and something
that we're at the center of,

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and I'll caveat with everything that I
say with the fact that the reasons that

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people stay at a company encompass
more than just personal finances,

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you need to create a healthy
culture, rewarding workplace,

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respectful to each other. Those
are all requirements as well,

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but from a financial perspective,

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it's really interesting to think about
the ways that people oftentimes look for

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a new job because they're
not paid well enough.

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Or maybe they don't understand all of
the range of benefits that they receive

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that have, maybe they're not, they
don't have a fungible cash value,

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but they do have a significant impact on
my livelihood and my ability to achieve

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my financial goals.

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So what we found is that by

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offering something like NorthStar
that it's not just about having a call

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center of coaches is being able to
work one-on-one with an advisor who

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understand let's take
like specific example.

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If somebody's looking to start a family,

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they'll go to their financial
advisor who understands all their,

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their different needs,

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but also all the different
benefits that the employer offers.

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So it's not just about setting a new
budget or figuring out how much I need to

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save,

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but it's also about understanding that
maybe you get fertility benefits and

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infertility benefits through work,

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or maybe you're on a high
deductible health insurance plan.

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And you need to change to one
that's a better support for

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parents and, and childbirth.

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So it's this really holistic
approach to financial wellness that

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employers are really at the center of.

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And so we want to help
people shift away from a

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world where they see a higher salary as
the only way to achieve their financial

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goals and kind of providing a more
holistic set of support beyond just

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a higher salary.

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So I think there's a really interesting
shift that we're seeing with many

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employers to,

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to think about their or total rewards
or compensation and benefits packages

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in this way, rather than just
saying like, Hey, here's the salary,

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here's your retirement plans and
health plans. And calling it a day.

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This has been Count Me In,

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00:19:43,300 --> 00:19:47,150
IMA's podcast providing you
with the latest perspectives
of thought leaders from

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00:19:47,151 --> 00:19:49,630
the accounting and finance profession.
If you like what you heard,

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00:19:49,631 --> 00:19:53,100
and you'd like to be counted in for
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