United Income Leverages Technology, Human Expertise, and High Ethical Standards to Provide Quality Wealth Management Advice

United Income Leverages Technology, Human Expertise, and High Ethical Standards to Provide Quality Wealth Management Advice

In a Nutshell: Planning for retirement can come with distinct challenges that supposed one-size-fits-all advice doesn’t always cover. United Income from Capital One takes on these challenges with its innovative platform that helps those planning for retirement get the most out of their money. The company uses Efficient Investing to help clients avoid costs that can drag down investments in other plans. United Income combines new technology with an experienced wealth management team so customers can reap the benefits of the latest fintech solutions and human resources. One of the platform’s notable features is how it ties financial plans directly to portfolios so clients’ investments are always optimized.

Planning for retirement is a topic that comes up frequently, whether you’re a high-paid executive or an hourly worker just starting out in the labor force. The idea is that, by following a few basic guidelines people will be financially secure to live out their retirement years in comfort.

Of course, this is easier said than done.

Yes, the average worker may understand the concepts. Plan to spend 75% to 85% of pre-retirement income each year in retirement or plan to draw down about 4% of your retirement accounts every year, to name a couple.

But, in reality, managing retirement funds can be much more complicated.

“Those rules of thumb are there because these problems are hard to solve — they’re not there because folks are lazy,” said Andrew Vincent, Head of Product for Capital One’s United Income. “These problems are challenging. But United Income was designed to solve those problems, and that’s how we approach this.”

United Income was founded in 2017 by Matt Fellowes, an innovator, entrepreneur, and fintech expert who previously created the personal financial app HelloWallet. Capital One acquired United Income in 2019.

Vincent said that, when many people transition from the workforce to retirement, they must learn to adapt from managing one or two income streams to managing income from a number of accounts, including Social Security, pensions, and annuities.

“They’re trying to figure out, ‘Ok, so which check do I cash, which one do I spend, which one do I deposit now?” he asked. “Then the question is, ‘Which account do I draw down and when? If I draw down my Roth IRA Does that mean I have to rebalance that account? And how do I do that?’”

Vincent said these questions illuminate complicated problems. And Fellowes, a former Brookings Institution scholar, loves a complicated problem, he said.

“Powered by new technology, a team of experienced wealth managers, and the highest ethical standards, we seek to unlock more effective ways to build wealth that endure over increasingly longer and ambitious lives,” according to United Income.

United Income essentially helps those approaching retirement age optimize their resources and manage their wealth efficiently and effectively.

Andrew Vincent

Andrew Vincent is the Head of Product for United Income.

“Our target demographic is folks between the ages of 50 and 70 who are on the cusp of retirement who we can really impact on those last years,” Vincent said. “That’s when catch-up contributions and all those things kick in, and we can help them take advantage of that.”

The platform aims to extend the life and potential of money, in part, through an approach it calls Efficient Investing.

While retail investment management prices have dropped by more than 50% over the past 35 years — generally viewed as an advantage for investors — the lower prices may be undermined by other non-fee costs for features that don’t add significant value, according to United Income.

Following this supposition, the company analyzed 62 different retirement solutions in the market and more than 26,000 potential combinations of future market returns.

United Income makes the complete study available on its website, including methodology, in-depth analysis, and its conclusions.

“In short, our approach at United Income picks up the legacy of the low-cost investing pioneers by extending their thesis to other forms of (non-fee) costs in a portfolio,” according to the paper. “The result for clients is an approach that wrings out costly inefficiencies from investing and managing wealth, which can lead to improved financial outcomes for households.”

Getting the most out of one’s money starts with understanding the interrelationship of every financial decision and event in one’s life, according to United Income.

“We have invented new technology that allows us to analyze these relationships more thoroughly than has been possible before, fundamentally improving our ability to build wealth that can be sustained over longer, healthier lives,” according to the company website.

Snapshot of Dashboard Section

United Income’s technology allows it to predict the likelihood of clients meeting their financial needs.

Vincent said that one of the big challenges the company faced in terms of developing this new technology was figuring out how to run the number of simulations needed to make the platform responsive and impactful.

“No one wants to say, ‘Great, you’ve given us all these inputs now go away for seven days and we’ll get back to you,’” he said. “That’s not really how this process works.”

Instead, United Income built a serverless architecture through Amazon that allows it to quickly spin up as many simulations as it needs to analyze plans and quickly bring them back down so they aren’t paying for server costs over time, Vincent said.

“It allows us to run through every financial plan — we end up running up to 219 million simulations of both market outcomes and life choices simultaneously,” he said. “And we’re still able to help someone get answers to these core financial planning questions within minutes.”

But that’s not to say that United Income is a completely automated platform with the human element completely removed from it. Vincent said the company understands the importance of human touch and expertise in this process.

“You don’t want to sit someone down in front of a computer and tell them they need to build a financial plan when they’re accustomed to sitting across the table from a financial advisor,” he said. “Someone who’s really amiable and personable. Someone who has built a business through personal relationships.”

Rather than completely supplant that model, Vincent said United Income combines the human and tech-based approaches. It maintains a devoted team of wealth managers to help out every step of the way.

United Income’s fresh, technology-based approach to wealth management has been innovative in a number of ways. One notable example that Vincent pointed out was how it ties financial plans directly to investment portfolios.

“Typically, people go through and build a financial plan, then get stuck in the risk assessment questions where folks are going to ask, ‘Great, wonderful plan, what would you do tomorrow if the market fell by 20%?’ and other standard assessments,” Vincent said.

United Income Cash Flow Graph

The platform provides easy-to-read and transparent information to clients.

Those types of questions are what drives a person’s investment portfolio, he said. United Income is able to use a person’s financial plan — specifically the spending they have and how much risk they’re willing to take on each spending need — and amalgamate that into the portfolio, Vincent explained.

“What that means is — this is a really neat innovation — since everyone has different spending needs, every one of our customers gets their own unique portfolio,” he said. “There are not five model portfolios that we chunk clients into based on a specific score.”

Additionally, each client gets a unique glide path that is not based on a retirement age, Vincent said, but is based instead on how one’s spending is going to change over time.

For example, paying for a child’s college tuition will only be in a financial plan for about four years after which it falls off the plan. The portfolio will automatically adjust because the client no longer needs low-risk investments to ensure they have tuition money.

“By giving every one of our customers this unique investment portfolio and this unique glide path, all driven by that spending plan, we’re able to really give folks more control and frankly, a better understanding of why they are invested the way they are,” he said.

Ultimately, this leads to United Income clients possessing distinct insight into the investment process which helps them be able to do all the things they want to do over time with the money they have.

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