Take a peek on Adam Potter’s LinkedIn profile and you may be intrigued at how he identifies himself: “I am here to disrupt how Americans do banking and financing. Instead of banks picking the winners or dragging everyone down when they make their own mistakes, I want to be part of the movement to get finances more equitable and for normal Americans to make the same return on their own finances that banks expect when using other people’s money.”
Smart money would go on Potter for achieving this goal. After all, he is no stranger to combat: a veteran of the U.S. Marine Corps, he served as Executive Officer in the Marine Special Operations Command and holds the rank of Major in the USMC Reserves. In his current civilian life, Potter is among the driving forces behind SimpleFi, a company that takes a very different approach to financial literacy and financial empowerment.
Q: What was the inspiration for SimpleFi and is this the first time you created your own company?
Adam Potter: SimpleFi was inspired at first by my co-founder, Dino Setiawan, who in the latter years of being an investment banker was exposed to the lack of opportunities provided to the middle-class. Banks attend to the very wealthy with very creative products but for those without big bucks, there is relatively nothing other than the checking and credit cards. Opportunities like flexible payments, investments, and customization allow people to maximize their assets whereas cookie cutter financing do not. Not only is financing poor if you do not make a lot of money, but if your credit score is not in the top two quintiles, then you face crippling interest rates and fees – if you get approved at all.
As I came aboard, I knew of a program I had as a Marine called Navy Marine Corps Relief Society that gave service members 0% interest rates when overwhelmed by debt or family emergencies. It gave them a dignified and affordable way to get out of debt and avoid payday lenders while the managers got their soldier’s focus back. We thought applying this type of relief to work places with highly skilled, low turnover workforces would allow us to help folks no matter their credit score – their occupation would enhance their credit.
And that is where we are today – we are always building financial products to offer anyone as long as the customer has a sponsor and a quality job.
This is the first time Dino and I have started a company. However, Walter Balmas, our other co-founder has a lot of experience with successful start-ups particularly with student loans and credit unions. We have all known each other for a long time and the team works amazingly well with dedication to making this work. I am very grateful to work with them.
Q: According to your website, it says: “Organizations partner with SimpleFi to provide effective financial empowerment to its employees or members.” How exactly does this work? And how do you define “effective financial empowerment”?
Adam Potter: The employer pays for our program just as they would any other company benefit. Right now, the rate is $35-$50 per employee per year. This gives them access to all our assistance and subsidizes our funds for employees to borrow at 0% for emergencies and 0%-9% for debt elimination.
We are credit blind – this is not just for the employees who have great credit. However, we work our hardest to transform anyone to have great credit no matter where they were when they started.
We also conduct monthly and quarterly employee communications to convey the benefit and remind people we are out there. We hope to achieve 25% participation each year including 10% in our funding program. This is consistent with the percentage of employees who usually experience financial distress due to things like lost income from a spouse losing a job; moving expenses; new job hires needing to catch up after having been out of work; divorce; birth; medical costs; etc.
This is a great bargain for a couple reasons – compared to an Employee Assistance Program which typically experience 2%-8% annual participation while costing $35-$50 per employee per year, employers are getting a huge bang for their buck with our rates and participation that are five times to 12 times higher. Plus, we are actually solving problems in house – EAPs typically are a network of providers the employee must navigate to get help from with significant drop-off as they get referred around the country until someone helps them. We are also helping alleviate the burden of heath care costs by being able to finance high deductibles at 0% interest. Everyone saves on the lower premiums, and if the worst happens, they get a plan to pay the deductible in affordable payments.
You brought up “effective financial empowerment” – everyone believes that no financial aid should come without a lesson learned to prevent borrowing from happening in the future. That’s a given. SimpleFi provides coaching and online tools like every other wellness program – but we make it very personal and customized. However, you can’t just budget your way out of a $2,000 emergency or $10,000 of debt. The typical line counselors give someone is “cut your cable to basic, stop going to Starbucks and you’d have the money you need”
Hypothetically, those two actions might save you $50 per month. That will pay your $1350 deductible in two or three years. SimpleFi does not subscribe to that as an effective solution. What’s more costly to most individuals is not the latte habit – it’s the high interest people are paying on their home, car, student, and credit card debt. You need money to change those. You need money to pay off the things that are causing your credit score to be low and your interest to be high.
SimpleFi teaches people why their costs are so high and what to pay off in order to lower costs across their lives. We then give them the money to pay off existing debt, particularly credit cards and delinquent accounts. We then track them as their credit scores go up and advise them when they are in the best shape to apply for lower home, auto, and student loan rates. We teach them how to make long term changes, but also empower them to make the immediate changes that will make those possible.
Q: Why would an individual want to take a loan from SimpleFi instead of a bank or credit union or even a payday lender?
Adam Potter: First, our rates for the employer benefit program are 0%-9%. No gimmicks, no tricks. We are dedicated to the “single digit” interest rate as being the gold-standard for quality financing. Those are rates any employer should feel comfortable offering to employees at work – many employers are nervous that they could appear to be offering loans at work that hurt their employees but no one can argue that a non-secured rate under 9% could be bad.
Currently, the best rates on a non-secured personal loan are 10%-15% from banks and credit unions. For a credit card, the range is 10%-29%.
Second, we are committed to making the individual better than when they started with us. We will give them free access to their credit score and point out where they could apply our funds for better interest. As we audit their documents, if we find something that is wrong, we will advocate with them using our financial institution clout to repair unfair fees or reporting.
Third, for anyone that is not happy with the banks and is interested in the movement to stop letting them control finances in America for better but mainly for worse, we are not a bank and are fighting to level the playing field – I think a lot of our customers like knowing that by working with us, they are helping to change the world. In that respect, we have a growing following among credit unions where I believe our values are really aligned.
Q: How many companies are currently using SimpleFi? And how are you marketing your services to the corporate world?
Adam Potter: We have 30 companies that cover over 20,000 employees. We also have a municipality who is offering it for their low-income residents as well as a teacher organization that is paying the subsidy for teachers.
We market it directly to HR professionals. In 2015, we are able to offer it nationally and are building relationships with benefits brokers and providers. As you can see, our program complements their retirement and health benefits by keeping employees in the programs through thick and thin.
Employees now have an alternative to borrowing from their retirement or access to affordable financing for high deductibles. HR no longer has to process alterations as such. It’s also an inclusive benefit – usually the most affluent employees benefit from the financial benefits – this is something for every employee.
SimpleFi is online at http://www.simplefi.org. An earlier version of this interview was published on Business-Superstar.com.