Tuesday, February 28, 2012

Would you invest some of your retirement savings in a VC fund?


The clock is ticking. Yesterday, and even today, people are waiting to begin investing for retirement until they are 50 years old. This delay brings about unneeded stress, financial complications, and worry for the years ahead. Couple that scenario with a stock market crash and Americans can easily lose 40% of their savings in the blink of an eye at one of the most inopportune times of their lives. The landscape for retirement savings in this country is muddy, unprotected and, in fact, systematically exposed to the downpours of market turmoil. But that was yesterday. Tomorrow we bring innovation to the market for retirement savings. We’re starting the movement with young professionals, and our clients will not make the mistake of waiting too long to begin saving. Our clients are getting ahead of the curve.

In a recent ING survey, nearly half of Americans wish they had started saving for retirement earlier. In fact, 89% of respondents agree that retirement savings process should begin with a person’s first job. However, the survey also found that nearly 70% of people in their 20s have no retirement savings accounts! Aside from societal opinion, the simple concept of an account’s worth compounding over such a long time horizon should be enough to persuade young people to begin investing, right? Yet the young professionals have remained stubborn and are caught in the quicksand of the status quo. With so much information available, how could this be? What is causing this pure neglect for future financial stability among young people? Our belief is that the problem does not lie in the young professionals themselves, yet it is due to the inability among today’s financial firms to draw in this demographic because of the pure mismatch of personalities between the target client base and the bureaucratic, gray-haired wealth management firms. No longer is this the case. Curve, Inc. is spearheading America’s retirement revolution, offering retirement solutions that are attractive, appropriate, and convenient for young professionals.

Curve is approaching the market with innovative retirement products that will provide young professionals access to many asset classes. We’re taking the traditional stock, bond, and cash allocation that current 401(k)s utilize in and adding private equity, hedge funds, and other alternative investments. This not only gives the retirement investment opportunity some sex-appeal, but more importantly it’s a smart option for young people given their long time horizon until withdrawal and limits their dependence on the stock markets. Therefore, next time the market crashes and our clients are in their 50s, their retirement savings will be protected. This is a wildly different concept from what we see today. Alternative investments are usually reserved for institutions and the mega-rich. Curve is bringing this possibility to young professionals by offering structured Roth 401(k) and Roth IRA products.

The market of Young Professionals in the United States, defined by Curve Financial Services as those with a college degree under the age of 36 making at least $40,000 per year, is approximately 12 million people. Only 32% of them have a retirement savings plan, which gives Curve 68% of this total market as year one non-competed for clients. That’s nearly 8.2 million people and $41 Billion worth of potential assets unclaimed by any other financial institution. Looking at the market as a whole, assuming a $5,000 annual contribution, the asset potential nears $60 Billion. Furthermore, that’s only the United States market, and market potential grows as the model is transferred to other countries.

Curve has a competitive advantage that stems from our ability to easily and effectively engage and interact with our target market. The founding team consists of young professionals with backgrounds in the financial services industry, which gives Curve the ability to communicate with prospective clients in a professional manner regarding the benefits of signing up with Curve. Finally, Curve is going to leverage its three-fold mission of educational, financial, and social aspects to relate with clients on an open and non-intimidating level. Young professionals will be inclined to open accounts with Curve since the company is positioning itself around the lifestyles our clients. We can do this better than today’s wealth managers because the leadership and employee base of Curve consists of young professionals.

Curve is introducing a highly scalable business model that allows for ultra-high revenue growth without a substantial increase in overhead costs. Our scalability is due to our operational plan in which we grow assets through employer-sponsored programs, thus lowering our cost of a sales force. We then bundle client accounts into one large account and pass through to our selected fund managers at one hedge fund, one private equity firm, and one financial adviser. Curve, as well as portfolio managers will earn a management fee off the total account. Therefore, we need not employ more portfolio managers as we take on more clients. Beginning in year three, Curve will begin franchising new locations, each of which will pay a 5% gross revenue royalty fee.

Our founding team’s skills have been honed over the years due to experiences at a global bank, UBS Financial Services, as well as hedge funds and regional commercial banks. One member brings previous entrepreneurial experience, and both members of the founding team possess the Masters in Business Administration (MBA) distinction.

By working with young professionals, we’re going to positively enhance the financial stability of our clients for years to come. In an industry recently dominated by profit-minded investment banks, Curve offers a breath of fresh air to an otherwise stale industry. Curve is going to draw in young professionals by leveraging our familiarity with their trends and lifestyles, and sell them on the aspirational notion of being able to allocate assets across many asset classes when they are newly college graduates. This is something they wouldn’t otherwise be able to attain unless they had a net worth in the tens of millions.

At the end of the day, Curve is a company that seeks to better the financial lives of today’s society. With social security issues looming ahead, and with the recession and market crash of the recent years still fresh on everyone’s mind, we’re creating a smart, desirable, and “cool” option that’s going to incline young professionals to begin saving for retirement at a younger age. It is our belief that America has been waiting too long to start saving for retirement. Today, we’re working on getting our young professionals ahead of the curve.

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