In partnership with two national community organizations, HelloWallet will distribute 10,000 free passes to its financial advice service starting in January 2010. Community Builders, Inc., the nation's largest affordable housing builder, will distribute the service to residents of the affordable housing communities it manages. The Center for Economic Progress will provide free access to HelloWallet through its tax-filing network, which is in over 200 different communities throughout the country.
In addition, the Office of Mayor Antonio Villaraigosa and the City of Los Angeles have agreed to provide free access to HelloWallet's financial advice to households in Los Angeles that are participating in their workforce training, foreclosure counseling, and family and work support services. The City of Los Angeles and HelloWallet will be evenly covering the costs associated with this investment.
Beginning in July 2010, HelloWallet will make available a larger number of free passes to a network of over 60 cities and 12 states that are working on opening bank accounts for low-income households, which HelloWallet founder Matt Fellowes helped to create. These state and local programs are collectively aspiring to open bank accounts for over 300,000 low-income households over the next three years, making them a powerful distributional channel for HelloWallet's free services for low-income households. Any excess free passes to its service will be provided to additional non-profit organizations that have approached HelloWallet requesting access to its service.
Through these distributional channels, HelloWallet intends to provide a total of 54,899 free passes to low-income households in 2010; 46,800 in 2011; 58,200 in 2012, 67,200 in 2013, and 77,200 in 2014. These annual goals will be monitored by HelloWallet automatically by providing partner organizations with unique codes that each participating worker will enter when they register for our service.
In the 20th century, there was a broad and sustained expansion in U.S. households' access to nearly every financial product, from the most basic to the most complex. There was one important exception to this broad expansion in access over the last 50 years: financial advice. Financial advice is truly one of the last frontiers of the financial services market needing democratization.
Lack of access to financial advice creates massive roadblocks to economic mobility and sweeping economic problems for the country more generally. In perhaps the most dramatic recent illustration of these problems, over 4,500,000 foreclosure notices were sent to U.S. homes over 2008 and 2009, contributing to a global economic crisis nearly as severe as the Great Depression.
Recent research has found that there are now hundreds of billions of dollars unnecessarily lost by middle- and low-income workers because of missteps. For instance, more than one-third of the fixed-rate mortgage market, or more than 15 million households, have not refinanced when they would stand to financially benefit from doing so. About 70 percent of all consumer deposits are held in non-interest-bearing accounts. Over ten million mostly low-income households, for instance, lack a bank account, even though researchers at the Brookings Institution have found that about half of these households both qualify for an account and would improve their finances if they had one.
Professional financial advisers could help households avoid these types of broad and expensive problems and bolster their financial health, yet only 20 percent of American households--most of whom are wealthy--use financial advisers. This mismatch between the need for advice and the demand for this service exists in large part because the financial advice industry relies on a business model that only works with high-income individuals.
In response, Matt Fellowes, the founder of HelloWallet, was inspired by the 2007 Clinton Global Initiative to develop a new, scalable business model in the financial advice industry that could sustainably serve the tens of millions of households that currently lack access to financial advice. By utilizing powerful new technology, new findings from behavioral economics, and a network of partnerships, HelloWallet is able to offer high-quality, individualized financial advice at a price that is affordable to all Americans. HelloWallet is also able to support a pledge to provide free financial advice to one low-income family for every five paying subscribers.
SEEKING: Financial resources, implementing partners, media/marketing opportunities
HelloWallet currently partners with institutions that promote its program to over 3.5 million people. This includes employers that provide HelloWallet's financial guidance service as an employee benefit; educational institutions that provide the program as a University service; foundations that provide it to nonprofit partners; utilities that provide it to customers as a tool to reduce delinquencies; and membership groups that provide it as a benefit to their members. HelloWallet is always in search of additional partners that can help expand charitable impact, through subsidizing access to service, distributing it on the organization's behalf, or helping to market it.
OFFERING: Implementing partners, media/marketing opportunities