New initiative seeks to make FinTech socially responsible

Financial Finesse, an independent provider of financial wellness coaching as an employer-paid benefit, has announced the launch of Financial Finesse Ventures – a venture arm for socially responsible FinTech.

Financial Finesse seeks to bridge the financial literacy gap by delivering objective, life-changing financial coaching to millions of Americans. The goal of Financial Finesse Ventures is to support a new era of FinTech that is strictly aligned with the best interests of consumers, the company said in a press release. The new venture arm, corporate-backed and led by Liz Davidson, Financial Finesse founder and CEO, will seek investments in purpose-driven companies dedicated to creating positive social impact.

The explosion in FinTech has led to an escalation of services that put profit over purpose – with a recent rise in companies selling high-interest loans, encouraging irresponsible investing or hooking investors up with overpriced financial products and services in exchange for high commissions. This trend concerns not only consumers who may fall for this predatory practice, but also business leaders who worry about problematic service offerings embedded in employee-facing platforms.

Financial Finesse Ventures seeks to change the trajectory of the industry, support companies that both consumers and employers can trust, and inspire other firms to start investing in innovation for good, the release said.

In an interview with PLANADVISER, Davidson says Financial Finesse Ventures will work directly with employers to reach adults in the US – but adds that this is a trend the industry has been moving towards as customer acquisition costs have continued to rise. Establishing relationships directly with plan sponsors, recordkeepers and advisors and getting installed on their platforms is easier than reaching consumers at scale.

But with so many retirement firms and different technologies in the market, the challenge has been how to treat them and ensure they can be a reliable partner, says Davidson.

“We know there’s certainly a need for a lot of these point solutions,” says Davidson. “But how do we know who’s going to be in business? How do we know that this company is operating in a way that is transparent, is pro-consumer, is socially responsible, that our brand is not going to be compromised by working with wrong company?”

Financial Finesse Ventures reviews a combination of factors when selecting companies, says Davidson. For the social responsibility part, the team looks at whether the company does not charge too much, provides transparency about fees and has smooth internal operations. On the social impact side, she says Financial Finesse Ventures is looking at the firm’s technologies to see if they can be transformative for consumers, putting money back in their wallets that they can use to pay down debt, invest or grow their financial security.

“Our business model has always been B2B, [where] the employee pays nothing. We do not sell any products or services. It’s very mission-based, says Davidson. “We have a very good sense of what works in this area in terms of having a business model that is set up to be in the best interest of the employee, and by extension [best interests of the] employer or record keeper.”

Financial Finesse Ventures announced in the release that it has identified a number of early-stage companies with pro-consumer models and will announce its first investment this quarter. Beyond funding, Financial Finesse Ventures will help incubate its portfolio companies, leveraging Financial Finesse’s relationships and expertise.

“While there is increased discussion of social responsibility and some encouraging macro trends in the ESG space, FinTech lags significantly in these areas,” says Davidson. “We are at a critical crossroads – what we do now as investors, employers and consumers has the potential to change the trajectory of the industry. With Americans facing significant economic challenges, much is hanging in the balance. FinTech has the potential to to be a powerful solution; we want to do our part to ensure that it is.”