Building a nest egg with Savvly
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What
Savvly is a Boulder, Colorado-based financial services company offering pooled equity index fund investing. Clients allocate a small portion of their portfolio to Savvly in the form of a limited partnership, and clients specify an age at which they would like their payout.
Savvly thinks of itself as a sort of retirement insurance that functions as the opposite of term life insurance—offering a second windfall if you live a long life. If a client passes away before the payout date, the estate receives the initial investment, but other profits are reallocated to other members of the pool. At present, Savvly is only available to accredited investors.
Why
To Dario Fusato, CEO and Co-Founder of Savvly, the company’s product functions as a second retirement account. Aging involves many unknowns—how long you’ll live, how much money you’ll spend, and the size of your portfolio. The relatively predictable returns of an ETF over a multi-decade period let clients rely upon a sizable nest egg at the later stages of retirement. “The vision is to be an always solvent universal pension system that manages your latest stage of retirement,” Fusato said.
How
Savvly is building out its financial product with regulatory concerns and structural obligations in mind. It’s starting with accredited investors, because Savvly can form a limited partnership to function as the product’s infrastructure. “We have a limited partnership because it’s significantly faster to implement, and provides a significant number of tax advantages for qualified purchasers and accredited investors,” Fusato explained.
It’s also started by putting investors’ assets in Vanguard’s S&P 500 ETF, VOO. Over time, it will offer other options, such as bonds, especially for more conservative investors.
The startup looks to provide its retirement product to retail investors in the coming year—and, to do so, has engaged in a multidisciplinary legal fact-finding process to ensure compliance. As a client for a major law firm, Savvly has worked with five partners across five disciplines to understand insurance law, intellectual-property law, and other intricacies.
Once Savvly has expanded beyond accredited investors, it hopes to partner with RIAs, 401(k)s, and other retirement options in order to provide an investment opportunity with clear payout terms for people as they age.
“We really want to make it available into 401(k)s as a new way for people to join forces and build a solution that is really low cost,” Fusato said.
