Wealthtech

Why Acorns is focusing on financial wellness for veterans

As veterans return from Afghanistan, rebuilding their lives – including their financial health – will come into focus.

To help incoming veterans build a financial life foundation, Acorns, an Irvine, California-based digital banking and investing company, this week launched a program to encourage veterans to use the platform to grow their money. 

“We don’t want to forget about our veterans and this has been a really long war, and I expect a lot of them haven’t been thinking about their future – they’re just thinking about surviving,” said Acorns Chief Data Officer and army veteran Pete Johnson. “This is an opportunity to lean in and help.”

The company is permanently waiving subscription fees for veterans and offering a $50 starter investment, under an initiative called “Investing for Heroes.” The outreach to veterans is part of a bigger effort to reach underserved communities.

We don’t want to forget about our veterans… a lot of them haven’t been thinking about the future — they’re just thinking about surviving.

— Acorns Chief Data Officer and army veteran Pete Johnson

Veterans and active-duty military service members face complex financial-life challenges that have become more acute during the pandemic. 

According to the National Foundation for Credit Counseling 2020 Military Financial Readiness survey, active duty service members were more than twice as likely to have taken out a cash advance or payday loan than the year prior. 

In addition, emergency savings are an ongoing challenge for veterans. A 2019 survey from the Military Family Advisory Network found that among military retiree families, 22.2% had less than $500 in emergency savings or no emergency fund at all.

In response to these obstacles, financial services companies have rushed to meet the needs of an estimated 19 million veterans. 

Of course, Acorns isn’t the first financial company to tailor products to veterans. USAA has long offered insurance, banking, investing and retirement products to more than 13 million members that include active, retired and separated veterans. Others in the field with veterans’ programs include Prudential Financial, which launched a partnership with the Department of Veterans Affairs earlier this year. Meanwhile, the StreetShares Foundation offers financial education and grant programs for veterans.

Acorns aims to support Veterans across various financial-life stages, Johnson said. Educational outreach programs for the community will roll out this year.

The Veterans’ initiative “is part of a larger strategy to provide the tools of wealth-making to up-and-coming communities,” said Kennedy Reynolds, chief content and education officer at Acorns.

Acorns currently has 4 million users, and is on pace to reach 10 million subscribers by 2025, the company said. In May, Acorns announced plans to go public through a merger with special purpose acquisition company Pioneer Merger Corp. in a deal that would value the firm at about $2.2 billion.

Sarah Biller, executive director at Vantage Ventures, suggested the timing of the Acorns announcement is noteworthy, given the shift toward individuals conducting more of their financial lives through non-bank fintech companies than ever before. The growth of non-bank fintech platforms is illustrated in surveys conducted during the pandemic, including a 2020 McKinsey study which found that 40% of respondents said they used at least one fintech.

“Now, we see firms like Acorns tapping into this earned trust by reaching out to affinity groups such as veterans to increase individual savings rates,” Biller told FinLedger. “I think we are seeing the rise in trust in fintech as a confluence of these two ‘network’ effects: In other words, economic choices are made based on an individual’s confidence in the wisdom of their community, and their own personal systems experience.” 

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