The Biggest Transaction of Your Life

A conversation with Cody Barbo, founder and CEO of Trust & Will.

There’s a great observation in a report written by Nonfiction Research called The Secret Financial Lives of Americans — many of the services that consumers most want aren’t things that most financial institutions currently provide:

Many Americans want help with eight key parts of personal finance: knowing if they’re paid fairly, maximizing their salary at their current job, planning career moves that earn them more money, monthly budgeting, right-sizing their debt, planning affordable vacations, having someone to talk to holistically about their financial life, and dealing with the spending pressures that status anxiety exerts. Unfortunately, not one item in the previous paragraph is currently offered by the mainstream financial services industry — at least not widely available to households with under $100,000 of investible net worth.

The reason for this is the same reason that VC investors are so smitten with the fintech space — traditional banks are mostly terrible at imagining customer needs that can’t be met by their existing products.

And while there are plenty of fintech startups that have fallen into the trap of trying to reinvent current bank products with better UX (see: most challenger banks), there are also lots of fintech companies that are building fundamentally new products and services, stuff that meets the unmet needs of financial services consumers.

Needs like:

39% of Americans admit to wanting additional help in planning financially for end-of-life issues. 28% earning less than $25,000 and 46% earning $150,000 to $175,000.

Enter Trust & Will, a digital estate planning company that is trying to make estate planning accessible for everyone.

I had the opportunity to chat with Cody Barbo, founder and CEO of Trust & Will about why estate planning is such a critical (and underserved) financial service. Our conversation, edited for length and clarity, is below.

Profile photo of Cody Barbo

Fintech Takes:

My initial connection to Trust & Will is as a customer. My wife and I just had our second child and that was the tipping point for us to start estate planning. I heard about Trust & Will through Twitter and found the end-to-end experience to be so easy and delightful that I literally turned to my wife when we’d finished and said ‘where’s this been my whole life?’ So, let me put that question to you. Where has this been? Where did the idea for Trust & Will come from? What drove you to reinvent the estate planning experience?

Cody Barbo:

I was about to get married. Three years ago, and I was thinking through our financial picture and our need for life insurance and I was like “people when they get married, they create a will, so that’s something we should do.” And I'm starting to do research online and attorneys charge between $3,000 and $5,000 for this and our situation wasn't that complex. And I was like '“How am I not able to do this online, in a Turbo Tax-like fashion?”

And even though there are companies like LegalZoom that have been around for 20 years, they’re generalists. It’s off the shelf.

But estate planning isn't one and done. As life changes; you get married, you have a kid, then two kids, buy a home, and really start to build your wealth, there are all of these events, dozens of life events, that justify an update to your estate plan.

And if you go the offline route, you’re not just spending the $3,000 to $5,000 to create it, you’re spending another $1,000 every time you have it updated.

So the cost has been a huge barrier for a lot of families, but what we realized is that education is actually the first and biggest barrier — meaning that there's a reason why half the population doesn't have an estate plan. They don’t know about them or why they’re important.

Trust is the second piece. Some people don't trust attorneys. Some people don’t trust generic online legal services.

And the third is procrastination. You're not required to do this. You don't have to have an estate plan, in the same way you don't have to have life insurance.

It's all about the ‘what if?’ You don't do this for yourself, you do it for your family. And if you have an estate plan and it's up to date and it's organized and your family members that are named in it know where it is and how to access it, then when that time comes, it can make the transfer of assets and wealth much more seamless.

We started the company in late 2017 and even though we're at 120,000 customers today, there's 150 million in the U.S. that don't have an estate plan and then there's the other half of the population that has an estate plan but hasn’t updated it in 5, 10, 15 years. So we view the entire U.S. adult population as our funnel, to go capture or create demand and that's what we’ve set out to do.

Fintech Takes:

Traditional banks are really struggling to digitally transform themselves. One of the reasons is that financial services is a heavily regulated industry, so compliance tends to be a blocker on a lot of innovation. I had one banker sum up this challenge to me by saying “we keep getting stopped by the lawyers”. Obviously, estate planning is almost entirely defined by the law and regulation, much of it varying widely across the 50 states. How did you overcome this challenge when building your products?

Cody Barbo:

We started by studying what other digital providers had built in the robo-advisor and insurtech industries. Companies like Wealthfront and Betterment and Ladder and Haven Life.

And for us, we didn’t roll out our three products in all 50 states at once. Our first hire was a 10-year trust and estates attorney, who’s still with us today. We started by rolling out a Will product, just in California and Texas. Our company is based in California and our first employee went to school in Texas, so we had strong networks in both states and we figured most of our friends are married with kids so we can at least sell to them and that’ll give us an opportunity to start slow and work out the hiccups.

This is not the type of business or product that you can mess up. It has to be super black and white, really dialed in. It took us a full year and $2 million raised in venture capital just to get the Will nationwide. Then we rolled out the Trust product in California and Texas, but it took us another seven to eight months to get it national.

We are trying to be as thoughtful as possible in terms of how the products are designed. We’re trying to focus on the needs of the everyday American family, but also leaning in and out for those edge cases when we find them. There are some times that a customer just isn’t a good fit for us and you have to be OK with that too.

Fintech Takes:

Another objection you hear in banking to ‘digital-only’ is the need to foster trust. The argument goes something like this — money is a very sensitive, private, and important subject for people; they need to trust the companies that handle their money and you can’t foster that kind of trust solely through digital channels. The need for trusted relationships would seem to be as important or more important in estate planning. How have you tried to build that level of trust with your customers, through a digital service?

Cody Barbo:

Our biggest competitors aren’t LegalZoom or attorneys, they’re trust, education, and procrastination. So from a product design perspective, we were focused on overcoming those challenges.

We didn’t want to make you feel rushed. From the very beginning of the experience on our website, which starts with filling out a short quiz to find the best product for you and your family, we wanted you to feel like you were winning and accomplishing something as you moved from one section to the next. So in between those sections you see quick congratulatory messages and checkmarks, and that’s our way of encouraging you and nudging you forward without making you feel rushed.

We also don’t force you to pay for the product until the very end of the process. That’s the final step before we release the documents because we want to give you as much time as you need to think things over, talk with your family, even talk with your financial advisor, before you finalize the process.

And the documents themselves — we spent weeks obsessing over the design of the physical documents and the experience of unboxing them. We figured as long as we’re legally required to ship physical documents, we might as well look at it as an opportunity.

From start to finish, we really tried to think through the customer journey and we are constantly looking for ways to enhance it.

Fintech Takes:

In July you announced a partnership with Fifth Third Bank to give the bank’s customers easy access and discounted pricing to your service. This follows similar partnership announcements with Acorns and Axos Bank. In the announcement, you used the term ‘holistic financial health’, which really jumped out to me. Why is estate planning a critical component of a consumer’s holistic financial health?

Cody Barbo:

So, I'll start with a blunt statement — people tend to think that the biggest financial transaction of our lives is when we buy or sell a home; it isn’t. The biggest transaction of your life is when you die.

That is the largest transaction of your life and you’re no longer there, but that is why estate planning exists. Estate planning facilitates the multi-generational transfer of wealth and assets. And that’s the vision that we have for Trust & Will — not just to do best-in-class legal documents or best-in-class estate management, but to build the end-to-end digital infrastructure for multi-generational wealth and asset transfer.

Fintech Takes:

How do you see your products evolving as the underlying infrastructure in the financial services space matures and things like open banking become more ubiquitous?

Cody Barbo:

Take trusts as an example. After a trust is created, it needs to be funded. You have to move all of your accounts and assets into it. To do that today, you have to fill out forms and get signatures. There is no Plaid-like experience, with direct logins and the one-click ability to change or retitle an asset or an account. It doesn’t exist today.

So, when we think about our product evolution, we think about going more into the estate management side where we can do automation around the trust funding process. Build out an API to integrate into any financial institution, real estate platform, or title or insurance provider. Leverage single sign-on to autofill the estate plan as you’re creating it or updating it, with that info coming directly from your financial institutions.

How no one has digitized this yet baffles me, but that’s the longer-term challenge that we’ve taken on as a company, the challenge that gets me the most excited — how do we not just help more American families get protected with estate plans, but legitimately transform how wealth and assets are transferred?

Short Takes

(Sourced from This Week in Fintech)
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Alex Johnson


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