Cherokee Office of Economic Development · Cherokee by Choice.

Local Fintech Startup Sets Out to Innovate an Industry

June 8, 2018

The 1 Million Cups (1MC) Cherokee community welcomed its first financial technology (referred to as fintech) startup entrepreneur to the stage on Wednesday morning. Atlanta is well known for its reputation as the financial technology capital of the world, and 1MC Cherokee is excited to support the team at Veriphy Analytics as they disrupt the 401(k) industry. The success the team has already achieved proves that it is not the mailing/business address that makes the entrepreneur, but the team and community they surround themselves with.

 

Al Otto, a previous investment advisor and CEO/Co-founder of Veriphy, represented his team during the 1MC CHK presentation. At every 1MC CHK event, an entrepreneur presents their company for six minutes and the audience asks questions and provides feedback during the remaining time. Otto is no stranger to the 1MC stage; he previously presented Veriphy’s business model for the 1MC Atlanta community.

 

Veriphy has identified two flaws within the industry – lack of transparency regarding fees and hidden costs and the need to measure performance. Veriphy’s mission is to highlight the healthiest retirement plans in Georgia by bringing accountability, transparency, and objective value measurement through feedback. By working directly with employers, the team measures the effectiveness of financial advisors and compares the outcomes with other plans. Veriphy’s goal is to create transparency throughout the marketplace and increase employee participation.

 

“Something that makes no sense to me at all is the 401(k) industry. It is an $8 trillion industry, and no one measures the outcomes and performance. $7 billion is spent annually within the industry, but 98 percent of the plans are not monitored for their value. This is where Veriphy comes in. “No one else is doing what we are doing, at least not when it comes to investment advisors. We are building a business on this and changing the paradigm so you focus on the outcome rather than the input. We have built patent-pending methodology called the Veriphy Ratio, which works like a FICO Score, and serves as an indicator for what is going on,” explained Otto.

 

The Veriphy Ratio provides clear insight into the health of the chosen 401(k) plan. This score is beneficial for employers and plan sponsors because by comparing the plan against others in the marketplace, the employer can attract and retain valuable employees.

 

The Q&A session was lively as the audience, made up of local entrepreneurs and business professionals, asked several questions about where Veriphy would fit in the market:

 

“With the advent of blockchain technology, how have you seen that impact 401(k)s?”

 

“I think the impact so far of cryptocurrencies of any type in the 401(k) world has been minimal, if any. You may see more investment in that, but it will be limited. Because it’s a method of trade, you will see more of this in plans when the markets become available. What we have done is talk to blockchain providers about how to secure this information. We do have a blockchain strategy on the drawing board to increase the level of the security of the data.”

 

“So as you look to scale, do you feel like there is an opportunity to use that data and sell it back to a customer segment?”

 

“I think there are several adjacent markets that are available. The academic world would love this because it would help them measure and understand behavioral economics more in 401(k) plans, the litigation industry, and the fund managers would love to know which plans are over and underperforming.

 

“We are starting to highlight the healthiest retirement plans in Georgia and hopefully we will have that published before the year’s end. There is a large difference between healthy and unhealthy plans, and this report will help us talk about that.”

 

“Have you seen a greater uptick in the employee participation based on having a healthy retirement plan?”

 

“The answer is no, not yet. What I have seen is that employers who embrace this thinking can attract people because they have a better retirement plan.”

 

“What other hurdles are you facing?”

 

“Data entry is one of our biggest challenges. We use the data collected by the U.S. Department of Labor and since we are going all the way back to 2009, there are almost 600,000 forms that we have to go through. Machine learning is going to be necessary to complete this.”

 

Veriphy shares a similar story to many of our fellow entrepreneurs – they identified a problem within the system and built a process to solve it.

 

In closing, several attendees stuck around to network and speak with Otto directly. Since the kick-off launch of 1MC Cherokee in February, the program has provided a unique value to both the entrepreneur and the community and helps to create a culture of entrepreneurship in Cherokee.

 

We are now 300 cups of coffee into our goal of 1 million! Help us achieve our goal by marking our next event at the Holly Springs Train Depot on your calendar! We are excited meet back up with the community on Wednesday, June 20th!

 

Free, bi-weekly program developed by the Kauffman Foundation
helps build startup communities nationwide.

To learn more about 1MC or if you are interested in being a presenter, please visit the website to be directed to the application.

If you missed the event this morning, you can still access all the fun! All of the 1MC Cherokee events will be live streamed and recorded. So, pour yourself a cup of coffee and check out the presentation here: https://www.1millioncups.com/cherokee

1MC Cherokee will meet at the Holly Springs Train Depot on June 20th from 9-10:00 am.