Income Lab: On A Mission To Change How Retirement Is Lived

How Wealthtech Can Drive Greater Accuracy While Removing Fear From Retirement Planning
Justin Fitzpatrick, Chief Innovation Officer, Income Lab
Justin Fitzpatrick, Chief Innovation Officer, Income Lab
James Miller, Contributing Editor & Research Analyst, Wealth Solutions Report
James Miller, Contributing Editor & Research Analyst, Wealth Solutions Report

Justin Fitzpatrick, Chief Innovation Officer of Income Lab, says his mission is simple – he wants to change how retirement is lived in the United States.

A co-founder of Income Lab, Fitzpatrick describes the firm as a software company with about 30 employees. According to information about the company shared with WSR, Income Lab describes itself as “the only firm providing dynamic retirement income software for financial advisors to use with clients.”

In his role as head of innovation, he leads all research and development, leveraging his experience as a CFA charterholder and Certified Financial Planner (CFP) professional and his years in academia, where he earned a Ph.D. from the Massachusetts Institute of Technology (MIT) and served in a research and teaching capacity at several universities including MIT, Harvard, University of London and UCLA.

Having recently announced a strategic partnership with Docupace’s PreciseFP to help advisors save time and streamline the retirement planning process, Income Lab has continued to grow at a robust clip.

According to the press release announcing the partnership, the two wealthtech companies will use a newly developed API that allows both firms to connect their platforms, enhancing the financial advisor and end client service experience.

WSR connected with Fitzpatrick to discuss how Income Lab will enhance the ability for financial advisors to more effectively support a secure retirement for their clients, the unaddressed market for Income Lab’s solutions and what to expect next from this rapidly expanding, Colorado-based company.

WSR: A significant number of Americans either have no plan for retirement, are underfunding their retirement or have no idea if they are saving enough for retirement. This is both a major problem and incredible opportunity. How does Income Lab work to address each of these significant risk factors for Americans as they plan for their lives after working?

Fitzpatrick: A significant segment of the U.S. population has undersaved for retirement. This is a retirement readiness crisis that Americans as a society will have to face and work to address holistically. Despite being a widely reported issue, it is not something a financial advisor could be expected to solve on their own for all of their clients without additional resources and expert guidance.

There is a crisis when it comes to the clients of financial advisors who are overly cautious in how they approach retirement.

Justin Fitzpatrick, Chief Innovation Officer of Income Lab

At the same time, there is also a related crisis when it comes to the clients of financial advisors who are overly cautious in how they approach retirement. When the subject comes up, financial advisors will frequently discuss how far too many of their clients have internalized the public chatter about insufficient savings for retirement among older Americans, and as a result, they approach retirement with way too much fear.

Financial professionals, the media and common knowledge have repeatedly told them to save their money for their entire lives. But now, after they are done working and job-related income has stopped, they are told to go spend, and it is something they can’t bring themselves to do.

So, what happens from there? Clients of financial advisors eventually face a crisis of regret in not achieving their goals. And it’s not because they don’t have the resources to reach them, but because they were too afraid to spend what they saved for this exact purpose.

At Income Lab, we help financial advisors work with retirees to live the best life they can, given their resources, preferences and the world they happen to live in – without fear.

WSR: How does Income Lab differ from other retirement preparation tools on the market, and how do you ensure that the tools you offer drive value for financial advisors?

Fitzpatrick: We focus on balance. There are two risks in retirement – the risk of overspending and the risk of underspending. Advisors constantly need to balance these risks for their clients to deliver the services those in their spending years need.

There are two risks in retirement – the risk of overspending and the risk of underspending.

Justin Fitzpatrick, Chief Innovation Officer of Income Lab

But it goes beyond these two risk factors. Our tools help financial advisors work with clients to understand how their resources can contribute to their quality of life. An older person’s needs change drastically, and matters such as mobility, time with children and grandchildren and comfort become more valuable. How an advisor can help a retiree spend effectively to enhance quality of life is critical, and our solutions help deliver that level of granularity.

Interestingly, countless surveys suggest that quality of life and sharing memorable experiences – taking a comfortable vacation with the extended family, for example – rank higher on the list of priorities for retirees and their heirs than bequeathing or receiving a significant inheritance. But these kinds of goals take active planning and regular reassessment, and Income Lab is the only financial advisor-facing solution that helps deliver this kind of support.

WSR: For more than a generation now, most retirement plans have a “set it and forget it” saving option. But there isn’t really a program that simplifies the utilization of those funds in retirement. How does Income Lab work with advisors serving clients who preferred a more simplistic approach to ensure they can confidently live their lives without fear of running out of money?

Fitzpatrick: While there will always be those who want a simple approach, even the “set it and forget it” options – with clear benefits and drawbacks – are complicated. It’s true that the development and long-term maintenance of these accounts are less intense than actively managed accounts, but they still require careful consideration and adjustments over time to ensure growth and stability, which is usually out of the view of a client.

Clients and their advisors should make the same consideration about drawing down these assets in retirement. For clients working with trusted financial advisors, our tool simplifies the presentation of the critical information needed to inform their spending without sacrificing any of the sophisticated support it provides to advisors to ensure their clients can reach their goals.

WSR: This is obviously an area of the broader wealth management business for which you have a great deal of passion – What is it that drives your sense of energy and excitement about Income Lab’s mission?

Fitzpatrick: I truly believe we have the chance to do an enormous amount of good. In the wake of significant regulatory, economic, demographic and structural changes that have all impacted retirement savings and income trends over the past 30 years, it is abundantly clear that we need better solutions for financial advisors to provide superior guidance to clients approaching and within retirement.

It is abundantly clear that we need better solutions for financial advisors to provide superior guidance to clients approaching and within retirement.

Justin Fitzpatrick, Chief Innovation Officer of Income Lab

There are tens of millions of people who have enough money to achieve their life goals. One of the very best things that the wealth management industry can do for these individuals and their families is to deliver the accurate, expert guidance that gives them the data-driven validation they need to go out there and live the best life they can with the people they love, in the time they have – without unnecessary fear and uncertainty holding them back.

James Miller, Contributing Editor & Research Analyst at Wealth Solutions Report, can be reached at ContributingEd@wealthsolutionsreport.com.

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