by Nick Daley
The last two decades of Fintech innovation have benefited many segments of the population. Nevertheless, one group has been left behind: the elderly.
Yet 83% of U.S. household wealth is held by Americans over the age of 50. In fact, when you dive deeper to look at ages 65+, you’ll notice that a fast-growing part of the U.S. population is undergoing significant change in the types of financial services they require, and in the way in which they interact with financial institutions.
Not only that, but an interconnected group is emerging: caregivers. As of 2020, the AARP estimated a total of 49.9M adult caregivers in the U.S. Every caregiver’s responsibilities are different, but as Fintech investors, one piece stood out to us: the growing need for solutions to address the burden, and risks, of financial caregiving.
In 2022 there were 88,000 reported victims of fraud over the age of 60. This represented $3.1B in total losses, an 84% increase from 2021. The latest data from the FBI’s Elder Fraud Report shows that “scams targeting individuals aged 60 and older caused over $3.4 billion in losses in 2023—an increase of approximately 11% from the year prior.” Perhaps what’s most worrying is that it’s widely believed this is only a small portion of the real numbers, since much of elder fraud goes undetected and/or unreported.
Protecting the Elderly
Naturally we ought to look at the lines of defense to prevent this specific type of fraud. This ends up with two groups: caregivers and financial institutions.
The former is drastically under-supported. They are offered limited financial, emotional, and logistical support (which is especially the case for less well off socio-economic groups). Caregivers commonly suffer mental and physical health challenges and already on average spend $7,242 a year on providing care to a senior loved one.
Financial institutions have historically done very little to support the elderly segment and their financial caregivers. They have chosen to focus attention on customer segments that are in the wealth accumulation phase. However, there’s a significant opportunity for financial institutions to protect this segment at scale, and guide the transition of wealth between generations.
Furthermore, the elder-specific fraud models used by banks and credit unions are underwhelming. They’re typically static rules-based approaches which lack the ability to identify new or emerging fraud styles. FINRA, the CFPB, the NASAA, and the Federal Government have all shown increasing focus on enhancing banks/credit union’s responsibilities in regards to elder fraud––putting pressure on these institutions to modernize their approach.
Financial advisors and wealth managers are similarly positioned to improve the experience for their elderly customers. According to JP Morgan and Focus Financial, 44% of a typical RIA’s clients are age 60 and above. Yet, advisors and wealth managers typically do a disappointing job of managing this segment, in part due to a lack of tools and resources available. In an age where investing capabilities are increasingly commoditized, the advisor’s role in safeguarding a lifetime of well-earned assets could be a unique differentiator.
To us, it’s clear that not only is fraud the most urgent and valuable wedge into the senior finance space, but that to minimize the challenges faced by all stakeholders (the elderly individual, caregiver, and financial institution) a motion that combines the scale of B2B with the benefit to accuracy through individual feedback loops would be the only way to deal with the problem at scale. In other words, a B2B2C motion would be most impactful.
Introducing Carefull
With all of this in mind, it gives us great excitement to share more about our investment in Carefull. Having followed the team’s journey for several years, we were very excited to lead their $16.5m Series A with participation from TTV Capital, Bessemer Venture Partners, Commerce Ventures, Montage Ventures, and Alloy Labs, in the fall of 2023.
Carefull is a groundbreaking financial platform for older adults and financial caregivers. Their product suite provides full stack financial safety to an increasingly vulnerable age segment (50+ years old). Tools include embedded identity theft insurance, credit monitoring, document vault, and title monitoring. The Carefull platform is underpinned by an ML-powered financial engine, “Cari”, that monitors individual accounts for scams, money mistakes, and behavioral issues specific to seniors.
The platform is distributed to end-users through a) banks and credit unions, and B) financial advisors and wealth managers. The value proposition to these segments centers around Carefull’s ability to provide peace of mind to customers, increase engagement between the institution/advisor and the end-customer, and improve management of the wealth transfer process between generations.
Our Conviction in Carefull
Having had the chance to observe the team for several years and speak to banks, wealth managers, and financial advisors – it was clear to us that Carefull is well positioned to become to address the opportunity and need in senior financial behavior.
That conviction is based upon:
- A seasoned, complementary, team with lived experience: Todd and Max (co-CEOs) are proven entrepreneurs with a history of bringing B2B & B2C products to market. Within the Carefull context of a consumer end-user combined with an enterprise experience and distribution strategy, we see their skillsets as naturally complementary. The product is designed, and experienced, in such a way that clearly exhibits empathy and understanding for the elder and caregiving experience.
- An important opportunity: It is undeniable that the elder financial journey is a large, urgent, and valuable problem to solve. To-date, it’s a significantly under-represented and under-invested category. Keeping the vulnerable safe, managing the decumulation process, and facilitating the wealth transfer experience is an important and necessary service. We believe Carefull’s enterprise-ready approach with a foundational data layer, holistic feature set, and bundled nature is well suited to tackle this problem at scale.
- Calculated Positioning: Carefull is a holistic solution focusing on the end-to-end process of financial caregiving. Other solutions that we have seen are either heavily verticalized (e.g. banking) or relevant at a particular point in time (e.g. retirement planning).
- Opportunity for Bundling: With Carefull’s software layer acting as the underlying foundation of the financial caregiving experience, they can easily deploy in-house or third party add-on products and services e.g. estate planning or insurance products.
We welcome Carefull to the Fin family and are eager to be a part of the journey to transform how seniors experience the financial services ecosystem. You can learn more about Carefull here and schedule a demo of the platform here.