C
Carlos García believes there’s an important
conversation missing in most Latino households— a conversation about saving for the future. It’s what led him to start Finhabits, the first bilingual financial advisor that offers Roth and Traditional IRAs as well as individual investment accounts. There are no hidden fees with Finhabits and users can get started with as little as $5 a week. “I started Finhabits for people like me,” said Garcia, founder and CEO of Finhabits. “We are Latinos and we learn about the importance of hard work at home. That’s something our parents always talked about at the dinner table, but I don’t think they really spoke to me about planning financially for the future, and in that case, that’s something that I really missed.” García said that most Latinos are taught to work hard to earn money, but many don’t know how to build wealth. “In most Latino households, we need to create that habit of saving for the future, in this case, your retirement,” he said. Finhabits, as its name implies, is meant to help families develop those long-term habits. “What we’re trying to do is help create the habit of investing and saving for retirement for people who have never had access to this type of product,” said García. Finhabits works by allowing users to open an account online at Finhabits.com. Users will then answer a few questions and Finhabits will create a personalized portfolio for them. The portfolio is created based on the user’s financial goal, such as a 3-year goal for a house down-payment or a 10-year goal to build a college fund. Users will then need to link a bank account with their new Finhabits account and enable autodeposits into the new account. The deposited funds are used in the stock and bond markets, where the money grows on interest. While investments in the stock and bond markets always have a degree of risk, Finhabits diversifies its investments to minimize that risk. The firm then rebalances and reinvests the dividends automatically as needed. “My goal with Finhabits is to make highquality financial services accessible and approachable to anyone who wants to invest or save for retirement, regardless of their wealth, background or portfolio balance,” García said. As for his own background, García was raised in the Texas border town of El Paso, earned an engineering degree at Massachusetts Institute of Technology and spent about 15 years working on Wall Street, but he saw that there was a need for helping Latinos start investing. He says his own father didn’t plan for retirement and that’s how he realized that saving is a “big problem” for many Latino households.
Carlos García, Founder and CEO of Finhabits • Born in El Paso, Texas • Received an engineering degree from Massachusetts Institute of Technology • Worked on Wall Street for 15 years • Launched three companies (including Finhabits)
About Finhabits Currently available on the web at Finhabits.com and on the Google Play and the Apple App stores. contact@finhabits.com Finhabits finhabits Garciacarlosar
www.finhabits.com
HOW IT WORKS Finhabits uses simple and repeatable actions to help users develop long-term financial habits. Easy as can be. Setting up and managing a Finhabits account on a smartphone or computer takes just minutes. Proven investment strategies. Using low-cost ETFs from Blackrock and Vanguard, Finhabits recommends diversified portfolios for each user. Smart habits. Finhabits will send timely reminders to help reinforce the habit and ensure users stay on track. Clear fees. Finhabits charges a small fraction of the cost of traditional services, with no surprises.
“We have a mission By the Numbers and passion for what we • 74 percent of Latino families do and we truly believe are not saving for retirement. this is going to change • $22,000 median savings the wealth of a lot of for Hispanic families with a retirement account families,” he said. Unlike traditional • 9 percent of Hispanic families brick-and-mortar financial have a defined-benefit pension plan firms, Finhabits offers personalized investment • 20 percent of Hispanic families a defined-contribution plan advice in a convenient have (i.e. 401(k)) way— online and on your SOURCE: Economic Policy Institute smartphone. http://www.epi.org/publication/ “The idea that I had in retirement-in-america/ my mind is that I believe that technology can help people reach their financial goals in more efficient ways,” García said. Finhabits is particularly geared toward Latino families, who are traditionally less inclined to save and to invest. “So how do you create financial habits? That’s an important piece of what Finhabits is doing,” García said. “If we create the habit, that is something that is passed from generation to generation. Hopefully, the clients we are targeting today, these are the parents that are going to be one day sitting at the table and saying, ‘By the way, when you start your first job, make sure you enroll in a retirement plan.’” “I think that’s lacking right now,” he added. According to the Economic Policy Institute, about 74 percent of Latino families ages 32 to 61 are not saving for retirement, including investments such as 401(k)s accounts and IRAs. The number of white families not saving for retirement is 35 percent. “One problem is access,” García said. “Most Latinos are sent to work for small and mediumsized businesses and in those cases, your boss sometimes doesn’t have the resources and the capacity to offer a 401K plan. That’s why Finhabits IRAs make sense for so many workers.” But he added that the main problem is making investing a habit. “The first thing that I believe creates a habit is repetitive action,” he said. “What we do at Finhabits is we get people started with their IRA in less than 10 minutes and contribute as little as $5 a week.” Finhabits is meant to teach people that while investing is not a guaranteed return, over time, those accounts will generate compound interest on your initial deposits. Also over time, Carlos hopes a healthy savings habit will be passed on to the next generation of Latinos. “If we can help Latino families plan for the future, we can help them build wealth over time,” he said.