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Comment by brudgers | Hacker News Reader

Interesting. I thought that insurance regulations varied from state to state in the US and that each state requires their own license for sales...anyway, I wonder whether monetization via sales of insurance create a tension between neutral financial advice and the business strategy of the platform.

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Hi Brudgers, I'm a co-founder of Nickel. Regarding disclosure: we will fully disclose to Users how the company works, how we are compensated, and provide full fee transparency and any potential conflicts of interest (like advice vs. the sale of products). Most planners and advisors also manage investments and/or sell insurance products: it's a matter of full disclosure. Customers will be receive a comprehensive financial plan (that can be saved and updated) for free. We believe that's valuable, but what's infinitely more valuable is implementing that plan, and that's where we'll deliver, because we plan to make it easy for Customers to do so. For example: telling a couple with two kids, a mortgage, and only one working spouse that they need life insurance is valuable, but making that insurance one click away is even better.

Beside insurance sales is their another monetization strategy with fewer regulatory hurdles and a less commoditized market?

Hi Brudgers - Thank you for the feedback. We are evaluating a number of alternative revenue options. (Most come with plenty of regulations and oversight requirements - the nature of the beast in financial advice/insurance.) I have favored the insurance revenue model (at least in the beginning) because we can be up and running (i.e., open for business) in one or two months, and fund growth strictly off of revenue. But you raise a valuable point. As Vic mentioned, we're hoping to mine the feedback of the financial plan users to determine appetites for buying, etc. The price compression and commoditization in the crowded investment management ("robo") space (i.e., <20 basis points annually on assets) tends to make that approach less attractive in the beginning.

That's true, states do regulate insurance including licenses for sales. And there's some Federal regulation too.

The tension between commissions and neutral financial advice is an important issue. Sometimes advisors disclose their compensation but not always. In our case we could not only disclose that but also reveal the logic and math behind the recommendation. The rules aren't a secret; anyone can look them up in a book. The value we add is not having to look them up, and then reconciling all the different rules into an algorithm that takes all the variables into account.

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