Rocket Dollar Improves Alternative IRA Investment Options
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Businesses in many industries have catered well to the needs of the middle and upper classes, but IRA and 401K accounts have long lacked convenience and quality of service.
Henry Yoshida is changing that.
He is the CEO of Rocket Dollar, an alternative investment platform that allows individuals to invest in alternative assets.
Its recently upgraded platform will allow people to sign up in less than five minutes and use just six screens. They help people gain exposure to a wider range of assets that the rich have had for a long time.
After graduating, Yoshida spent a decade at Merrill Lynch, where he specialized in setting up small business retirement plans.
He then created an SEC-registered RIA acquired by CAPTRUST and Honest Dollar (now Marcus Invest) which Goldman Sachs acquired.
Given his background, Yoshida wanted to empower people to unleash the power of their IRA and 401K accounts by giving them the ability to buy private and alternative investments, ranging from cryptocurrency to physical real estate to even part of a private venture capital or investment fund.
Technology-based workflow
“Anything private they can own inside an IRA using our platform,” Yoshida said.
Rocket Dollar does not offer investment opportunities. They provide a technology workflow platform that allows users to create their own IRA. The company gets paid to unlock that money and maintain regulatory and reporting requirements.
Yoshida described it as an IRA bank account where customers make their own investments but must transfer ACH or perform other permitted transactions in an IRA.
Yoshida said the 60/40 stock-to-bond ratio we were taught as a formula for successful retirement didn’t hold for most of his two-decade career. The two asset classes have evolved in parallel throughout this time.
“What we’ve helped facilitate is for people who are not entry-level investors, but say mid-career investors, (who) have between $50,000 and $2.5 million in investable money, who ‘a 60/40 portfolio won’t be enough,’ he said. . “You’ll actually generate higher returns with better diversification and less risk if you put a certain percentage of whatever you choose into something that isn’t a stock bond or a traditional listed mutual fund. in stock exchange.”
“I allow people with their regular IRAs if they have money saved up, to be able to now diversify the way a wealthy, very wealthy individual or institution always has.”
Neither stocks nor bonds
And remember, alternative investments mean anything that isn’t a traditional stock or bond. If they meet the criteria, it could be a cryptocurrency, a private real estate fund, or even an early-stage angel investment.
“I think it’s quite empowering because we’re able to tap into one side of a pool of capital, which is around $13.5 trillion today; very long-term, relatively illiquid money in the form that you can’t use it to spend it, but you can, if you’re invested in stocks, you take it and take it out… You might be able to use a small part and go bet on the company in the early stages, or if you find them later on the website like Stocks, it could be that growth stage but still before the IPO, where there is lots of potential benefits.
“We’ve seen this happen in the markets because now the same companies 15 years ago that would have gone public and existed as publicly traded small and micro caps are actually now taking serious CD and E rounds of hedge funds and late- venture capital firms.
Rocket Dollar’s philosophy is that it is difficult for the retail investor to diversify the way institutions and high net worth individuals have for so long. Yoshida said he’s been thinking about how to level the playing field for a long time. Some make asset classes available to investors on platforms, but Rocket Dollar approaches it differently.
“Unlock Money”
“We can unlock the money that usually can’t be invested in these types of private investments and make it available to make alternative private investments. There are many companies that create marketplaces and platforms for alternative investments. Still, I would say most of them are trying to create an investment product or idea or securitize an investment, and we’re here to help people unlock the money they already have.
Yoshida disagrees with those who believe regulators will be tasked with creating more restrictions. With $13.5 trillion in IRAs and more when you add 401Ks, such large sums mean regulations will actually make it easier for people to invest in the investments of their choice.
“There is too much money to put too many safeguards. You are looking at 10 years ago. It looked like Uber and Lyft were going to be shut down by various local municipalities and taxi organizations. It now seems that the public actually wants the flexibility of having different types of shared transportation options for transportation options.
“We may exist to regulate them, but we will not exist to restrict choice. This is going to happen in the investment world. I think they will create more regulations, especially around cryptocurrencies. They are already suggesting perhaps increasing reporting requirements for private investments. I agree with that. I think that’s actually a good thing. I don’t think they’re going to restrict like, you can invest in this or you can invest in this type of regulation.
Wider platform on the horizon
Yoshida sees Rocket Dollar becoming a broader platform for middle- and upper-class Americans who lack the private banking capabilities that HNWs served by the world’s Goldman Sachs have long enjoyed.
“Our goal is for a business to actually be a larger platform for the massive fluid retail investor,” Yoshida said. “And that means my team and I have a responsibility to continue to deliver products and features that are both relevant and in demand by this sub-segment of the population.”
Fintech 1.0 was about democratizing access to mainstream financial products for the middle class, Yoshida said. Now 2.0 will focus on meeting the obvious need for private banking services for people earning between $200,000 and $2 million.
“I it’s actually the big chunk of the blue ocean of the economy that we’re looking at, and in wealth management no one is specifically addressing that target segment, but I think Marriott, Southwest Airlines, Nordstrom, Disney+, Netflix and Costco live very well in this sub-segment of the US population, I just wanted to come full circle and see Rocket Dollar be the financial services company for this demographic in the US.
Rocket Dollar recently hired Mike Panzarella as Chief Technology and Product Officer.
A longtime adviser to the company, Panzarella was most recently at Block (née Square), where he helped launch their internal banking charter.
He was also CPO and Green Dot and oversaw the build and distribution of several consumer fintech products now used by millions of consumers.
The product manager was the key
Yoshida said Panzarella was instrumental in revamping Rocket Dollar’s onboarding process, which has now been streamlined to six screens and under five minutes.
The redesigned user interface allows investors to manage different types of Rocket Dollar accounts using a single login and integration of Rocket Dollar’s patented funds transfer module for full funding transparency.
Rocket Dollar also uses a passwordless architecture, with the customer’s phone number being used as part of an enhanced two-factor authentication process.
“We try to strike the right balance between a great customer experience and ease of onboarding, while ensuring that we check all the boxes necessary to get the correct information and proper security procedures,” Yoshida concluded.
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Tony Zerucha is a longtime contributor in the fintech and alt-fi spaces. Twice nominated for LendIt Journalism of the Year and winner in 2018, Tony has written over 2,000 original articles on blockchain, peer-to-peer lending, crowdfunding and emerging technologies over the past seven years. He has moderated panels at LendIt, the CfPA Summit, and DECENT’s Unchained, a blockchain expo in Hong Kong.