At Juxtapose, we believe that markets are in a constant state of change, driven by technology innovation and evolving customer expectations. In our view, some of the most compelling investment opportunities are made where these changes lead to substantial shifts in the balance of power between various players in a value chain, or where new value chains are created altogether. It’s in these circumstances that incumbent businesses tend to be substantially disadvantaged and there’s an opportunity to create breakthrough value for customers.
The financial services industry is an archetypal case of this kind of transformation. In financial services or fintech, we believe that power is overwhelmingly shifting to companies that are close to customers and own end-customer relationships. This is developing against the backdrop of a broad-based flattening, commoditization, and embedding of financial services capabilities and products. These “customer-centric” businesses are able to create enormous value for customers and generate enterprise value themselves by commoditizing other players of the financial services value chain.
Our latest example of this thesis is Earned, formerly known by its Beta name Forme Financial. Earned is the first tech-enabled, comprehensive wealth system built exclusively for physicians, and today, the company is launching out of Beta with a new name, a new look, and expanded capabilities. Earned has also announced a $12MM Series A round led by Hudson Structured Capital Management, Breyer Capital, and Juxtapose. This latest round brings Earned’s total funding to $18MM since it started serving customers in 2022.
The financial services industry today is highly product-centric and advisor-centric. For example, in order to get a mortgage, most consumers need to find a mortgage broker who does nothing but sell mortgages to all types of people with all kinds of earnings profiles. This relationship then becomes one of the dozen-or-so financial relationships a consumer will need to source and manage. Our thesis is that financial services will increasingly move towards customer-centric models, in which these commoditized financial services offerings are aggregated by a new class of consumer fintech businesses that focus on specific groups of high-value consumers, earn their trust through real specialization and expertise, and are capable of comprehensively addressing their financial needs in a coordinated and coherent way. To us at Juxtapose, this opportunity rhymes with the emergence of vertical SaaS: commoditization of software has enabled the creation of purpose-built, vertical SaaS solutions that combine a broad range of solutions customers need in a way that comprehensively addresses their needs, better integrates their data, and unlocks massive value.
Building a business like this requires a founding CEO with an extraordinary level of general management capacity and strategic vision. At Juxtapose, we live by the mantra "talent is everything" and it couldn't be more true than for a build that's trying to so meaningfully shift the paradigm in consumer financial services.
In the Fall of 2021, we announced that we were partnering John Clendening to create a new company focused on delivering better outcomes for clients by creating products and services that are highly personalized, remarkably comprehensive, and purpose-built to be definitively better for our clients - especially against a backdrop of one-size-fits-all financial services offerings that are stalled and stuck in the past. Over the last year and half, that vision became Earned.
A New Approach to Physicians’ Wealth
For most physicians, personal financial decisions and wealth management have been a fragmented and complicated experience where every step of the process is siloed, from debt management and lending to investments and tax planning. Every meaningful financial decision in a physician’s life represents a complex optimization involving disconnected specialists (CPAs, CFPs, and lawyers) that are basically never found in the same firm. The stakes are higher for physicians because of high levels of student debt, unique legal risks, specialized earning and investment opportunities, and their incredibly demanding careers. In fact, financial stress is the second leading cause of burnout among physicians, even though they’re in the top 5% of U.S. earners(1).
Since its Beta launch in May 2022, Earned has worked with physician clients, across 24 states(2), at every stage in their career journey. During the Beta phase, clients were supported by a sophisticated, interdisciplinary wealth team including Certified Financial Planners (CFPs), CPAs, lawyers, and insurance experts. This team was able to leverage Earned’s first-in-class technology platform to get a detailed, 360-degree view of each physician’s financial life, powering more complete analysis and accurate decisions. Even though the Beta operated for less than a year, we were blown away by the tangible results Earned’s unique approach was able to drive for clients. The Earned team supported clients across a wide range of high-stakes financial decisions that traditional wealth management firms would be incapable of handling, and saved physician clients an average of $77,000 in taxes alone(3). While the financial impact is profound, we are equally proud of the way Earned is able to massively reduce the administrative friction and uncertainty associated with finance. Our clients report being delighted by the way Earned allows them to actually accomplish financial tasks with minimal effort and maximum confidence. As a testament to this, most clients choose to interface with their Earned team primarily through the company’s mobile app, with 71% of users logging in weekly - triple the industry average(4).
With this new round of funding, Earned is expanding its capability set to become a one-stop shop for physicians, providing access to highly specialized investing, tax prep, filing, insurance optimization, debt management, lending solutions, and career & compensation advisory. Earned’s proprietary wealth engine is personalized to an individual physician's goals and situation, connecting the dots and optimizing against client wealth creation. The company also enables physicians to understand the implications of important career decisions, including buying into or selling a private practice and selecting from multiple job offers. The wealth engine is designed with the goal of delivering quantifiably better financial outcomes with an unprecedented level of specialization for physicians. Earned’s approach maximizes physicians’ wealth cohesively and seamlessly, helping physicians earn more, invest smarter, and reduce risk.
Our Partnership with John
We’re thrilled to deepen our partnership with John as Earned continues to grow. John brings over two decades of CEO and President experience in innovative financial services. Before Earned, John most recently served as CEO of Blucora (NASDAQ: BCOR), a publicly traded technology-driven financial services firm offering tax-smart wealth management outcomes for consumers, where he drove a total Stock Return in the top 3% of the Russell 2000 and built a technology stack to power tax alpha across investing accounts and first-in-class forward-looking digital optimization.
Prior to Blucora, John spent over a decade as one of the most senior leaders at Charles Schwab. As President of Charles Schwab’s consumer-facing division, John played a leading role in transforming the firm from a transactional, reactive service model into the leading omni-channel wealth manager it is today.
We look forward to continuing to support John and the Earned team as they pursue their mission to create brighter financial futures for physicians.
1 Medscape National Physician Burnout & Depression Report 2018; US Bureau of Labor Statistics, The Social Security Administration National Average Wage Index, 2021.
2 Forme Financial is currently required to be notice filed in nine states. While Forme Financial has clients in additional states, the firm qualifies for the de minimum filing exemption, allowed by each individual state.
3 Physician Client Tax Savings is the average Tax Savings calculation for physician clients invested in the Custom Indexing Global ADR strategy, sub-advised by Brinker Capital Investments, LLC, a registered investment advisor. The Tax Savings calculation goal is to quantify the value-add of tax management by measuring the benefit from (1) tax loss harvesting, (2) transitioning legacy securities with unrealized gains, and (3) the growth of the savings from 1 and 2, by the rate of return of the portfolio. The Tax Savings calculation will be heavily influenced by the assumed tax rates, which can be specified at the investor level. If no tax rate is specified, the maximum short- and long-term Federal and State tax rates will be assumed. All calculations are based on the ending market values, of each account, as of 12/31/2022. Not all Forme Financial clients choose or are eligible for the Custom Indexing Global ADR strategy.