Brad Walker is CEO of Income&
What is Income& and where did the inspiration to create the company come from?
Income& is a marketplace investing platform for PRIMOs, a new fixed-income product backed by high quality, prime-rated mortgages.
The idea behind Income& began when Ben Strub and I were working for a large alternative asset custodian where one of the most popular asset classes was hard money lending, both secured and unsecured. We realized that hard money lending seemed to be more understandable to investors regardless of their level of sophistication.
It was about this time that Lending Club and Prosper were experiencing explosive growth. They were scaling unsecured lending to an unimaginable level. We loved what they were doing in the unsecured space but realized, while they were offering a really great yield proposition, that unsecured consumer debt would not fit the risk characteristics of the largest yield-seeking population: retired people.
That was when we decided to create Income& and to offer hard asset-backed notes that outperform the safer end of the spectrum in traditional fixed-income options from a yield standpoint but also maintain similar risk characteristics to those same options. It was critical for us to create a product that our parents needed and, just as importantly, one that we would be comfortable selling to them. Soon after, we put together the core team of founders, including Keith Meyer to run marketing and Vincent Phillips to run technology, and we hit the ground running
Why is investing for retirement so hard for most people?
The extended low rate environment that we have been experiencing for the last decade has made it difficult for Baby Boomer investors to find decent returns with yields at historical lows. A majority of retirees and pre-retirees are looking for investments that are safe, outpace inflation, and return enough after inflation that they can have a comfortable life without eating into their principle.
What’s the PRIMO and how is it a better alternative than other options out there for fixed income investors?
A PRIMO is a note backed by an individual high credit quality prime-rated mortgage. As an investor, you have a great deal of transparency into the borrower’s credit statistics, the geography of the collateral property, and more. Using our technology platform, investors will easily be able to buy across our inventory of PRIMOs or customize a portfolio that fits their exact needs. We believe PRIMOs are better than other fixed-income investments through a combination of higher yields, lower risk, transparency and no on-going management fee.
Is this a dual-sided marketplace? Where does your supply of mortgages come from? Are there challenges in creating a vibrant marketplace that you see for Income&?
We are a two-sided marketplace. However, unlike other peer-to-peer platforms and marketplace lenders, we are not involved in the origination of loans. Instead, we work with well-established mortgage lenders by providing a place to sell their high credit, high quality prime-rated mortgages and through that liquidity, expand their lending operations. We then take those mortgages and create PRIMOs.
Our biggest challenge is really an educational one. The residential mortgage market still has a bit of a black eye after the downturn. We need to help people to understand that fixed-rate prime mortgages have historically been very safe and that we are working very hard to use the residential mortgage debt market responsibly to create a product that people need and that they can trust.
How do you intend to go to market with an electronic product for baby boomers? Are there challenges there?
Selling to an older demographic through a technology platform can be a challenge, although we have found that many Baby Boomers are comfortable interacting with their finances online and more will continue to gain comfort. Early on, we will largely be selling through Registered Investment Advisors (RIAs) partially as a way to get over the technology adoption hurdle but also more as a way for early adopters to gain comfort with PRIMOs as a new product, by having a trusted professional vet the product.