Why We Started Intelligent401k

February 15, 2021

An Interview with Steve Demarest, Founder and CEO of Intelligent401k

Intelligent401k was started by Steve Demarest and his college roommate, Jon Floyd, who have over 30 years of successful experience in the financial industry.  With an eye for sound investing and an aptitude for innovation, Steve and Jon founded a successful trading firm that was later acquired by one of the largest financial firms in the United States. 

Now, they are on a mission to improve the way people invest in their future.

Steve and Jon saw a void in the way most American’s managed their retirement funds and set out to create a unique way to solve it. The answer was an innovative A.I.- driven technology which effortlessly optimizes your retirement funds with the goal of maximizing your account’s performance. 

Intelligent401k was started with the idea that saving for retirement should be clear, simple and efficient. Instead of feeling overwhelmed and stressed about building a nest egg big enough to support your future, we want you to be able to look forward to your golden years with ease and clarity.

We sat down with Steve to pick his brain about why he started Intelligent401k and how it can help people like you optimize their retirement funds, save on fees, and try to obtain better long-term results. Read on to learn more about Steve, Intelligent401k, and how to manifest the future you deserve!

Q: What initially sparked your interest in the financial industry? 

My father was a career stockbroker, so I took an interest since I was probably about 8 years old.  He had me investing and trading early on but, of course, I didn’t really know what I was doing. Nevertheless, it got me involved and after the first winning trade, I’ve been hooked!  

Q:  Wow, 30 years in the industry! Can you give us a background on your financial experience including building your previous trading firm?

I actually started as a cold caller during the summer after my freshman year in college for a firm out of New York, called Oppenheimer. I went back again to do the same thing after my sophomore year but this time I was able to take my Series 7 (brokers license) and I passed on the first attempt! This was 1990, I was 20 years old and had my license to be a broker. From that point forward I couldn’t wait to get involved with helping clients invest.  

I worked for my father the following summer after my junior year and then, after graduating, I immediately went to work building my career. In 1992, I was hired by PaineWebber Inc. as an Investment Executive (a fancy way of saying stockbroker) and finished number one at the top of my training class. Within two years I was able to earn Vice President status at only 24 years old. I’m fairly certain that I was the youngest person in the firm with that title. From there, I parlayed my early success to move to a regional firm, Piper Jaffray, which allowed me to expand from working with retail clients to working with institutional clients. This was substantial because it was my inroad to understanding how “the business” really works.  

After a little less than two years, I was doing great when Jon called me, excited to show me what he was doing with at the trading firm where he worked. After visiting him and seeing some of the new technologies he was using, as well as being abreast of changing regulations, the lightbulb turned on. I took a huge risk by leaving a successful career to start my own independent branch office called MB Trading.  In 1997, I had just turned 27 and had my own brokerage business! By the time I was 30, we had moved on to be our own Broker/Dealer which means it was a full-fledged brokerage firm specializing in sophisticated technologies that supported Stocks, Options, Futures, and eventually Forex. MB Trading was successfully acquired in 2016. My work was complete … for the moment.

Q:  What did you learn from starting your first firm and how can you use it to improve this new venture (Intelligent401k)?

MB Trading was very successful over the years, but the trading and investing experiences would be almost impossible to match. I have gone through several market cycles and have seen the good and the bad, many times. I had worked with and/or monitored hundreds of thousands of traders over the years seeing some of the best on earth and, candidly, some of the worst. I was able to gain a deep understanding of the financial markets as well as the financial infrastructures and investment vehicles that correlate with them. It’s the combination of all these aspects that afforded me the knowledge to understand successful money management and investment traits. I have had so many experiences understanding how mistakes are made and how to avoid those mistakes. I have also been able to work with such successful traders and investors which allows me to apply those traits to be a successful investor.  

By putting all these together, I am able to offer a truly substantial benefit to people who may not be totally versed in investing. My goal is for Intelligent401k to be completely aligned with our customers, creating a win-win relationship because as they do better, the company does better. It’s quite simple and very rewarding.

Q:  What void did you see in the market that inspired you to start Intelligent401k?

What a really unique situation. This is strictly my opinion (which I need to emphasize for compliance guidelines), but it seems obvious to me that since funds in a 401k cannot be moved out and must stay at the plan provider, most financial advisors purposely overlook them because they can’t get paid (I need to be clear for compliance purposes that this is just my opinion). Additionally, even if they could get paid they would probably not offer up their services because many of the balances would not meet their minimum requirements and many larger firms have ERISA concerns (rules and regulations that come with liability).  Those are my general observations, but regardless of the exact reason this segment of people, undoubtedly, are overlooked. That leaves millions of people from getting the help that they so desperately could use.  

Lastly, the help that is available to people by the plan provider, seems to me, to be fairly useless. What I mean by that is, usually, an advisor shows up once a year or maybe a few times a year to offer guidance. The jargon and confusion that ensues is baffling. The employees end up becoming even more confused and seize up, not understanding what to do. It is confusing, daunting, and even intimidating to most and it, candidly, doesn’t need to be.  Their natural response is to ask a friend or a peer what they are doing and mimic their investment choices. That is just so wrong because everyone’s situation is different and needs different solutions to be successful … not to mention you can easily be following less than ideal recommendations. From my experience, this happens all the time, so we have devised a process and technology that makes everything simple, affordable, powerful, and accessible to everyone with one goal in mind – to make their lives better.

Q: What do you think are the biggest challenges that people face regarding managing their retirement funds?

They simply don’t understand what the investment choices provided to them mean or what they are intended to do. The other challenge is that most truly don’t understand how to manage risk. Everyone focuses on the returns, but not all returns are equal. For example, at any given time you may have two people that both profit $1,000 from their investments. However, what if one person took half the risk as the other? It’s true they both had the same return for that snapshot in time but I can confidently say if they continue with that behavior they will not have the same returns over 5, 10, or 20 years. Then you hear the nightmare of what happens when the market corrects or has a substantial pull back. That’s when you really see who was taking on risk that they didn’t quite understand.

Q:  Why do you think it’s taken this long for a system, as potentially beneficial as Intelligent401k, to be put into place?

There are others that offer similar services but not all services are equal. It’s partially long-term vs. short-term thinking too and new technologies that exist today which allows us viewership into a person’s account without having to custodian the account. Essentially, that means we can offer our optimizing services without having to move the money over to a new brokerage or advisor. Simplicity is key, leave it right where it is, and we try to make your investments more efficient.  

I think understanding the long-term view and not focusing on short-term results could be a huge factor. This is a slow and long process for both Intelligent401k and every customer. I think in general, many types of people look for quicker results or measure in the short-term and we don’t think that way, at least not for your retirement. I believe that if you trust our process of proper and prudent money management skills and let our investment algorithms do their magic, I am confident that you will look back over 10-20 years with contentment.  

For example, if we are able to get on average a 1% better return over 25 years, starting with 80k (one person getting 8% return and the other getting 9% return) then that ends up being about a 150k difference! Obviously, this is hypothetical, but it is an absolutely reasonable outcome by using proper money management.  

I suppose the short answer is wisdom and new technology coming together at the same time which were not previously available.

Q:  What’s your vision and long-term goals for the company?

My vision is to help people realize that they have a problem that they may be aware of and, in turn, offer them an extremely simple solution. Therein lies the difficulty, but along with difficulty comes opportunity and value. 

A 401k is usually a person’s second largest asset behind their home but they spend more time researching where to take a vacation this year than they do when filling out their retirement selections. That’s not right. My goal is to help them today, so that tomorrow, they can afford plenty of vacations.

Q:  Alright, alright, alright … When you’re not crunching numbers and finding the next investment opportunity, what can we find you doing?

I’m boring nowadays. I read a lot and study the markets continually and especially use the weekend time to catch up on much of that. I used to practice Jiu Jitsu and was active for 17 years achieving my black belt in 2013 but I’m a bit too old for that now so I try to keep active in the gym where I can’t get beat up!

Q:  I’ve got to say, for a big-time finance guy, you seem pretty down to earth. What are your personal life goals outside of your career?

I don’t know if I would call myself a big finance guy because I look up to so many smart traders/investors in the business that have taught me so much and continue to do so. My life goal is to simply be viewed as a good person with integrity that is always willing to help where or when possible. Seems so simple but I have found it’s difficult for many to do.

Q:  Most importantly, what’s your best dad joke?

Maybe not a joke but a brilliant question.  I opened a restaurant and my sister asked me if I was mad at my money! I thought it was funny.

 

  • Investing involves risks including the possibility of loss of principal. Investment results will fluctuate based on market conditions and the economic environment. The example does not take into account fees, commissions, taxes or any other costs (e.g., service fees, low balance fees, maintenance fees, annual operating fees). If such costs were included in the 150k amount, the value would be lower.

 

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