A downtown Springfield financial firm recently announced the launch of a new social media platform the company says will also allow users to save money for retirement.
Megga Inc., a subsidiary of HUTN Inc., recently announced it will launch a social media platform called Meggalife that awards points to users as they use its apps for tasks like searching the Internet, listening to music or sharing messages.
HUTN INC. has undergone several name changes since its incorporation in Colorado in 2007, according to its most recent quarterly report filed with the OTC Markets. The firm was known as EFH Group Inc. in 2014, but was changed to EF Hutton America Inc. in April 2015. The name was changed again to HUTN INC. in October, the quarterly reported filed on Nov. 15 with OTC Markets showed.
Megga Inc. will generate advertising revenue and deposit a portion into a trust overseen by independent third-party trustees, based on the number of points users accrue. Meggalife users will be able to redeem those points at the age of 68 to provide additional funds for their retirement, according to a news release.
Nearly half of working-age families in the U.S. have nothing saved in retirement accounts and the median working-age family had only $5,000 saved in 2013, according to a 2016 report by the Economic Policy Institute, a nonprofit based in Washington D.C.
“We believe that this model is compelling to users who have typically received no financial gain, despite their devoting hundreds of hours, on average, per year to internet activities,” HUTN INC.’s quarterly report says. The quarterly report likened the business model to a frequent flier program for financial security.
HUTN INC.’s quarterly report also says users “start earning points when they join an affiliated nonprofit investment club, the Beanstalk Club, which uses crowd sourcing of its members’ preferences to inform the Megga Trust’s investing decisions.”
Top points earners will be eligible to win additional prizes and contests, according to the news release.
The proposal is original, although customers will likely want more information, said Grant Easterbrook, co-founder of Dream Forward. Easterbrook said he spent much of his career tracking financial tech companies. His start-up has developed artificial intelligence to walk customers through the process of starting and maintaining a 401(k) program.
It’s not uncommon for financial tech companies to reward users for using their products online, although tying it to a long-term outcome like retirement is unusual, Easterbrook said. But more information is needed, he believes, including how the money will be invested, how much the company will take in investment fees and how easily users can roll over or move their accounts.
More information about the investments will be available when the product launches, said Jeff Kursman, a spokesman for EF Hutton. He said the points users accrue have no value until redemption and users cannot redeem until age 68. He said the value of the points will fluctuate based on factors like the number of users, the number of points in total and the value of the trust.
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“By participating on the Meggalife platform, they are earning points,” Kursman said of users. “Those points are captured in a solo 401(k). A solo 401(k) as opposed to a corporate 401(k) allows you to have nontraditional investments.”
The biggest challenge for financial tech businesses, Easterbrook said, is encouraging customers to move their funds into their products.
“The specific challenge of finance, it’s very hard to get distribution,” Easterbrook said. “People don’t move accounts very often. It’s very hard to attract money to you but once it’s there it kind of stays there for a while.”
The concept is original but Megga Inc. will need to see some success early on, Easterbrook maintains.
“The general rule of thumb for social media is very much boom or bust, feast or famine,” Easterbrook said. “A social app is going to blow up or totally fizzle. It’s going to be the same case for these guys.”
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