Fintech fills a gap for divorced parents co-managing money

Jacklyn Rome’s parents divorced when she was 14. Though they had an amicable split, “money was the number one cause of arguments,” she said. “As you scratch the surface on this problem and talk to more people who have been through a divorce, it’s pretty universal.”

About 45% of marriages end in divorce, according to the Centers for Disease Control and Prevention’s National Center for Health Statistics. Finances are routinely cited as a top reason behind these decisions. Moreover, discussions about money in relationships can be fraught, and even more so when rancorous emotions are involved — yet parents may have decades ahead of them where they are jointly invested in their children’s expenses.

Jacklyn Rome, founder and CEO of Onward

Her own parents’ divorce inspired Jacklyn Rome to start the fintech Onward.

Rome formed a startup, Onward, that developed an app that takes some of the heat out of this situation. It helps parents who have split co-manage their children’s expenses.

There are numerous budgeting apps for couples and challenger banks for families that help people manage their money more harmoniously as a unit. The Onward app, which recently announced its Series A, fills a gap somewhere in the middle.

Michelle Spirn, owner of Spirn Family Law in Clayton, Missouri and vice president of the Missouri chapter of the American Academy of Matrimonial Lawyers, says there is generally no confusion about which expenses each parent is responsible for; in Missouri, for example, the parenting plan, or custody agreement, requires parents to allocate the children’s uncovered medical expenses, extracurricular activities and daycare while parents are working, and will frequently outline other allocations as well, such as college expenses.

“The problem for some families is keeping track of which expenses were incurred for which child, gathering receipts, and requesting reimbursement,” she said.

Onward is a new twist on shared finance, which consulting firm Forrester said in a 2021 report is a major opportunity for financial services companies, yet one not explored much by incumbent firms beyond joint accounts.

“There’s no question in my mind based on our research that Onward is a valuable service that meets a latent need,” said Peter Wannemacher, principal analyst at Forrester. Some of the biggest opportunities in shared finance are for relationships between people that are complex or fraught.

“The question will be, is it enough value for people to add it onto their list of brands they use for financial services,” he said.

Rome herself, who is Onward’s CEO, does not have a background in fintech — she previously held roles at Uber and meal delivery service Blue Apron — but she has populated her staff with people who previously worked at fintechs, including investing app Acorns, Intuit and PayPal.

“Our app sits at an intersection point of fintech and ‘famtech,'” she said. “We’re solving an emotional problem that is masquerading as a financial problem.”

One parent will typically download Onward and invite the other to join. They can both add expenses and suggest a split — say, 50/50 or 70/30 — and upload a receipt. Each party will receive a notification when the other adds an expense and can either settle it immediately or propose a different split. They can click on a link in the app to pay the other parent back via Cash App, PayPal, Venmo or Zelle or, in the near future, via ACH transfer in the app.

Rome says she has been asked why parents don’t use services like Splitwise or Venmo to accomplish the same tasks.

“I’ve spoken to hundreds of co-parents and have never been told they transition to us from Splitwise,” said Rome, noting that most say they are managing expenses via text message or emailed spreadsheets. “Splitwise is built for relationships that have inherent trust,” such as friends or a group seeking to split expenses on a trip.

In Onward, Rome points out, every change a parent wants to make triggers a notification to the other, which they can accept or reject, and is also logged in an activity feed. Users can export their data, which may be useful if the parents return to court.

Spirn says her firm advises clients to keep careful records of children’s expenses, including dates that they were incurred, receipts demonstrating payment and written copies of requests for reimbursements.

“Truthfully, this can be a challenging process for parents who are not quite as organized or ‘Type A’ as others,” she said. She has found many parents use Excel or handwritten charts.

Rome’s team also put care into the language and design to alleviate tension.

Instead of using proper names in push notifications, the alert will tell users that the co-parent has settled an expense. 

“That comes out of research where people say reading their ex’s name on their phone was triggering for them,” said Rome. She focused on more neutral terminology like “settle up” over “pay back” and emphasizes the children’s names in expense descriptions, to reinforce the idea that this is for the kids. The name “Onward” is meant to evoke feelings of optimism and building a new future.

Rome founded and developed Onward at Co-Created, a venture studio based in New York, with support and funding from Citi Ventures, which had an existing relationship with Co-Created. The Onward app launched in May 2020 as Ensemble and rebranded to Onward last year, because people had trouble spelling Ensemble. Citi Ventures invested in Onward’s seed and Series A rounds; Onward raised $9.7 million in Series A funding from Citi and other investors in October.

“As different family structures and financial dynamics become increasingly common, Onward is providing an important tool to prioritize the well-being of healthy and well-adjusted children,” said Luis Valdich, managing director of Citi Ventures. He noted that Citi Ventures rarely invests in startups at the seed stage, “so Onward stands out in that we were there since the beginning,” he said.

The app uses Plaid to verify the account and routing numbers for ACH payments, and fintech-as-a-service provider Solid to enable ACH payments. Rome chose Solid because it will also be able to help Onward build its next financial products, namely a “co-parenting card” that will function like a debit card and split expenses by pulling from each parent’s bank account at the point of sale and then, likely, a savings product that will help parents jointly save for large expenses, such as their child’s braces or summer camp.

The app has nearly 100,000 downloads, and Rome estimates the number of active users is in the tens of thousands. One method she used to spread the word was to recruit co-parenting influencers. For instance, a TikTok influencer under the handle @heartmindedmama dispensed tips in a video for separated parents such as encouraging a positive relationship, communicating respectfully and using Onward to stay organized and avoid fights about money.

“Onward differentiates from other general use budgeting and bill-splitting apps in that it deeply understands the exact points of friction that co-parents experience when sharing expenses on an ongoing basis and goes beyond simply facilitating the transfer of funds,” said Valdich.

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