WILMINGTONÂ â In many ways, Fred Phillips IVâs story is one about leveraging human capital for maximum potential. He tends to see possibilities instead of obstacles in the path ahead. […]
[caption id="attachment_221299" align="aligncenter" width="683"]Investment Cash Management CEO Fred Phillips IV and his wife, ICM Chief Administrative Officer Carolina Phillips. DBT PHOTO BY JIM COARSE/MOONLOOP PHOTOGRAPHY[/caption]
WILMINGTON â In many ways, Fred Phillips IVâs story is one about leveraging human capital for maximum potential. He tends to see possibilities instead of obstacles in the path ahead.He describes himself as competitive, even against himself as a young student at the prestigious St. John's School in Houston, where he attended on scholarship. Back then, tests were like puzzles, a game he could solve if he just looked at it the right way.Decades later, while Phillips was in Argentina after working with international private equity funds he mused over a tremendous problem: the volatile currency of the country. Twenty years ago, an American dollar would have been worth 2.5 Argentine pesos. Today, itâs about 108 in Argentine pesos. Phillips would want his ideal currency to be stable and generate a steady return, but also be used to buy things, so immediate liquidity would be needed. In short, a government money market fund.âBut if Iâm doing that, why not make a mutual fund or an exchange-traded fund? If I can do that, why not come up with a liquid bond ladder, so I can have a cash product for up to 30 days and a bond fund for six to 12 months and so on?â Phillips thought. âThen, I started to think, âThis could be really interesting because I had never seen anything like this before.ââThat was the inception of Investor Cash Management,an upstart financial technology firm that leverages its own software to link debit cards to both cash and securities. In turn, that means securities can be turned into digital currencies to pay for everyday transactions.ICM is a star on the rise. Launched in Chicago with $6 million raised in venture capital from board members like MBNA co-founder and former Mastercard chairman Lance Weaver and Morningstar founder and chairman Joe Mansueto, the Pitchbook valued the company at $24 million in 2018. After closing out a Series B round of fundraising, another $10 million was raised, and the companyâs value was at $120 million.Late last year, ICM was awarded state funds for his plan to build a $15 million headquarters in downtown Wilmington â a credit card capital of the world â and bring 395 jobs with it. Phillips, with his wife and ICM Chief Administrative Officer Carolina Phillips at his side, is now looking to launch its product internationally this year, and is in âintense conversationsâ with at least two countries now. In June. ICM will be one of two fintech companies to join the U.S. Commerce Department for a financial innovation trade mission in June. But Phillips believes that ICM wonât transform downtown Wilmington like MBNA did back in its heyday â for one, the focus is on technology and on a smaller scale. But the hope is to play a pivotal role in the cityâs future, through its work and social programs like improving financial literacy in the local schools. âThe standard for us is what we can do to make our community better, not only through our products, but through the different contributions we can make,â Phillips said.
Much of that serendipity pushed ICM from an idea to reality, as Phillips met someone who worked at Morningstar at a dinner party, and offered to introduce him to the companyâs founder and chairman Joe Mansueto. After thinking about it for a day, Mansueto was in, and ICM took off.Investments came in from MBNA co-founder and former Mastercard chairman Lance Weaver and Ariel Investments founder and chairman John Rogers, who also serves on the board of McDonalds and the New York Times. Rogers was particularly interested in ICMâs social inclusion aspect, gearing the products for the average person who have less assets than billionaires.âFor people like my mom, you don't invest for three reasons: thereâs a cost, thereâs thousands of investment products out there, and they donât have a lot of money, so they need to be able to access it,â Phillips said. âIt's a benign Trojan horse to get them started in investing.âICMâs mission is to convert people into investorsâ but Phillips said one of the ultimate goals was creating a tool that would improve the community through building wealth. Or boiling it down: presenting a more âreasonable choice.ââItâs not that youâre leveraging your mortgage to buy the latest big stock. Youâre making conservative products that will perform or ever outperform every time,â he said. âAnd if you harness an investment product to a free bank account, itâs something that can speak to a broad group of people who have historically underinvested.âIn 2014, a Pew research Center study showed that a quarter of Black households would have less than $5 if they liquidated investments and retirement, compared to the $3,000 of a quarter of white households in the bottom of the income brackets. Over time, that wealth gap has grown even more vast - a recent study from Goldmanâs Sachs shows that Black families have a median net wealth of $66,000 compared to the $260,000 combined wealth of a white family.âOne of the things we're very proud of, is that our product we think benefits everyone. I do think here in Delaware the government officials at all levels are supportive of that message, and trying to support balanced growth,â Phillips said.Right now, the latest puzzle is what does work look like in the post-pandemic future for ICM, and how does it compete for a skilled workforce? The company hopes to hire coders and programmers as well as marketing, finance and managerial positions for an iconoclast workplace looking, in some cases, to change financial outcomes for marginalized populations.Phillips has already tried working in monolithic companies, and he knows thereâs thousands of people in Wilmington still doing that work. But heâs betting thereâs a small subsection of that workforce who already has the experience thatâs looking for something different.âItâs like the fallacy of saying everyone in the city loves pizza because every restaurant is a pizza place. We want to be a Chinese place - and who knows, maybe you wonât eat pizza every day.âhe said. âI would rather work in a place where I have more autonomy and youâre creating a unique product.â