Why you should care
Because he could be the most generous banker around.
Looking at Andrei Cherny’s résumé, you’d think he was on the path to the presidency: a gifted White House speechwriter, a Navy veteran, a polished Harvard grad, a hard-nosed prosecutor and that one “Most Likely to Succeed” type of kid in high school who actually succeeded, dadgummit.
But no one likes a cliché, especially Cherny.
After two failed election bids — for Arizona state treasurer and U.S. House representative — the 40-year-old Cherny is now way out in left field as the high-minded hippie working against Wall Street. Sitting in his office in Marina del Rey, he’s mild-mannered but his talk is radical, his Don Draper-ish voice eerily gentle as he explains his plan to purge the world’s most powerful financial hub of “too big to fail” banks. Never mind that Sen. Elizabeth Warren couldn’t do it, or that Sen. Bernie Sanders looks close to defeat. Cherny’s online investment firm, Aspiration, has a simple strategy it says will do the trick: Give people a bank with a “conscience,” and let the market work from there.
To wit? Let customers pay what they want for money management, starting at $0. Yep, that’s like paying whatever you want for a restaurant dinner after you’ve eaten every last crumb, or a rock concert after you’ve danced your booty off. The financial tech startup will also donate 10 percent of its revenue to a charity of the customers’ choosing and boasts a minimum deposit of just $10 to open a checking account. Clearly, “we took a big bet on trust,” Cherny says — and on the little guy too. “People think we’re absolutely nuts.”
There is a method to the madness — or at least a potential market. Aspiration targets people who feel jilted by big financial institutions, and if the data is correct, there are a lot of them: Some 43 percent of Americans who have money saved don’t trust banks at all, according to a recent American Express report, while about 9.6 million Americans don’t have a bank account, the FDIC says. “If you don’t have a few hundred thousand dollars at a minimum, you’re off their radar screen,” Cherny says of the big financial institutions. Which sounded to Cherny not just a social justice problem but a business opportunity, one involving a latent middle class.
The pay-what-you-wish, pay-it-forward model “isn’t just rhetoric or words; it’s at the heart of how the company operates,” he says. And at the risk of sounding too Kumbaya, the “circle of trust” appears to be panning out beyond the $20 million Aspiration raised since it started in 2014. The company is managing about $40 million, and about 90 percent of its 25,000 customers choose to pay Aspiration rather than give nothing, Cherny says. The trust model, in fact, may make Aspiration cannier than other players in the no- or low-fee online banking space, like Betterment and Simple, because it requires customers to take a kind of collective responsibility for the endeavor. Says Ron Klain, one of Cherny’s longtime mentors and former chief of staff to Vice Presidents Joe Biden and Al Gore, “Andrei is the kind of person who brings people into his orbit and engage new people” who would otherwise be shut out.
Cherny’s own days of penny-pinching go back much further. The son of Czech exiles, Cherny grew up in an immigrant family where financial struggles were always “laying on us like a heavy blanket,” he says. At 8, he opened up his first savings account at a community bank around the corner. He wanted to be an astronomer, but was daunted by the amount of math involved. So, he kindled a love of numbers through finance instead and started learning about all those complicated financial instruments that only seasoned Wall Streeters seem to understand these days — compound interest rates, subprime loans and more. He also nailed down the art of persuasion with his flair for words as one of the youngest White House speechwriters for Al Gore, John Kerry and Bill Clinton. In 2000, he won a Soros Fellowship, a scholarship reserved for immigrants and children of immigrants, which eventually helped him earn a law degree at UC Berkeley.
If it’s surprising that a man who seemed fated for politics is now, in essence, a banker, Cherny sees a strong throughline: For 20 years, he says, he witnessed how low- to middle-class citizens were “preyed on” for financial gain — all the way from small-town Arizona, as the assistant attorney general, to the White House. As a financial fraud prosecutor, he manhandled the wolves of Wall Street (in Arizona) with a 100 percent conviction record, and eventually worked with Warren to set up the Consumer Financial Protection Bureau in the wake of the 2008 financial crisis.
In some ways, his is the quintessential rags to riches tale. So maybe Cherny’s a little bit of a cliché after all. But as former chief of staff Klain notes, if his track record is any proof — “It’d be wrong to bet against Andrei Cherny, ever.”