401k tech luddites—listen up.
401k robo advisor Betterment for Business announced Thursday that 300 plan sponsors now use its service. Launched 10 months ago, the company notes that the 401(k) industry, “marked by high fees, conflicts of interest and subpar employee retirement outcomes, is ripe for disruption.”
Betterment caused a stir in September 2015 when it announced a plan to target the 401(k) plan market. It made good in January with the official launch of Betterment for Business.
Since its debut, the company claims “it’s received a groundswell of interest, particularly from mid-sized professional services firms like medical and dental practices, law firms and architecture firms, as well as technology companies. While the industries appear diverse, the common theme across customers is the emphasis placed on compelling benefits and a true desire to help employees save for retirement.”
The average size of plans that have signed on has increased 12 times in the last 10 months, it adds.
“Plan sponsors now understand that lowering fees is only the first step in helping participants reach their financial goals,” Cynthia Loh, General Manager of Betterment for Business, said in a statement. ”Participants can benefit from independent advice to reach their goals and the interest we’ve garnered in our service this year is only just the beginning. We look forward to converting more plans onto our platform in 2017.”
The Department of Labor’s new fiduciary regulation, which is slated to go into effect in April 2017, has led plan sponsors to reassess their 401(k) offerings and look to implement plans from independent providers offering unbiased advice.
Betterment notes that it’s a fiduciary and provides 401(k) participants with “independent advice that uses proprietary, smart technology to automate and help optimize asset allocation, aiming to provide greater value than traditional 401(k) plans and approaches.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
Our firm was told by Betterment that they were no longer implementing start up retirement plans. This was about a month ago and left us in a bind with two small business clients.