A new independent platform to transfer retirement assets called “Capitalize” aims to solve one of the biggest problems in the $17 trillion retirement savings market by helping Americans easily locate and transfer their legacy 401k accounts.
Capitalize, which says it is the first independent platform for this purpose, announced today that it has closed a $2 million seed round led by Bling Capital, an early-stage venture fund based in San Francisco. Additional investors include Greycroft, RRE Ventures and Walkabout Ventures.
A release announcing the launch says Capitalize “guides users through an intuitive, online process to offer a streamlined alternative to the historically complicated, manual process of rolling over retirement accounts—for free.”
The platform instantly locates former 401k accounts, matches users to individual retirement accounts at leading financial institutions, and initiates rollovers on their behalf. With over 15 million 401k account holders changing jobs each year and higher levels of financial insecurity resulting from the COVID pandemic, Capitalize says it will help ensure Americans avoid cashing out or losing track of their 401k savings.
“As fintech companies have digitized across various industries, we noticed a gap in the retirement savings market to improve how legacy accounts are transferred and managed,” said Gaurav Sharma, Co-Founder and CEO of Capitalize. “With Capitalize, we’re empowering Americans to digitally consolidate their 401k assets and make the most of their money as they move throughout their careers.”
Due to the lack of clarity on how to handle employer-sponsored accounts at the time of job change, many are not able to maximize their retirement benefits. Almost 5 million Americans cash out almost $100 billion of assets from their 401k accounts each year when changing jobs and millions more leave their assets behind for an extended period of time, the company says.
An additional 5 million Americans are estimated to have rolled over more than $500 billion of 401k assets into an IRA in 2019, with Capitalize saying they “endured a manual, complex process in order to do so.”
Capitalize says it accelerated the digital platform’s launch to help those affected by COVID-induced layoffs preserve their retirement savings. The “easy-to-use” platform, the company adds, also supports employers by helping them lower fees paid to administer their 401k plan, reduce exposure to potential ERISA lawsuits, and free up HR time otherwise spent communicating with former employees.
“We believe in Capitalize’s mission to make it easier for individuals to save for retirement,” said Ben Ling at Bling Capital. “Gaurav and the team have identified a significant opportunity in the market and created a platform that simplifies this complex process. We’re excited to partner with Capitalize to realize their vision.”
The new funding will allow Capitalize to build out its retirement rollover platform capabilities and hire additional team members focused in operations, product, and engineering. Over time, the Ney York-based fintech company says it intends to help its users manage all of their employer-sponsored and individual retirement accounts as they move throughout their career.
“Gaurav and the Capitalize team have streamlined an antiquated process to provide individuals with a modern-day retirement savings solution,” said Will Szczerbiak, Partner at Greycroft. “We’re excited to support Capitalize’s fintech initiative as they continue to provide resources for Americans to better manage their personal finances.”
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
