Like many, Andrew Evans noticed a problem affecting small(er) businesses while working at Lloyd’s Bank early last decade. Several clients needed a retirement plan, and he didn’t have a suitably-sized product to offer.
The U.K.’s Automatic Enrolment (Miscellaneous Amendments) Regulations 2012 provided much-needed help and opportunity. Implemented in 2012 and expanded over the next six years, all employers, however small, were required by the government to offer an opt-out retirement plan (or pension scheme) to their employees.
Yet the ability of legacy technology to cope with smaller companies, which are typically unprofitable and therefore uninteresting to plan providers, was a legitimate concern.
To fill the void, Evans partnered with eCommerce expert Will Wynne, and in 2014 the two founded Smart, a global savings and investment technology platform provider. Investors include J.P. Morgan and Natixis. High-profile target-date fund pioneer and 401(k) Specialist cover subject Anne Lester sits on its U.S subsidiary’s board.
Its mission is to transform retirement, savings, and financial well-being worldwide. Smart partners with financial institutions and advisors to deliver digital, customized, and cost-efficient retirement savings and income solutions.
“There was a government option called Nest, but then Smart was developed as a sort of private-sector option,” Catherine Reilly, Director of Retirement Solutions with Smart, explained. “The idea is to use technology to make something intuitive, very low cost, and very scalable. Will Wynne always described it as eCommerce for pensions, which I think is a beautiful concept.”
The firm’s master trust, the U.K. equivalent of a pooled employer plan, has grown to almost one million participants and $3 billion in assets on the platform since it launched in late 2015.
In fact, Smart Pension Master Trust onboarded 77,376 employers with one or more employees between 2016 and 2020. 49.17% of those employers have 10 or fewer employees. The company supports its clients with 650 employees globally, and it has seen over 2,000% growth in assets on its platform since 2018.
“Another interesting thing is Smart Retire, our retirement platform,” she added. “It’s like a record-keeping platform specifically for the post-retirement phase integrated into the employer plan with distribution and efficient spending strategies.”
British Invasion
While mentioning similarities to Vestwell and Betterment for Business, Reilly said Smart has a broader product offering and global reach, something the others currently do not.
“We already have clients in Dubai and Ireland that we’re running live platforms for,” she added. “We’re looking at the Australian market, and we established an office here in the United States in September 2021.”
Smart’s experience with the U.K. government’s auto-enrollment requirements gives it a distinct advantage in execution and administration, particularly with the rise of state-mandated plans.
California is rolling out the last stage of CalSavers this summer, and the firm is launching a product in partnership with Finhabits, a financial wellness provider designed for the Latino community, to act as a 401k alternative to the state plan.
Ultimately, Reilly concluded that the U.S. version will include both accumulation and decumulation options “that are modular and configurable to work with various partners—from advisors, recordkeepers, asset managers, insurers, and banks.”