After launching at the beginning of this year, a robo-advised 401(k) service is celebrating the addition of its 200th client.
Betterment for Business, the 401(k) offshoot of New York-based robo-advisor Betterment, celebrated the milestone Thursday
“The 401(k) industry is an antiquated industry,” says Cynthia Loh, general manager of Betterment for Business. “We’re kind of shaking things up and doing things differently.”
In announcing its launch, Betterment pitched the 401(k) offering as a cost-effective solution for small businesses interested in offering retirement accounts to their employees.
Not surprisingly, small businesses and start-ups have been among the first to adopt the platform: Betterment’s new 401(k) clients include Greenhouse Software, a New York-based recruiting software provider, and MVP Anesthesia Associates, a Norwood, Mass.-based physician group.
Loh says the two companies are representative of the bulk of Betterment for Business’s sponsors.
“From an industry perspective, it’s been across the board,” Loh says. “From a size perspective, we’ve seen primarily small- to medium-size plans, with new plans being opened with up to $20 million in assets.”
In its first three months, Betterment for Business reports that 15 percent of its plans came from conversions from other 401(k) providers. Over the past three months, 40 percent of the new plans have been conversions, according to a spokesperson, with the largest plan being $15 million.
The platform offers participants access to Betterment’s ETF-based portfolios and personalized advice, carrying AUM fees between 10 and 60 basis points.
“We have a full host of financial companies using our plans, from venture capital and private equity type businesses to companies more on the financial services side of the business,” Loh says. “Interestingly enough, we’re also starting to work with financial advisors.”