"You can encourage good behavior by making something enjoyable to use," he said. "That's the nub of what Betterment has done."
On the other hand, for a company in the market for a 401(k) plan and choosing between a giant and Betterment, there's an old saying that you can't get fired for hiring IBM. You may incur higher fees but you're getting decades of experience.
If Betterment for Business is a blip on the big money managers' radar for now, it could serve an important purpose for Betterment beyond its ambition to create a better all-around 401(k) plan experience. It could help the company acquire pools of customers at a much lower cost than in its regular robo business.
"The cost to acquire customers is incredibly high compared to what [a robo-adviser] can monetize on the back end," said Cloherty. Signing on 401(k) plans can provide the exponential growth investors demand from young tech companies. If the venture helps 401(k) savers achieve better results at the same time, it's a twofer.
This article was provided by Bloomberg News.