Wealthtech CookBook – Retirement Software Overview

Retirement Software


By Vasyl Soloshchuk, CEO and Co-Owner at INSART

Our series of WealthTech Cookbook articles explores various wealth-management components, explaining the importance of each.

Retirement planning and investment guidance is one of the most required aspects of wealth management. According to research by CB Insights, a massive demographic shift in this area can be expected. In 2016 there were 19 million retirees, which equates to 71 retirees per financial advisor. Assuming 10,000 new retirees per day, in 2025 there will be 51 million retirees, which is 163 retirees per financial advisor.

However, the beneficial 401(k) plan is underused. Only 550,000 plans hold 401(k) assets, meaning that just 41% of workers contribute to this retirement vehicle. And half of small & mid-sized businesses do not a plan at all.

To defuse the so-called “retirement crisis,” wealth-management technology companies are offering digital retirement advice. Lower fees and better user experience are inspiring more and more employees to invest in their retirement. Compared to 2007, the size of assets in 401(k) plans has grown from 2% to nearly 20% of total retirement savings.

In today’s article, we will provide an overview of offerings in the digital retirement advisory market in terms of services offered and pricing.

We consider the following companies:

  • Business-to-Business (B2B) (direct to plan sponsor):
    • ForUsAll
    • Guideline
    • Human Interest
    • Ubiquity Retirement + Savings
  • Business-to-Consumer (B2C) (direct to participant):
    • Blooom
    • FutureAdvisor
    • Financial Engines
    • FeeX
  • Advisor-led (B2B2C):
    • Vestwell
  • B2B/B2C:
    • Empower Retirement

Blooom

Blooom is a B2C robo-advisor that was founded by several financial advisors who wanted to use a narrow focus to help American citizens with workplace retirement accounts (e.g., 401(k) plans). Blooom offers a free analysis of the client’s current retirement plan, including hidden fees, investment optimization, and management of the plan.

Blooom
Blooom 401k

Features: Blooom offers the following services:

  • Investment selection. The company researches every fund in the retirement account and creates an optimal portfolio depending on the customer’s age and financial situation.
  • Reducing hidden fees. The company examines hidden fees in the retirement plan and moves it to the lowest cost available. In addition, it eliminates excessive fees connected with conflicts of interest in financial institutions.
  • Suspicious activity alerts. The company monitors the client’s account to prevent large withdrawals or suspicious activity. In case of such events, the customer is alerted via text message or email.
  • Rebalancing. The company regularly rebalances the portfolio to offer the best mix of investments based on the funds available and current retirement goals.
  • Market guidance and communication. The company enables clients to speak with financial advisors via live chat or email.

Basic pricing: $10 per month for management and monitoring of a single retirement account; $7.50 per month for each additional retirement account.

ForUsAll

ForUsAll is a B2B company that provides 401(k) advisory services for small and medium-sized businesses. The company takes on both investment and administration responsibilities.

ForUsAll ForUsAll 401k

Features: ForUsAll offers the following services:

  • Retirement advisory. The company finds the right record keeper and investments, constructs a smart plan design, handles ERISA compliance and fiduciary responsibilities, and drives participant success with a technology-driven education and engagement strategy.
  • Automatic administration. The company plugs its cloud-based software into the client’s existing HR software, connecting their payroll with their 401(k). As the client’s business grows, the software will scale the 401(k) safely.
  • Managing investments. The company’s investment approach consists of three main principles: avoid unnecessary fees, avoid unnecessary risk, and conduct a thorough fiduciary review.

Basic pricing: The advisory fee depends on the size of the plan, varying from 0.20% to 0.35%. If the plan’s assets are less than $250,000 there is an additional “employer’s fee” of $200 per month.

FutureAdvisor

FutureAdvisor is a B2C investment advisory firm. It was founded in 2010 by two friends, Bo Lu, CEO, and Jon Xu, CTO, who realized that good financial advice is easy to apply at scale when powered by technology.

FutureAdvisor FutureAdvisor 401k

Features: FutureAdvisor offers retirement planning and investment advising, which includes the following:

  • Investment planning. The company has created a powerful recommendations algorithm that creates an investment plan for all customer accounts that is tailored to their age, risk tolerance, portfolio size and holdings, time to retirement, etc.
  • Managing and monitoring investments. The company serves as a portfolio manager, monitoring customers’ investments daily and taking strategic action when markets shift to help customers reach their long-term goals.

Basic pricing: Retirement advice is provided free of charge, though asset management costs 0.5% annually.

Guideline

Guideline is a B2B financial technology firm whose 401(k) platform automates plan administration and compliance. Its all-inclusive retirement plan is used by nearly 4,000 small businesses. Guideline is the first-ever robo-advisor serving the group retirement plan market to complete CEFEX’s independent certification process.

Guideline Guideline 401k

Features: Guideline provides the following services:

  • For employers, the company offers a fully automated maintenance-free 401(k) plan that includes seamless integration with the payroll provider, along with administration, record keeping, reporting, investment management, and employee education.
  • For employees, the company helps clients to easily enroll and understand their investment options, choose a recommended investment portfolio or create a custom portfolio, and access investment fund data and plan information.

Basic pricing: Employers pay a one-time $500 setup fee and $8 per participating employee per month (with a $40 monthly minimum). Employees pay no fee, though Guideline portfolios have a blended expense ratio of 0.06% (6 bps).

Vestwell

Vestwell is a B2B2C technology company that offers a 401(k) and 403(b) platform for financial advisors and businesses.

Vestwell

Features: Vestwell offers the following:

  • For financial advisors, the company provides a simpler way for advisors to scale their retirement business with a white labeled, plug and play solution.  Advisors can create proposals in minutes, use off the shelf or custom models, and offload fiduciary responsibilities to Vestwell who also handles rebalancing and behind-the-scenes operations. The Vestwell platform is fully white-labeled.
  • For employers, Vestwell combines technology with human advice to facilitate the creation and running of a retirement plan. The platform offers employers streamlined administration, fiduciary oversight, flexible investment options, custom plan designs, and transparent pricing.

Basic pricing: Vestwell charges a management fee ranging from 0.16% to 0.60% of the client’s total net assets under management.

For more information, read the research on Vestwell provided by WealthTech Club.

Financial Engines

Financial Engines is a B2B/B2C company founded in 1996. The company has launched an online advice platform intended to transform the way people plan, save, and invest for retirement, regardless of their wealth or expertise.

Financial Engines

Features: Financial Engines offers the following:

  • Financial planning based on unique goals.
  • Investment management of 401(k) plans, IRAs, and taxable accounts.

Basic pricing: Financial Engines charges the following fees:

  • $25 per plan per year for online advice.
  • up to 0.75% of AUM quarterly for professional management of IRAs.
  • up to 120 bps on AUM for its Personal Advisor service (with a minimum annual fee of $900).

Empower Retirement

Empower Retirement is a B2B/B2C retirement services provider formed in 2009. The corporation focuses on helping people achieve financial independence, and offers clients investment advisory, financial planning, and consulting services.

Empower Retirement

Features: Empower Retirement provides the following services:

  • For individuals, retirement services to find the best options and strategies.
  • For employers, a better retirement experience for employees.
  • For financial professionals, financial software tools and guidance, relationship management, training, plan administration, etc.

Basic pricing: Empower Retirement charges from 0.35% to 1.0% of AUM for advisory services.

Human Interest

Human Interest (formerly Captain401) is a B2B company whose platform enables small businesses to set up 401(k) plans to their employees.

Human Interest

Features: Human Interest offers the following services:

  • Automated administration, including creating employee accounts and processing contributions.
  • Investment advising, i.e. helping employees to understand how much to contribute and how to allocate their assets.

Basic pricing: Human Interest charges the following fees:

  • Employers pay a base price of $120 per month and $4 per employee per month.
  • Employees pay 0.50% of their account balance per year.

FeeX

FeeX is a B2C software company founded in 2012 with a focus on bringing transparency to retirement accounts. FeeX has developed technology to capture, normalize, analyze and compare various financial products, including 401(k), 403(b), 401(a), 457, PSP, and IRA plans.

FeeX

Features: FeeX provides automated and personalized in-depth analysis for retirement accounts, scans accounts for hidden fees, and offers advice on how fees can be reduced or even eliminated.

Basic pricing: FeeX does not charge system users; instead, it has referral arrangements with financial service providers who compensate FeeX for referring users.

Ubiquity Retirement + Savings

Ubiquity Retirement + Savings is one of the first flat-fee-for-service, small-business plan providers. Founded in 1999, the company introduces savings plans such as 401(k) and HSAs and helps small companies and employees save for a more financially secure and healthy future.

Ubiquity Retirement + Savings

Features: Ubiquity Retirement + Savings helps small and startup firms and their employees benefit from tax-deferred retirement savings. The offering includes Safe Harbor plans, Pre-tax and Roth contributions, and customizable options for incentivizing key employees.

Basic pricing: The company offers the following pricing options:

  • $215 per year for employers with no full-time employees other than the business owner and spouse.
  • $115 per month for small businesses and startups looking for simplicity, low fees, and tax savings.
  • $165 per month for businesses owners who want to maximize their tax savings at lowest possible fees.
Bottom Line

When choosing a digital retirement service provider, several aspects are worth considering in addition to services and cost. These include projections modeling, the level of investor interactivity, and the ability to make changes to the plan and goals. Moreover, users of a retirement software platform may need technical support, so it helps if the technical support team has financial expertise as well to being able to help users with their issues.


Vasyl Soloshchuk, CEO and co-owner at INSART, FinTech & Java engineering company. Vasyl is also author of the WealthTech Club blog, which conducts research into Fortune and Startup Robo-advisor and Wealth Management companies in terms of the technology ecosystem.