Betterment for Business, the robo-advisor's new 401(k) platform, officially launches today with about 50 plan sponsors already signed up to use it, Betterment announced.
Retirement plan participants have been using the platform since late December, Cynthia Loh, general manager of the new platform, told ThinkAdvisor on Monday.
“We announced our product in September and spent the quarter building it out,” she said.
She added, “Without any formal sales effort, [we] were able to get the set of first 50 charter customers on board. We actually launched the platform with these customers with the first payroll in January. So participants actually got access to their 401(k)s with Betterment in late December.”
Betterment also announced Tom Clark and Ray Kanner as the first two members to the plan’s advisory board. Clark is of counsel at The Wagner Law Group, which specializes in the Employee Retirement Income Security Act and employee benefits. Kanner is head of IBM’s global pension and savings system, overseeing about $140 billion in assets.
Loh noted that for the time being, Betterment for Business is only working with advisors and firms that service more than 25 retirement plans.
Betterment first announced plans to get into the 401(k) space in September, with CEO and founder Jon Stein calling the new platform the “only full-stack, bundled 401(k) provider to launch in the last three decades.”
Rivals disagreed, with Eric Droblyen, president of Employee Fiduciary in Mobile, Alabama, saying his firm launched an RIA subsidiary of its recordkeeping business the prior year, Nick Thornton of BenefitsPro reported.
Others in the industry, like Barry Ritholtz of Ritholtz Wealth Management, said, “the 401(k) market is ripe for change,” adding that robo-advisors’ success in the 401(k) market will be based on how they manage ERISA’s complexities.
Betterment for Business allows participants to invest in a globally diversified portfolio of index-tracking ETFs. They can aggregate multiple accounts on the platform alongside their 401(k), according to the firm.
Fees are based on assets under management and range from 10 basis points to 60 bps. Sponsors with more than $1 million in assets have no upfront fee.
--- Read Rivals Question Betterment’s New 401(k) Platform on ThinkAdvisor.