A new 401(k) plan is attempting to address some drawbacks to traditional plans by offering a transparent, lower cost plan. The Dream Forward 401(k) was created by a team of “innovators in technology, investment strategy, behavioral finance and legal/compliance.”
“The robo-advisors did great things for personal wealth management, but a lot of people are still in a 401(k) plan,” Grant Easterbrook, one of the founders of Dream Forward and a former analyst at Corporate Insight, said. “If you want to move the needle [on retirement outcomes], you need to go through 401(k) plans to reach people who would never take the time to [meet with] a financial advisor.”
In addition to common explanations for poor retirement outcomes, like people aren’t saving enough or they’re living too long, Easterbrook said a lot of it is that “people are forced to save using these expensive 401(k) plans.”
“We founded Dream Forward to create a low-cost, transparent, modern 401(k) service,” Easterbrook said.
The problem with 401(k)s is that they can be confusing for the average consumer. “People just don’t get it,” he said. “Sometimes it’s hard to step outside of our knowledge of finance and talk to people without a finance background and realize how little they get it.”
Dream Forward released a video to highlight that issue. In the video, people are asked — and unable to answer — simple questions about their retirement plan like what company administers it or what the fees are.