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Retirement Planning > Retirement Investing

Betterment Signs Up 300-Plus Retirement Plan Clients in 2016

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Robo-advisory firm Betterment says its service for retirement plans has amassed more than 300 clients this year. Among Betterment for Business’ client list are mattress-maker Casper and Trello, an online project management application.

Betterment, an independent robo-advisor with some $6 billion in assets and 200,000-plus individual clients, relies on ETF portfolios. It says that the retirement industry is “marked by high fees, conflicts of interest and subpar employee retirement outcomes,” making it “ripe for disruption,” especially in light of the Department of Labor’s new fiduciary rule, set to go into effect in April.

“Plan sponsors now understand that lowering fees is only the first step in helping participants reach their financial goals,” said Cynthia Loh, general manager of Betterment for Business, in a statement. “Participants can benefit from independent advice to help reach their goals, and the interest we’ve garnered in our service this year is only just the beginning.”

The company, which also has a platform for advisors, says midsize professional services firms — including medical and dental practices, law firms, architecture firms and technology companies — are attracted to its retirement-plan offering.

In August, Betterment said it had struck a deal with Uber to give some of its 300,000 drivers one year of free service on its investment platform, saving them 15 to 35 basis points – depending on balances – and allowing them to set up a Betterment IRA or Roth IRA account through their driver app.

The robo-advisor also says the average size of plans signing onto its retirement-plan service has jumped “12 times in the last 10 months.”

The anticipated DOL rule “has led plan sponsors to reassess their 401(k) offerings and look to implement plans from independent providers offering unbiased advice,” according to Betterment.

Clients such as Casper say its clients “deserve the best night’s sleep [and] our employees deserve the best benefits. That’s why we chose Betterment for Business, the 401(k) platform for sleeping well at night,” explained Jason Costi, vice president of finance at Casper, in a statement.

Trello’s head of operations and general counsel, Brian Schmidt, says the firm’s retirement plan conversion “required significant experience and industry expertise, and Betterment for Business made the process seamless.” In addition, the service offered it “a top-quality onboarding experience, incredible customer service, and made something that is typically complicated and taxing enjoyable and easy.”

Earlier this year, Massachusetts securities regulators asked the New York-based firm to amend its communication practices so that all clients — institutional, retirement or retail — receive equal treatment. The move came after Betterment delayed the start of trading on June 24 following the surprise “yes” vote by U.K. citizens favoring a U.K. exit from the European Union.

Betterment’s letter to the state indicated that “while Betterment did not notify any of its clients” about the trading halt, “Betterment Institutional sent notifications to the 252 advisory firms … on its institutional platform.”


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