For many businesses, particularly those in the small- to medium-sized space, setting up a retirement plan for their employees is a complex, cumbersome and expensive process, even if it’s a necessary one.
“When an advisor comes in [to a company] to talk about a retirement plan, it’s usually a brown bag lunch scenario, where the advisor tells the company ‘here’s everything you can do but I can’t tell you what to do,” said Aaron Schumm, CEO of Vestwell, a new platform that helps advisors evolve their business to suit the changing world of retirement plan investing. “That can be intimidating and confusing, and more importantly, can prove to be a costly process for a business.”
For the financial advisors themselves, setting a company up with a retirement plan is not an easy proposition and can turn out to be both expensive and tedious. More often than not, advisors need to leave their firm’s “ecosystem,” Schumm said, to seek out and work with third-party custodians, recordkeepers, asset managers and other vendors providing different services. Then they need to keep tabs on all those moving parts. It’s often the case that a company’s employees end up bearing the brunt of administrative hurdles and feeling the pinch of the expenses incurred in setting up a plan.
Minimizing that aspect, while making it easier for employees of a company to save for their retirement, was a guiding principle for Schumm when he launched Vestwell in 2015 as a digital, one-stop, white-labeled 401(k) and retirement plan platform.
“Because we’re taking care of the headaches that come with setting up a retirement plan – the cost, the fiduciary aspect, the investment side – it means that employees can ultimately save more,” he said. “By becoming the only interface that an advisor or plan sponsor needs to design a plan, implement it and invest that plan on [employees] behalf, we’re saving everyone a lot of time, expense and headache.”
Schumm co-founded comprehensive wealth management platform FolioDynamix before selling the company to Actua in 2014. He felt that the same kind of seamless tech offering was necessary to make it easier for all parties – advisors, companies, recordkeepers, asset managers – to operate in the retirement plan space.
How it Works
In addition to giving advisors a turnkey solution that allows them to offer their clients a regulation-compliant retirement plan without taking on the risk and costs typically associated with creating one, Vestwell’s digital platform allows for seamless plan design, automated onboarding and low-cost investment strategies.