Rocking the retirement game

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11 September 2015


  • Though the Betterment announcement contained more than a few audacious statements, I think it's interesting if the only thing it does is stir up competition and activity in the small plan space.

    A critical flaw in Betterment's pitch, and one that almost the entire money management industry gets wrong time after time is the underlying assumption that most plan participants want investment advice. The data shows that they don't.

    We have a fully integrated retirement planning/investment advice offering from Newkirk called AdvicePlus! (Our RK system passes participant, plan and account data to AdvicePlus and accepts transactions back from AdvicePlus.) Across our client base (750 plan sponsors, 185k participants, $12 Billion) about 20% of the Plans choose to offer the this service. Less than 10% of participants who have access to AdvicePlus actually use it in a given year.

    If Betterment thinks that investment advice is the thing most lacking in the small plan market, I think they have the bullseye in the wrong place.

    The small plan market needs robust, reliable RK, administration, compliance and participant service at a price they can afford. Will Betterment be happy to collect 60 bps on a startup plan with $150k of cash flow a year? Seems unlikely.