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Vestwell to Add Multi-Manager Target Date Model Portfolios from Morningstar Investment Management

New offering will give advisors diversified strategies to help support the needs of plan sponsors

portfolios

NEW YORK, NY, April 16, 2019Vestwell, a digital retirement platform, announced today the upcoming launch of a service combining 3(38) fiduciary line-up services with target date model portfolios from Morningstar Investment Management LLC, a provider of discretionary investment management and advisory services. This series of target date model portfolios, built from one of the line-ups created by Morningstar Investment Management, will give Vestwell advisors exclusive access to a new set of target-date strategies.

The service will offer active-passive blended models free of any revenue sharing or referral fees. In addition, the diverse, multi-manager line-up will give advisors access to funds from Lord Abbett, State Street, OppenheimerFunds, Cohen & Steers, and Franklin Templeton Investments. These model portfolios, coupled with Morningstar Investment Management’s fiduciary support, will be delivered through Vestwell’s modernized retirement platform.

“When looking to expand the asset management strategies on our platform, we sought out an investment firm with core capabilities in asset allocation, investment selection, and portfolio construction,” said Aaron Schumm, Founder and CEO, Vestwell. “Fortunately, we did not have to look far, and we’re thrilled to have Morningstar Investment Management’s line-up fully integrated into the Vestwell platform.”

Vestwell’s proprietary recordkeeping and model management technology offers a highly flexible open-architecture construct, making for a simple integration that helps both parties more effectively support their client’s diversified needs. Advisors, in turn, can efficiently scale their retirement practices through advanced technology and sophisticated offerings.

“Vestwell’s offering provides advisors with a modern, streamlined approach to retirement services,” said Brock Johnson, President, Global Retirement and Workplace Solutions, Morningstar Investment Management. “We’re pleased to support Vestwell’s commitment to providing advisors with the retirement technology tools, investment offerings, and fiduciary support they need to assist plan sponsors.”

For more information on the service, please visit www.vestwell.com/news.

About Vestwell Holdings, Inc.

Vestwell is a digital platform that makes it easier to offer and administer 401(k) plans. Vestwell removes traditional friction points through a seamless plan design, automated onboarding, streamlined administration, and flexible investment strategies, all at competitive pricing. By acting as a single point of contact, Vestwell has modernized the retirement offering while keeping the plan sponsor’s and plan participant’s best interests in mind. Learn more at Vestwell.com and on Twitter @Vestwell.

About Morningstar’s Investment Management group 

Morningstar’s Investment Management group is a leading provider of discretionary investment management and advisory services. Guided by seven investment principles, the group is committed to focusing on its mission to design portfolios that help investors reach their financial goals. The group’s global investment management team works as one to apply its disciplined investment process to all strategies and portfolios, bringing together core capabilities in asset allocation, investment selection, and portfolio construction. This robust process integrates proprietary research and leading investment techniques. In addition to advisory services, the group’s investment professionals build and manage model portfolios for financial advisors in the United States, United Kingdom, Australia and South Africa to create strategies that incorporate a wide variety of investment objectives. Morningstar’s Investment Management group includes subsidiaries of Morningstar, Inc. that are authorized in the appropriate jurisdiction to provide advisory services.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $193 billion in assets under advisement and management as of Dec. 31, 2018. The company has operations in 27 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

 

Media Contacts:

Jessica Torchia

917-636-4804

Jessica.Torchia@ficommpartners.com

 

New York-Based Digital Retirement Platform Company Vestwell Raises $30 Million

New York-Based

New York-based digital retirement platform company Vestwell announced it raised $30 million in Series B funding. Goldman Sachs Principal Strategic Investments (PSI) led this round of funding as it worked closely with Goldman Sachs’ Consumer and Investment Management Division (CIMD). Point72 Ventures also participated in this round along with the venture capital arm of Nationwide, Allianz Life Ventures, BNY Mellon, and Franklin Templeton.

This round also included participation from Series A and Series Seed investors including F-Prime Capital, FinTech Collective, Primary Venture Partners, and Commerce Ventures.

“I feel Vestwell’s momentum on a daily basis, so it’s incredibly humbling to have so many of the industry’s leading players see the value in what we’re building and share our vision of what lies ahead,” said Vestwell founder and CEO Aaron Schumm. “We’re elated to align ourselves with retirement industry experts who are not only investing capital into Vestwell, but who are also investing time and resources into ensuring our success.”

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It’s the team, stupid: Vestwell’s new $30 Million the result of constant leveling up

$30 million

Vestwell, the digital retirement platform we funded in 2016, has had a big 2019. In January we shared the news of their BNY Mellon partnership. Today marks an even more significant milestone, as the company announced it raised $30 million in Series B financing led by Goldman Sachs. Goldman was joined in the round by fin-tech experts Point 72 and several strategic financial services players like BNY Mellon. Primary was also excited to join the party and increase our stake in this exciting company, which has seen 10x client growth in the last 12 months.

Raising a big financing is by no means an endpoint, however. Vestwell CEO and Founder Aaron Schumm and his team still have the hard work of building a business of enduring scale to come. But when we see a company get this far, it means a lot has been done right, and we think it worthy to pause and reflect on we’ve learned along the way. At Vestwell, that’s almost all about effective team and organizational capacity building.

When I look at Aaron’s success at driving a fast growing company in the three years since we first invested, I would say that while his incredible depth of industry knowledge and relationships is the easy answer to a question of the secrets to his success, his early epiphany about the importance of a relentless focus on leveling up his org has been as critical as anything.

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Why We’re Investors in Vestwell

investors

I met Vestwell CEO Aaron Schumm in early 2016, after an intro from an industry friend and colleague, Ben Malka. A long-time investment tech veteran, Aaron founded Vestwell to use modern investment technologies (like the tech he designed at FolioDynamix) to bring a low cost, easy-to-use retirement platform to the large and underserved SMB employer market.

So we joined fellow seed investors FinTech Collective (who led), F-Prime(Fidelity owners’ VC fund) and Primary Ventures to help Aaron build and launch their platform to early customers. Over the past four years, we’ve seen Vestwell zig and zag (as all early stage startups do), but always moving the company closer to that realizing the same mission of serving the vacant SMB retirement market.

Today, Vestwell announced its Series B round, led by Goldman Sachs and including investments from Point72 Ventures, existing investors (like us) and a number of leading, highly-strategic investors, such as NationwideAllianzBNY Mellon and Franklin Templeton. The company is now enabling hundreds of advisors to serve thousands of small businesses, representing $100s of millions of retirement assets…but that is really just the beginning of the story. Large advisory channel partners are deciding to switch their entire SMB book of business over to Vestwell’s platform — it’s just that much better.

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Goldman Sachs Backs Retirement Technology Platform Vestwell

Goldman Sachs

NEW YORK (Reuters) – Vestwell Holdings Inc, a tech platform for retirement plans, said on Tuesday it raised $30 million from Goldman Sachs Group Inc, Point72 Ventures and the Bank of New York Mellon Corp.

Franklin Resources Inc, Allianz Life Ventures and the venture capital arm of Nationwide Mutual Insurance Company also invested in the fundraising, which was led by Goldman Sachs’ principal strategic investments group, the companies said.

New York City-based Vestwell plans to use the funding to hire engineers and developers to expand its technology and customer service offering, said Aaron Schumm, chief executive and founder of the startup. The firm expects to add around 30 employees, bringing its workforce to nearly 80.

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Led By Goldman Sachs, Vestwell Raises $30 Million

Led By Goldman Sachs, Vestwell Raises 30 Million Dollars

Vestwell, purveyors of an increasingly popular digital retirement platform, announced a $30 million funding round Tuesday. The round was led by Goldman Sachs Principal Strategic Investments (PSI). Other funding participants in the Series B funding round included companies like BNY Mellon, which announced a partnership with the firm in late 2018 to add firepower for the bank’s foray into state-sponsored retirement plans, and Fidelity’s F-Prime Capital. Vestwell said it moved up its timetable for the funding round by about a year after receiving funding inquiries on the heels of the BNY Mellon deal.

This deal, however, is separate from the BNY Mellon partnership, noted Vestwell founder and CEO Aaron Schumm. Up to two-thirds of the capital will be earmarked for accelerating technology and product builds, including some that were already in development, like advisor-focused reporting and analysis and efforts to streamline plan sponsor onboarding.

The company’s client service offerings will also be expanded to handle the organic and strategic growth Vestwell is experiencing. Between 20 and 30 advisory firms come to Vestwell per month, said Schumm, of which “most” are conversions of existing clients. As the company scales, it’s exploring integrating chatbots with its customer support to allow its staff to field more inquiries. Vestwell’s client list has grown 10-fold, according to company figures.

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Vestwell Continues to Redefine Retirement, Announcing a $30 million Series B to Fuel Growth

 

Series B

New York, NY – Tuesday, April 2 — Vestwell, a digital retirement platform, announced that it raised $30 million in Series B financing. Goldman Sachs Principal Strategic Investments (PSI) led the round, working closely with Goldman Sachs’ Consumer and Investment Management Division (CIMD), joined by Point72 Ventures and a host of other strategic retirement-focused financial services providers including the venture capital arm of Nationwide, Allianz Life Ventures, BNY Mellon, and Franklin Templeton. The round also included participation from Series A and Series Seed investors, F-Prime Capital, FinTech Collective, Primary Venture Partners, and Commerce Ventures.

Vestwell is the first digital retirement platform built for the financial advisor, helping scale plan sponsor and participant relationships to a new level. With its innovative technology, streamlined administration, fiduciary oversight, and modern interface, Vestwell has reimagined the 401(k) and 403(b) industry for the better. This new financing will propel Vestwell even further, while resetting the bar for how open-architecture in retirement plans can be provided to companies of any size in an affordable and modern way. This includes significant investments in technology and client service, two areas where Vestwell continues to pioneer.

“We were drawn to Vestwell because it has developed a modern and intuitive interface that empowers advisors to more efficiently manage customized retirement plans,” said Timothy J. O’Neill and Eric S. Lane, co-heads of Goldman Sachs’ CIMD.

In just these past 12-months, Vestwell’s client growth increased tenfold and the company has implemented strategic alliances with BNY Mellon, Allianz, Namely, Dimensional Fund Advisors, OnPay and Riskalyze, among others soon to be announced. Retirement-centric advisory companies and incumbents are quickly turning to Vestwell to be the engine behind their retirement books of business, valuing cutting edge technology such as Vestwell’s patent-pending real-time payroll engine and advanced employee eligibility calculator.

“I feel Vestwell’s momentum on a daily basis, so it’s incredibly humbling to have so many of the industry’s leading players see the value in what we’re building and share our vision of what lies ahead,” says Aaron Schumm, founder and CEO of Vestwell. “We’re elated to align ourselves with retirement industry experts who are not only investing capital into Vestwell, but who are also investing time and resources into ensuring our success.”

“The market impact we’ve seen from Vestwell in the two short years since leading the seed investment in them is remarkable,” says Brooks Gibbins, Co-Founder and Managing Partner of FinTech Collective. “Participants, employers, and channel partners have all validated Vestwell’s approach, and we’re thrilled to continue supporting industry change alongside them.”

ABOUT VESTWELL HOLDINGS, INC.

Vestwell is a digital platform that makes it easier to offer and administer retirement plans. Vestwell removes traditional friction points through flexible investment strategies, fiduciary oversight, and streamlined administration, all at competitive pricing. By acting as a single point of contact, Vestwell has modernized the retirement offering while keeping the advisor’s, employer’s, and plan participant’s best interests in mind. Learn more at Vestwell.com and on Twitter @Vestwell.

 

Media please contact:

Jessica Torchia

FiComm Partners

908-872-7319

Jessica.torchia@ficommpartners.com

Participants Report Being Knowledgeable About Retirement Plans

participants

Nearly eight out of 10 participants, 76.7%, in 401(k) or 403(b) plans are saving more than 4%, according to a survey by Vestwell, summarized in its report, “The Retirement Advantage.”

Additionally, 59.5% say they are comfortable with their knowledge about their retirement plan, and 64.7% know they need to save 10% of their salary or more for a comfortable retirement. More than two-thirds, 67.3%, said they know where to find their retirement plan fees. Just over six out of 10, 61.6%, said they engage with their retirement plan. Only 33.5% said they wish they understood more about retirement planning.

However, only 25.7% of those between the ages of 25 and 34 are saving more than 10%, and 44.2% of those between the ages of 55 and 64 are saving this much.

Simple participant education ideas can make a great impact, according to Vestwell; after hearing one Investopedia statistic about the benefit of saving early, 21.7% of respondents said they plan to increase their retirement plan contribution. Another 26.4 said it made them rethink their deferral rate but could not afford to increase it.

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What Does Being a “Fiduciary” Mean, Exactly?

fiduciary insights
Any individual or organization that exercises discretion regarding their plan or any plan assets is a fiduciary, which is one of the highest standards in the law. So what does this mean in practice?

OVERSEEING SERVICE PROVIDERS

While plan sponsors can delegate many responsibilities of managing a retirement plan to service providers such as recordkeepers, investment advisors, and others, a plan sponsor cannot completely wash their hands of all fiduciary duty. A plan sponsor must carefully select and monitor their service providers, and is ultimately liable for ensuring the providers are doing right by their employees.

ACTING IN EMPLOYEES’ BEST INTERESTS

A fiduciary must exercise a duty of loyalty by operating the plan in the best interests of participants. After all, the plan sponsor is caring for their employees’ retirement assets. Proceed with caution when considering hiring plan providers that also do work for the company or individual owners. The plan sponsor should not receive any kind of compensation or anything of value from operating the plan. Consider the “smell test.”

SELECTING APPROPRIATE INVESTMENT OPTIONS

Plan sponsors should make sure that participants are offered a diversified set of investment options at reasonable cost, though that doesn’t mean they need to have the lowest fees. However, selecting  the initial plan lineup is not a “set it and forget it” exercise. Sponsors should continue to monitor the investment options available to participants to ensure they are offered investment options that will balance their risk and help meet their retirement goals.

FOLLOWING THE PLAN DOCUMENT

Plan sponsors must operate the plan in accordance with the terms of the plan document. Disconnects are common and usually arise in connection with administering loans, using the wrong definition of “compensation” for purposes of calculating benefits, and with submitting late remittances. Failure to comply can  become an issue, but fortunately, corrective actions are well spelled out by regulators and easy to fix.

MAINTAINING RECORDS

The best protection of all is for plan sponsors to know their plan documents, know what their service providers are doing to support the plan, and make careful decisions – and document them – about all activities relating to the plan. Have on hand all documents that show the plan sponsor’s decision-making process and actions  taken for the benefit of participants as well as how decisions are implemented consistent with terms of the plan. Keep all of those records permanently.

PROTECTING AGAINST LOSSES

Fiduciaries must have an ERISA bond and should consider obtaining fiduciary insurance to cover any losses to the plan caused by a fiduciary breach.

The rules are complicated and the waters are muddied. But there are many resources available to you for more education about your fiduciary duties. Vestwell and Goodwin Procter offer regular webinars on this topic, and we also recommend free programs offered by the Department of Labor.