Subscribe to our mailing list

As an advisor, it's important to stay on top of industry changes that affect you and your clients. Subscribe to our monthly newsletter for noteworthy articles, simplified guides, and practical tips on how to grow your business.

Vestwell Appoints Two Financial Industry Leaders to its Board of Directors

Rana Yared, Principal Strategic Investments, Goldman Sachs

Lori Hardwick, CEO Wealth Tech, RedRock Strategic Partners

Goldman Sachs’ Rana Yared and industry veteran Lori Hardwick join the board following Vestwell’s $30 million Series B

New York – July 2, 2019 – Vestwell, a digital retirement platform, announced the appointment of two new members to the company’s Board of Directors, Rana Yared, Partner and Managing Director of Goldman Sachs, and Lori Hardwick, CEO of Wealth Tech at RedRock Strategic Partners and Chairman of Riskalyze. The two executives join Vestwell’s board on the back of the company’s recent $30 million Series B funding round, which will be used to fuel innovation and scale the company’s retirement technology platform.

“We’re very excited to have Rana and Lori join our Board to lend their expertise in financial services and technology and help guide our next phase of growth,” said Aaron Schumm, Co-Founder and CEO of Vestwell. “Rana is a clear visionary with deep insight into how fintech companies can successfully navigate and disrupt traditional financial services, while Lori is a renowned and dynamic industry executive with decades of experience leveraging technologies to scale platform businesses at pivotal junctures. Their contributions will certainly help make our future vision a reality.”

“I was drawn to Vestwell because it has developed a modern and intuitive interface that empowers advisors to more efficiently manage customized retirement plans,” said Yared. “I’m looking forward to working alongside the team to continue reimagining retirement through technology.”

Rana Yared joins the Board of Directors as a representative from Goldman Sachs, which led Vestwell’s Series B funding round in April 2019. At Goldman, Yared plays a leading role in the company’s financial technology investment arm and helps lead the commercialization of the bank’s technologies. She was recently named one of Goldman Sachs’ “Most Powerful Women” and has been recognized by Fortune’s 40 Under 40 list.

“Vestwell is filling an important gap that has prevented so many retirement advisors from not only scaling their businesses, but also improving their client experience,” said Hardwick. “I’m thrilled to join the board to help fuel a much needed transformation in how retirement plans are administered, managed, and experienced by all stakeholders.”

Lori Hardwick is a renowned industry veteran, with specific expertise in investment, technology, and advisory solutions. In addition to her current position, Hardwick serves as a member of the Board of Directors for AI Labs, a company she co-founded in 2017. Previously, she was one of the original partners at Envestnet, as well as Chief Operating Officer of Pershing. Hardwick has been named to the “Women to Watch” list by InvestmentNews, listed as one of the “50 Most Influential Women in Private Wealth” by Private Asset Management magazine, and included in Investment Advisor’s 25 list, among other accolades.

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 Contact

Brooke Flohr

914-715-3247

brooke@bevelpr.com

How Small Businesses Benefit from the SECURE Act

 

computer pen papers mac apple office file shift keyboard laptop

By Allison Brecher, General Counsel, Vestwell

Congress is close to passing legislation that will be a big win for small business owners thinking of offering retirement plans to their employees. The Setting Every Community Up for Retirement Enhancement (SECURE) Act has a number of provisions centered around improving the nation’s retirement system, but small businesses in particular stand to benefit in many ways. Most notably, the Act would:

  • Increase the business tax credit for plan startup costs to make setting up retirement plans more affordable for small businesses. The tax credit would increase from the current cap of $500 to up to $5,000 in certain circumstances.
  • Encourage small-business owners to adopt automatic enrollment by providing an additional $500 tax credit for three years for plans that add auto enrollment of new employees.
  • Simplify rules and notice requirements related to qualified nonelective contributions in safe harbor 401(k) plans, a particularly common plan design amongst small businesses because the plan automatically passes certain compliance tests.
  • Offer a consolidated Form 5500 for certain defined contribution plans to reduce costs.

Additionally, the SECURE Act allows unrelated small businesses to get together in an “open” 401(k) multiple employer plan (MEP), which could also reduce costs and administrative responsibilities. Currently, only so-called “closed” MEPs are permissible, which require employers participating in it to have some kind of connection between them, such as membership in the same industry or an established trade association, and each business bears liability in the event any employer in the plan fails to comply with legal or regulatory requirements.  “Open” MEPs eliminate those rules.

The SECURE Act would also increase plan flexibility, which is a big benefit for small plan sponsors. First off, it would permit employers to add a safe harbor feature to their existing 401(k) plans even after the plan year has started as long as they make at least a 4% of pay contribution to employees, instead of the regular 3%. Second, it would extend the period of time for companies to adopt new plans beyond the end of the year to the due date for filing the company tax return.

There are other benefits that focus on helping employees save more for retirement. For example, it’s been proven that automatic enrollment and automatic escalation features encourage long-term savings, and the SECURE Act permits safe harbor 401(k) plans to increase the auto enrollment cap from 10% to 15% of an employee’s paycheck.  And since employees are working and living longer, the bill also benefits older workers by letting them continue to contribute to their plan until age 72, up from the current age of 70 ½. Lastly, it would provide penalty-free withdrawals from retirement plans of up to $5,000 within a year of the birth or adoption of a child to cover associated expenses.

The SECURE Act’s companion bill, the Retirement Enhancement Savings Act (RESA), is now moving forward through the Senate. RESA includes many of these same beneficial provisions and also has bi-partisan support. Many industry experts expect a compromise version of the two bills to become law before the end of 2019, making it the perfect time for small businesses to take action. If an employer wants to offer a safe harbor plan, plan documents need to be signed by late summer. This way, they’ll meet the October deadline for distributing legally required notices, be able to go January, and take advantage of the full tax benefits for the year.

Featured Webinars

Upcoming WEBINAR: It’s all about the people: Helping your employees effectively engage with their 401(k)s
Tuesday, July 16, 1-2 pm ET

A driving force behind offering a 401(k) is to position your employees for retirement readiness. But no one ever claimed that understanding the retirement plan market was easy or straightforward. As plan sponsor, how can you best support your employees to ensure they’re engaged, making sound decisions, and have their questions answered along the way?

Topics will include:

  1. Participant engagement (deferrals, rollovers, distributions, loans, etc.)
  2. Common mistakes participants (and sponsors!) make
  3. Frequent questions plan participants ask

Panelists:

  • Ann-Marie Gorczyca @ Vestwell
  • Courtenay Shipley @ Retirement Planology


PREVIOUS WEBINARS

 

4 Steps All Companies Should Take to Protect Themselves from Retirement Plan Litigation

By Allison Brecher, General Counsel, Vestwell

More than 100 lawsuits were filed in the last two years against plan sponsors and advisors, claiming that fees charged to them by their 401(k) plans were excessive. This litigation has resulted in hundreds of millions of dollars in settlements, significant reputational damage, and countless hours spent on defending litigation instead of servicing clients. Worse yet, when the stock market declines, we can expect more filings like these. In addition to litigation over failures to make reasonable decisions for plans, the Department of Labor restored over $1.6 billion to benefit plans to correct each plan sponsors’ failure to follow its own internal procedures.

Fortunately, many of these types of claims are preventable. With a little time and preparation, advisors, plan sponsors, and other fiduciaries can take steps to minimize their risk and even eliminate it almost completely.

  1.  Create internal policies and follow them.

Every plan sponsor and fiduciary should have a written guide – even if it’s just one page – that lists who the plan service providers are, what each one does, who makes decisions for the plan about investments and other plan features, and how often those get decisions reviewed. Courts have repeatedly dismissed claims where the plan sponsors provided evidence that their plan has internal procedures about plan-related decisions and that they were followed. There are many free online resources to help sponsors conduct fiduciary training, vet their service providers, and assess conflicts of interest that might impair their obligation to serve their participants’ best interests. Don’t wait for litigation to jump into action.

  1. Benchmark the plan’s costs to make sure they are reasonable.

One of the most often litigated claims against plan sponsors and advisors is that they permitted the plan to incur unreasonably high costs. The regulations are clear that the plan does not need to engage the least expensive provider and cost is not the only criteria to determine whether a provider’s or investment’s fees are “reasonable.” The plan sponsor or advisor should take stock of each service provider’s services, evaluate them, and document the review of them.

  1. Identify and disclose all actual or potential conflicts of interest.

Service providers should disclose their conflicts of interest to the plan sponsor so that the sponsor can make an informed decision that aligns with their participants’ best interests. Sadly, not all providers do. If the same company that serves as the plan’s recordkeeper is also providing the investment options available to plan sponsors or receiving other indirect compensation from the investments offered by the plan, there may be a conflict of interest. Conflicts can only be managed if they are disclosed.

  1. Give participants clear and complete information about the plan.

It is astonishing how many claims could have been avoided had plan fiduciaries been more transparent in giving plan participants information. This could be as simple as giving them materials about joining the plan and how to invest through an email blast or mailing. Tell participants in “plain English” what they need to know about the investment options, eligibility requirements, employer match, and other basic plan features.

Complacency about proper retirement plan management is a significant business risk, but there are easy ways to manage it. Advisors and plan fiduciaries can use these lessons of litigation to help plan sponsors ensure they are properly setting up their plans and keep them out of trouble.

 

 

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.”

READ MORE