Pontera, a financial technology firm that connects financial advisers to clients’ employer-sponsored workplace plans, has penned its first partnership with a recordkeeper that will allow direct billing by advisers from client 401(k)s.
In the deal announced Thursday, startup plan provider 401GO will use Pontera’s technology to give participants the ability to get personalized 401(k) account management from their financial adviser of choice. The agreement will allow advisers to charge management fees to clients directly from their retirement plan accounts, a service Pontera stated has been requested by plan participants to offer “greater convenience.”
From 401GO’s perspective, the agreement will give the recordkeeper “new opportunities” in the marketplace in working with financial advisers, the firms wrote.
The partnership comes on the heels of an announcement by the country’s largest recordkeeper, Fidelity Investments, that it would be shutting down such third-party credentialing services (without directly naming any firms) due to security concerns. In a September 13 announcement on its website and letter to plan sponsors, the firm wrote that it would be stopping third-party technology providers from allowing adviser access to defined contribution accounts without plan sponsor oversight or coordination.
“Fidelity is announcing that the company will begin taking steps to prevent platforms reliant on credential sharing from accessing and taking action in customer accounts held at Fidelity,” the firm wrote on its website. “This change is with customers’ best interests in mind to enhance security and reduce customer data exposure.”
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In its deal announcement Thursday, Pontera emphasized that focus and positioned its technology as a way for participants to have more choice in how their workplace retirement plan assets are managed.
“Working with Pontera’s technology, 401GO will be able to empower plan participants to receive holistic, personalized 401(k) account management from their own adviser, helping them to realize better outcomes,” the announcement stated. “Pontera believes all retirement savers should have access to expert help managing their 401(k) accounts and the ability to choose how they receive that help.”
In April, Pontera announced it was hiring three executives with DC industry experience.
“We work directly with a number of recordkeepers already, in various ways, and continue to build partnerships across the industry,” Jerry Bonnabeau, Pontera’s head of DC partnerships and one of those new hires, says via email. “My team and I were brought to Pontera six months ago to launch a DC partnerships effort and help the firm meet the demand it was seeing from recordkeepers for deeper partnerships that better serve the needs of advisors and plan participants.”
In response to a question about Fidelity’s announcement, Bonnabeau says the firm aspires “to work in close partnership with all recordkeepers. Our focus, as always, is on building the best possible experiences for financial advisers and their clients.”
401GO, founded in 2019, is focused on small and midsize companies, currently offering plans to more than 2,500 organizations.
Financial advisers looking to provide more holistic financial services are facing a growing pool of client assets in employer-sponsored retirement plans, according to second-quarter data released Thursday by the Investment Company Institute. DC invested assets are at a record $11.3 trillion, according to the ICI, far greater than the $3 trillion the institute reported in 2000. Retirement plan assets including individual retirement accounts, defined benefit plans and annuity reserves are at a record $40 trillion.
Correction: This article corrects an earlier version that stated this is the first recordkeeper relationship for Pontera; it is the first where advisers can bill directly from client 401(k)s.
