This is a sponsored post. The Debt Free Guys received compensation for this post. All opinions are our own.
As much as I love and rely on technology, technology never ceases to amaze me. This is never more true than in the world of financial services. In my first team meetings of the first investment firm where I worked, someone gave a demonstration on how to use a cell phone to place a stock trade. It was a flip phone and the technology captured trade instructions by phone prompts. This was state-of-the-art technology before smart phones.
Just before leaving that firm some 13 years later, the financial services industry was moving forward with robo-advisors. Robo-advisors are what they sound like; they’re robots that give advice.
Well, not exactly. Computer technology uses algorithms to manage portfolios based on investment strategies such as Core & Satellite, Monte Carlo, Modern Portfolio Theory and others. See? It’s more fun to say robots give investment advice.
The benefit to investors is it gives investment advisory access to smaller dollar clients, as most human advisors don’t work with less than $250,000 to invest. This isn’t a character flaw of human advisors. It’s just that most human advisors across the country don’t sit in the high towers of Wall Street and while they want to help everyone they also want to put food on their table. Fewer clients with bigger pockets can be more efficiently managed than lots of clients with smaller pockets. Enter the robo-advisor.
The Retirement Technology Solution Need
It’s hard to read a financial publication and not read more news about the crisis of Americans not saving for retirement. In March, Time reported that one in three Americans have nothing saved for retirement. In June, MarketWatch’s Rex Nutting reported, “The median working-age couple has saved only $5,000 for their retirement . . . .”
As of 2013, 45 percent of American workers had no retirement savings in either a company sponsored retirement plan or an individual retirement account. Part of the reason is that 50% of Americans work for small and medium-sized businesses, and only 1 in 6 of these businesses offer a 401(k) plan.
These businesses are reluctant to offer such plans because historically they’re expensive, complex to administer and the legal and compliance requirements are challenging. When you’re simply trying to make payroll, providing state or the art benefits is hard. Enter the retirement technology solution.
The Retirement Technology Solution
The retirement technology solution to offer 401(k) plans to small- and medium-sized businesses is ForUsAll. ForUsAll offers plan administrator (3(16)) and plan sponsor (3(38)) fiduciary-level 401(k) retirement plans. Being a fiduciary means, in both capacities, ForUsAll has both a legal and ethical responsibility to act in the best interest of those for whom they manage money.
This is where the retirement technology solution gets fascinating. ForUsAll offers many built in features that make its plan options appealing to small- and medium-sized businesses. It integrates with over 30 payroll providers, provides a dedicated team of people for customer service and other needs, including human licensed advisors, and offers low-fee index funds.
ForUsAll uses institutional stock and index funds. Index funds typically have lower expenses because they’re tracking established market indexes and institutional investments often have lower expenses because they have larger investment under management. Such lower expenses allows investors to take better advantage of compounding interest and investment returns.
The success of such a retirement technology solution is its automation. ForUsAll auto-enrolls its investors to contribute 6% with an auto-increase of 1% annually until it either reaches 15% or the investor stops the increase. The success is evidenced by ForUsAll’s investor’s average contribution rate being 8%.
The Retirement Technology Solution Benefit
We can’t keep doing the same old thing and expect to fix America’s retirement problem. And today, the best employees are looking for employers who offer benefits that help them achieve their financial goals. Our excitement for a retirement technology solution such as ForUsAll is that it gives an opportunity for small- and medium-sized businesses to attract their industries’ best workers.
This is better for businesses and workers.
This is a sponsored post. The Debt Free Guys received compensation for this post. Although this post is sponsored, all opinions are our own. The Debt Free Guys believe that 401(k) plans are the best retirement plan for the majority of American workers. We also believe that a successful American economy requires strong small- and medium-sized businesses. Thanks to technology such as ForUsAll’s it’s now easier for small- and medium-sized businesses to offer 401(k) plans to their employees. This is good for everyone.