With all the activity and VC money around robo advisors, it was only a matter a time before we had our first robo DC platform.
As the Wall Street Journal reports, (subscriber-only content) Henry Yoshida and partner announced the launch of their new company, Honest Dollar, which will offer online tax-deferred savings plans for companies and their employees, touting low fees and low-cost ETF models. Aiming to “re-engineer retirement” as stated on their beta website, the firm will offer six ETF models for about 10 BPs and charge a $10 per month per employee flat fee. They will focus on IRAs rather than ERISA plans, according to the WSJ report.
Yoshida is a well known and respected plan advisor who started his career at Merrill Lynch and went independent a few years ago. Will Hurley, Honest Dollar’s CEO, worked at Apple and IBM. Their firm has raised $3 million from Expansive Ventures, part of the Founder Institute network.
Honest Dollar faces a number of challenges and questions. With a focus on low costs for participants, will employers be high minded and pay the $10 per month fee? Who will be selling the service and how will they get paid? While Honest Dollar claims that it will take only 90 seconds to set up a plan, smaller companies have the least resources and need the most help. Will Honest Dollar need to partner or integrate with payroll companies?
There are some low-cost retirement savings providers today, including Online 401k, Sharebuilder 401k and PAi. And for the grayhaired among us, who can forget GoldK, Emplanet and ExpertPlan (now owned by Ascensus), who claimed that they would change the 401(k) world through technology during the dotcom era.
