Vestwell is a digital recordkeeping platform and has partnered with Bambu to expand investment advice in the retirement journey. Benjamin Thomson, executive vice president at Vestwell, joins us on the podcast to talk about why 401(k)s are over-complicated and what Vestwell is doing to fix that.
As a company, Vestwell wants to make it easier for people to save and journey towards a dignified retirement. To Benjamin, affecting this kind of change would require a group of courageous people willing to work hard at tackling an incredibly difficult challenge. He emphasises the word courage and highlights how it is an important quality for start-ups. It’s all about putting oneself out there, and finally rowing together with others in one direction towards the goal.
Companies that jumped into the wealth management space in the beginning have successfully built large conglomerates. However, when we go back 40 years and look at the state of technology, we realise that the resources available then are clearly much different from what we have today. This is a major problem of the 401(k) as the prevailing technology at the time of its inception did not facilitate the service well and has not been upgraded over the years. While the plumbing is serviceable, the operators of these archaic systems have to put in a lot of manual work. They are spending time with laborious tasks when really, automation and data integrity machines should be the ones carrying out these activities.
Benjamin shares that it is not easy getting people to save and invest for the future. Not many people wake up in the morning and think about wanting to save money. That’s just not the way that humans are built. However, Benjamin believes that targeting employees of companies to enter a subscription service is a way to successfully get people to save. This subscription service might not pay them, but if it is meant to secure their future, people will take interest. By the time they realise the intended benefits of this service, they will actively participate in saving for retirement. Benjamin thinks that everyone in the 401(k) business is trying to achieve this and helping people see how vitally important saving is.
While it is important to get people invested in saving for retirement, Benjamin acknowledges that the technology it takes to facilitate this is not easy to use and administer. Technology should eventually become the highest form of pension manager and offer personalised financial planning advice to customers. There are many data sets across different systems for an individual consumer and technology has to become to glue to bridge and compile this.This is exactly what Vestwell is striving to achieve – technology that makes saving for retirement as easy as using Amazon or Netflix.