7 ms·

Show HN: A paperless 401k with automated advising built-in

83 points by psawaya 11y ago

wj 11y ago
Good luck. I had been telling my soon-to-be-former firm create something like this forever!
- psawaya 11y ago
  Thanks! What sort of firm is it?
  - wj 11y ago
    401(k) provider
ashleyw0ng 11y ago
Could save big companies a lot of time educating their employees about 401k and on-boarding them to the plan. It could actually take away the role of an HR generalist who is always shuffling employee docs around. Very cool--looking forward to using you guys when my company offers a 401k.
- jeffasinger 11y ago
  That's definitely the future. I work for a company whose major goal is to make that job disappear, and do most employee onboarding and other annoying HR documents tasks online, mostly automatically. We do payroll, and integrate with various healthcare and retirement providers as our customers need. So far it's worked out really, really well.
2arrs2ells 11y ago
Does this connect to Zenefits? That would be awesome.
- psawaya 11y ago
  Yes! We work seamlessly with Zenefits (you'd simply add us as an external administrator).
greattypo 11y ago
I always wondered why my brokerage account felt so modern (Wealthfront), but my 401k feels like it's from the stone age. Makes complete sense. Do all employees have to use the automatic advising, or can they invest independently if they want?
- psawaya 11y ago
  No, employees can opt-out and make trades as they wish. We add extra fund options to each plan to make sure that this is possible. That said, we've found that most 401k users don't want to bother with analyzing and choosing between dozens of confusingly-named funds. They're much happier (and better off financially) with a solution that automatically gives them a globally diversified, low-cost, regularly-rebalanced portfolio without doing any of the work.
  - vonmoltke 11y ago
    That said, why do you think your robo advisors will be better at this than Vanguard's target retirement funds?
    - roger_lee 11y ago
      For 401k plans that have access to Vanguard's target date funds, they can be a decent choice. Unfortunately, the majority of 401k's don't even offer Vanguard as an option -- instead, employees are stuck with high-fee mutual funds because they give kickbacks to the 401k company. That said, employees using our investment advice get additional diversification (6-7 asset classes), as well as a more personalized recommendation that takes into account not just your age, but also your risk tolerance, financial situation, other investments, etc. We think that's better than a one-size-fits-all fund.
      - vonmoltke 11y ago
        Guess my wife and I have been lucky. My 401ks have always offered good funds, and hers is actually managed by Vanguard.
jwb119 11y ago
This is very cool. Looking forward to trying it out.
Gys 11y ago
From: http://www.forbes.com/sites/maggiemcgrath/2015/05/15/what-the-heck-is-a-401k-and-other-investing-questions-youre-too-embarrassed-to-ask/ http://www.forbes.com/sites/maggiemcgrath/2015/05/15/what-th... "Only about half of American workers have access to a 401k, which is a workplace savings plan that lets employees invest a portion of their paycheck before taxes are taken out. The savings can grow tax free until retirement, at which point withdrawals will be taxed as ordinary income. A large majority of employers will match an employee’s contribution – up to a point – thereby boosting the employee’s savings rate."
- toomuchtodo 11y ago
  It drives me insane that we haven't decoupled retirement accounts from employment as we're starting to with healthcare. Solo 401k? 401k? Roth 401k? IRA? Roth IRA? SEP IRA? SIMPLE IRA? FFS, just create legislation for two types of retirement accounts, pre-tax and post tax. Restrict by total yearly contribution between all accounts, with another limit for employer contribution. Setup contributions from both employee and employer with ACH routing and account numbers. Problem solved.
  - deleted 11y ago
    [deleted]
  - snikeris 11y ago
    Unfortunately, my healthcare options are still tightly coupled to my employment.
    - toomuchtodo 11y ago
      My startup offers poor healthcare choices; I went straight to the federal exchange. $500/month for two adults in their early 30s, excellent deductible/copays (no subsidies of course on a tech salary). Have you checked if this is a possibility?
      - snikeris 11y ago
psawaya 11y ago
My cofounder (hn:roger_lee) and I started working on Captain401 because we both had bad experiences with 401k accounts. As an employer, he kept putting off setting one up because of the time and cost involved. As an employee, I became frustrated by the archaic web interface my Fidelity plan had, and felt overwhelmed by the task of choosing investments. Captain401 is designed to make both sides of the 401k experience as pleasant as possible. We offer paperless administration to employers and automatic ("robo") advising to employees. We hope a tool like this will bring retirement savings to startups that had previously considered themselves too small or too busy for a 401k. We're especially interested in hearing from HNers who run their own business: have you set up a 401k plan for your employees?
- jsprogrammer 11y ago
  As a user receiving advice from your robo advisors, what guarantees do you provide that the advice I receive is sound and that following the advice will result in my retirement goals being met?
  - roger_lee 11y ago
    Our advice is based off decades of Nobel Prize-winning academic research on best practices for long-term investing.. And as an SEC registered investment advisor, we serve as a fiduciary to the 401k plan and avoid all conflicts of interest. Unfortunately, the same can't be said about how the 401k industry operates today: http://abcnews.go.com/Business/401k-conflicts-hurt-nest-egg/story?id=28199396&singlePage=true http://abcnews.go.com/Business/401k-conflicts-hurt-nest-egg/...
    - boomshucka 11y ago
      Nobel prize winning academic research is awful in the finance space. It's based on flawed assumptions and it's results are completely useless. Either a) the person claiming this is aware and effectively lying, or b) don't know this and aren't competent.
      - 11y ago
matttah 11y ago
Awesome - right now it looks like you are beating the other small business 401k provider that I know of (theonline401k) which i think charges around 525/quarter+4 per employee on it. Are you 100% managed investments? Or can an employee opt to pick their own investments? Do you have access to the admiral funds and are you allowing the company to chose which funds are available?
- roger_lee 11y ago
  Nope, an employee can certainly opt to pick their own investments! Though we've found that the vast majority of employees don't want to bother with choosing funds and doing the work of managing and rebalancing their 401k accounts themselves. Yes, we have access to Vanguard's lower-fee admiral funds. Companies can pick which funds they want in their 401k plan, although most choose a standard lineup of Vanguard index funds that spans across all the major asset classes and risk categories.
  - matttah 11y ago
    What's a good way to get in touch with you? Would like to talk a bit more about possibly switching our stuff over to you, my email is in my profile or let me know what is the best way to get in touch.
    - roger_lee 11y ago
      I couldn't find your email address, but please get in touch on https://captain401.com/join https://captain401.com/join
innguest 11y ago
If you have money in a 401(k) account you deserve what's coming to you soon. Again. EDIT: don't listen to people talking about compound interest. If you have a 401(k) you will be paying this interest to the government bonds your 401(k) holds when we are finally in NIRP. Look at Greece today, they are going to have to pay $71M on July 17 which is just the interest on their 2014 3-year bonds. If you are young, learn from the bad advice coming from the old folks. EDIT 2: owning US stock, no matter when purchased, is a bad idea now in these times of share buyback, yes. So yes, it cannot be a good idea to hold stock now since we're due a crash (which got caught yesterday by a "system update glitch" at NYSE which curiously affected United Airlines and Wall Street Journal as well). Holding some gold and cash, as Bank of America advises NOW, is a very good idea: http://www.bloomberg.com/news/articles/2015-05-18/bank-of-america-markets-are-in-a-twilight-zone-and-it-s-time-to-hold-more-cash-and-gold http://www.bloomberg.com/news/articles/2015-05-18/bank-of-am...
- fiveoak 11y ago
  This is really bad advice, especially for young people when they can benefit the most from compound interest.
- boomshucka 11y ago
  Let me guess. Gold is the place to be. Owning small stakes in a diversified set of large successful companies, bought at different prices over time can't possibly be a good idea right?
hmahncke 11y ago
How does this compare to Ubiquity [1] which also seems to target smaller companies with a paperless 401k system? [1] https://www.myubiquity.com/ https://www.myubiquity.com/
- saryant 11y ago
  Hopefully they're more competent. I've had bad experiences with Ubiquity. Deposits going to the wrong accounts, rollovers initiated without permission, discrepancies in the website.
kolencherry 11y ago
This looks really interesting. How does this compare to Honest Dollar (http://www.honestdollar.com/ http://www.honestdollar.com/)?
- roger_lee 11y ago
  Honest Dollar has a great retirement mission as well, but their accounts are structured as a SIMPLE IRA's, which are different from regular 401k's (SIMPLE IRA's have a lower contribution limit and require the company to match)
peter_l_downs 11y ago
This looks really nice. Probably revealing my inexperience, but I have to wonder: is it possible for an employee to set up their own 401k account, and then have the employer donate to that account? Or is it only ever possible to get a 401k through an employer. It seems weird to me that something so tied to a single person (the 401k account) is provided again and again by different employers. If you work multiple places, do you end up with multiple 401k accounts? Is there some easy process to merge them all? Never been able to find this information online, figured I'd ask in this thread, but apologies if this is all blindingly obvious. Would be happy to RTFM if someone could point me to the M.
- majormajor 11y ago
  Here's some basic info: https://www.fidelity.com/retirement-planning/learn-about-iras/401k-rollover-options https://www.fidelity.com/retirement-planning/learn-about-ira... Everywhere I've worked so far has both let me keep the existing account if I wanted when I left, and then also provided the option to rollover an old account into the new plan. Basically you fill out a form, send it to whoever the old account was with, and then get a check you can deposit in the new account through your new employer (or maybe the last step is electronic? I forget if I had to drop off a paper check at my current employer when I rolled over my old account). I generally do this, though I suppose I should look at fees and stuff in the future before just doing it blindly for convenience's sake of having everything in one place.
- deleted 11y ago
  [deleted]
- roger_lee 11y ago
  That's a great question, and I'm sure you're not the only one that's confused. 401k's can only be offered by the employer, so an employee isn't able to set one up on their own. That's why we want to make it really easy for companies to get a 401k, so that we can expand people's access to them and help them save for retirement and get the tax benefits. You do indeed have the option to merge multiple 401k accounts together after you leave your job.
- whisk3rs 11y ago
raspasov 11y ago
Congrats psawaya on the launch! Can't wait to use it in the future : )
- psawaya 11y ago
  Thanks Rangel! :)
rhc2104 11y ago
How much does Captain401 cost for employers?
- psawaya 11y ago
  Actually, we're still finalizing pricing. Please contact us, and we'll be happy to talk. https://captain401.com/join https://captain401.com/join
  - dp1234 11y ago
    Wow, that is really low cost compared to other providers. Surprised to not see an asset-based fee. Are there any other costs that get passed on to the participants?
    - psawaya 11y ago
      We also charge employees a low percentage assets under management yearly for the automated advising service, just as other automated advisors do.
dp1234 11y ago
What 3rd party recordkeeper are you using? Do you use the recordkeeper's websites or have you built your own?
zrail 11y ago
What's the $1,500 IRS tax credit?

83 points by psawaya 11y ago

wj 11y ago

Good luck. I had been telling my soon-to-be-former firm create something like this forever!

psawaya 11y ago
Thanks! What sort of firm is it?
- wj 11y ago
  401(k) provider

ashleyw0ng 11y ago

Could save big companies a lot of time educating their employees about 401k and on-boarding them to the plan. It could actually take away the role of an HR generalist who is always shuffling employee docs around. Very cool--looking forward to using you guys when my company offers a 401k.

jeffasinger 11y ago
That's definitely the future. I work for a company whose major goal is to make that job disappear, and do most employee onboarding and other annoying HR documents tasks online, mostly automatically. We do payroll, and integrate with various healthcare and retirement providers as our customers need. So far it's worked out really, really well.

2arrs2ells 11y ago

Does this connect to Zenefits? That would be awesome.

psawaya 11y ago
Yes! We work seamlessly with Zenefits (you'd simply add us as an external administrator).

greattypo 11y ago

I always wondered why my brokerage account felt so modern (Wealthfront), but my 401k feels like it's from the stone age. Makes complete sense. Do all employees have to use the automatic advising, or can they invest independently if they want?

psawaya 11y ago
No, employees can opt-out and make trades as they wish. We add extra fund options to each plan to make sure that this is possible. That said, we've found that most 401k users don't want to bother with analyzing and choosing between dozens of confusingly-named funds. They're much happier (and better off financially) with a solution that automatically gives them a globally diversified, low-cost, regularly-rebalanced portfolio without doing any of the work.
- vonmoltke 11y ago
  That said, why do you think your robo advisors will be better at this than Vanguard's target retirement funds?
  - roger_lee 11y ago
    For 401k plans that have access to Vanguard's target date funds, they can be a decent choice. Unfortunately, the majority of 401k's don't even offer Vanguard as an option -- instead, employees are stuck with high-fee mutual funds because they give kickbacks to the 401k company. That said, employees using our investment advice get additional diversification (6-7 asset classes), as well as a more personalized recommendation that takes into account not just your age, but also your risk tolerance, financial situation, other investments, etc. We think that's better than a one-size-fits-all fund.
    - vonmoltke 11y ago
      Guess my wife and I have been lucky. My 401ks have always offered good funds, and hers is actually managed by Vanguard.

jwb119 11y ago

This is very cool. Looking forward to trying it out.

Gys 11y ago

From: http://www.forbes.com/sites/maggiemcgrath/2015/05/15/what-the-heck-is-a-401k-and-other-investing-questions-youre-too-embarrassed-to-ask/ http://www.forbes.com/sites/maggiemcgrath/2015/05/15/what-th... "Only about half of American workers have access to a 401k, which is a workplace savings plan that lets employees invest a portion of their paycheck before taxes are taken out. The savings can grow tax free until retirement, at which point withdrawals will be taxed as ordinary income. A large majority of employers will match an employee’s contribution – up to a point – thereby boosting the employee’s savings rate."

toomuchtodo 11y ago
It drives me insane that we haven't decoupled retirement accounts from employment as we're starting to with healthcare. Solo 401k? 401k? Roth 401k? IRA? Roth IRA? SEP IRA? SIMPLE IRA? FFS, just create legislation for two types of retirement accounts, pre-tax and post tax. Restrict by total yearly contribution between all accounts, with another limit for employer contribution. Setup contributions from both employee and employer with ACH routing and account numbers. Problem solved.
- deleted 11y ago
  [deleted]
- snikeris 11y ago
  Unfortunately, my healthcare options are still tightly coupled to my employment.
  - toomuchtodo 11y ago
    My startup offers poor healthcare choices; I went straight to the federal exchange. $500/month for two adults in their early 30s, excellent deductible/copays (no subsidies of course on a tech salary). Have you checked if this is a possibility?
    - snikeris 11y ago

psawaya 11y ago

My cofounder (hn:roger_lee) and I started working on Captain401 because we both had bad experiences with 401k accounts. As an employer, he kept putting off setting one up because of the time and cost involved. As an employee, I became frustrated by the archaic web interface my Fidelity plan had, and felt overwhelmed by the task of choosing investments. Captain401 is designed to make both sides of the 401k experience as pleasant as possible. We offer paperless administration to employers and automatic ("robo") advising to employees. We hope a tool like this will bring retirement savings to startups that had previously considered themselves too small or too busy for a 401k. We're especially interested in hearing from HNers who run their own business: have you set up a 401k plan for your employees?

jsprogrammer 11y ago
As a user receiving advice from your robo advisors, what guarantees do you provide that the advice I receive is sound and that following the advice will result in my retirement goals being met?
- roger_lee 11y ago
  Our advice is based off decades of Nobel Prize-winning academic research on best practices for long-term investing.. And as an SEC registered investment advisor, we serve as a fiduciary to the 401k plan and avoid all conflicts of interest. Unfortunately, the same can't be said about how the 401k industry operates today: http://abcnews.go.com/Business/401k-conflicts-hurt-nest-egg/story?id=28199396&singlePage=true http://abcnews.go.com/Business/401k-conflicts-hurt-nest-egg/...
  - boomshucka 11y ago
    Nobel prize winning academic research is awful in the finance space. It's based on flawed assumptions and it's results are completely useless. Either a) the person claiming this is aware and effectively lying, or b) don't know this and aren't competent.
    - 11y ago

matttah 11y ago

Awesome - right now it looks like you are beating the other small business 401k provider that I know of (theonline401k) which i think charges around 525/quarter+4 per employee on it. Are you 100% managed investments? Or can an employee opt to pick their own investments? Do you have access to the admiral funds and are you allowing the company to chose which funds are available?

roger_lee 11y ago
Nope, an employee can certainly opt to pick their own investments! Though we've found that the vast majority of employees don't want to bother with choosing funds and doing the work of managing and rebalancing their 401k accounts themselves. Yes, we have access to Vanguard's lower-fee admiral funds. Companies can pick which funds they want in their 401k plan, although most choose a standard lineup of Vanguard index funds that spans across all the major asset classes and risk categories.
- matttah 11y ago
  What's a good way to get in touch with you? Would like to talk a bit more about possibly switching our stuff over to you, my email is in my profile or let me know what is the best way to get in touch.
  - roger_lee 11y ago
    I couldn't find your email address, but please get in touch on https://captain401.com/join https://captain401.com/join

innguest 11y ago

If you have money in a 401(k) account you deserve what's coming to you soon. Again. EDIT: don't listen to people talking about compound interest. If you have a 401(k) you will be paying this interest to the government bonds your 401(k) holds when we are finally in NIRP. Look at Greece today, they are going to have to pay $71M on July 17 which is just the interest on their 2014 3-year bonds. If you are young, learn from the bad advice coming from the old folks. EDIT 2: owning US stock, no matter when purchased, is a bad idea now in these times of share buyback, yes. So yes, it cannot be a good idea to hold stock now since we're due a crash (which got caught yesterday by a "system update glitch" at NYSE which curiously affected United Airlines and Wall Street Journal as well). Holding some gold and cash, as Bank of America advises NOW, is a very good idea: http://www.bloomberg.com/news/articles/2015-05-18/bank-of-america-markets-are-in-a-twilight-zone-and-it-s-time-to-hold-more-cash-and-gold http://www.bloomberg.com/news/articles/2015-05-18/bank-of-am...

fiveoak 11y ago
This is really bad advice, especially for young people when they can benefit the most from compound interest.
boomshucka 11y ago
Let me guess. Gold is the place to be. Owning small stakes in a diversified set of large successful companies, bought at different prices over time can't possibly be a good idea right?

hmahncke 11y ago

How does this compare to Ubiquity [1] which also seems to target smaller companies with a paperless 401k system? [1] https://www.myubiquity.com/ https://www.myubiquity.com/

saryant 11y ago
Hopefully they're more competent. I've had bad experiences with Ubiquity. Deposits going to the wrong accounts, rollovers initiated without permission, discrepancies in the website.

kolencherry 11y ago

This looks really interesting. How does this compare to Honest Dollar (http://www.honestdollar.com/ http://www.honestdollar.com/)?

roger_lee 11y ago
Honest Dollar has a great retirement mission as well, but their accounts are structured as a SIMPLE IRA's, which are different from regular 401k's (SIMPLE IRA's have a lower contribution limit and require the company to match)

peter_l_downs 11y ago

This looks really nice. Probably revealing my inexperience, but I have to wonder: is it possible for an employee to set up their own 401k account, and then have the employer donate to that account? Or is it only ever possible to get a 401k through an employer. It seems weird to me that something so tied to a single person (the 401k account) is provided again and again by different employers. If you work multiple places, do you end up with multiple 401k accounts? Is there some easy process to merge them all? Never been able to find this information online, figured I'd ask in this thread, but apologies if this is all blindingly obvious. Would be happy to RTFM if someone could point me to the M.

majormajor 11y ago
Here's some basic info: https://www.fidelity.com/retirement-planning/learn-about-iras/401k-rollover-options https://www.fidelity.com/retirement-planning/learn-about-ira... Everywhere I've worked so far has both let me keep the existing account if I wanted when I left, and then also provided the option to rollover an old account into the new plan. Basically you fill out a form, send it to whoever the old account was with, and then get a check you can deposit in the new account through your new employer (or maybe the last step is electronic? I forget if I had to drop off a paper check at my current employer when I rolled over my old account). I generally do this, though I suppose I should look at fees and stuff in the future before just doing it blindly for convenience's sake of having everything in one place.
deleted 11y ago
[deleted]
roger_lee 11y ago
That's a great question, and I'm sure you're not the only one that's confused. 401k's can only be offered by the employer, so an employee isn't able to set one up on their own. That's why we want to make it really easy for companies to get a 401k, so that we can expand people's access to them and help them save for retirement and get the tax benefits. You do indeed have the option to merge multiple 401k accounts together after you leave your job.
whisk3rs 11y ago

raspasov 11y ago

Congrats psawaya on the launch! Can't wait to use it in the future : )

psawaya 11y ago
Thanks Rangel! :)

rhc2104 11y ago

How much does Captain401 cost for employers?

psawaya 11y ago
Actually, we're still finalizing pricing. Please contact us, and we'll be happy to talk. https://captain401.com/join https://captain401.com/join
- dp1234 11y ago
  Wow, that is really low cost compared to other providers. Surprised to not see an asset-based fee. Are there any other costs that get passed on to the participants?
  - psawaya 11y ago
    We also charge employees a low percentage assets under management yearly for the automated advising service, just as other automated advisors do.

dp1234 11y ago

What 3rd party recordkeeper are you using? Do you use the recordkeeper's websites or have you built your own?

zrail 11y ago

What's the $1,500 IRS tax credit?