How does a financial technology company support a new and quickly growing arm of its business? Google it.
Betterment told WealthManagement.com it plans to add John Casey, the director of global benefits at Google, to the advisory board for Betterment for Business, the New York robo advisor’s automated 401(k) service.
Casey has been with Google since 2010, where he drove the technology behemoth’s financial benefits strategy, managed the corporate 401(k) and deferred compensation plans with a data-driven approach.
“At Google, we focus on optimizing the effectiveness and user experience of our employee benefit programs, and Betterment for Business’s mission and product align with these values,” Casey said in a statement.
Betterment’s 401(k) service operates similarly to its advisory service—an algorithm uses a plan participant’s answers to a questionnaire to place them in a portfolio of ETFs that is automatically rebalanced regularly. The company says Betterment for Business offers a better user experience, lower fees, and greater portfolio customization than traditional 401(k) providers.
While digital advice in the retail brokerage market gets a lot of attention, many feel the defined contribution space is much riper for technology innovation and disruption. Fidelity’s David Canter recently told the National Association of Plan Advisors that the technology is on its way, and the Tiburon Strategic Advisors has pointed to the success of Financial Engines as proof that technology startups will have an easier time attracting assets in the DC space than going against incumbent brokerages.
Eric Clarke, the CEO of Orion Advisor Services, said there is a “massive opportunity” for advisors to offer more attractive options in the DC market.
“It’s a good idea for [Betterment] to be focused on that market; it’s a good idea for all advisors to be focused on that market,” Clarke said. “[Betterment is] trying to expand their reach and maximize growth opportunities. They’re just running a good business.”
Betterment for Business launched in January 2016 and attracted 300 plan sponsors in its first 11 months, ranging from technology startups to mid-size professional services like law firms and medical practices. While recruiting Casey is a win for Betterment, a spokesperson said it should not be read that the robo will take over Google’s 401(k) plan.
Casey’s addition also doesn't mean Google is dipping its toes into financial services, a long-standing rumor among the wealth management technology crowd.
“This in no way is a harbinger for any future relationships between the two companies,” the Betterment spokesperson said. “There should be no speculation. This is strictly a personal appointment to the Advisory Board.”
Clarke said that he doubted Google, or other technology giants like Amazon or Facebook, will seriously move into wealth management any time soon.
“There’s a big difference between running a technology company and being saddled with the regulations that financial services companies have,” Clarke said. “Do they have the resources to do it? Absolutely. But it’s very different from pulling together a self-driving car.”
Prior to joining Google, Casey was a partner at Mercer where he led their international benefits group for the West Coast. He’ll join Ray Kanner, IBM’s managing director and CIO; Thomas Clark Jr., a counsel at The Wagner Law Group; and Stig Nybo, the global head of client development at Capital Preferences.
“John will further strengthen our board’s breadth of talent and experience, bringing invaluable benefits,” said Cynthia Loh, Betterment for Business’s general manager. “As Betterment for Business begins its second year of operation, the deep-rooted financial experience of our Board of Advisors will continue to guide us in our quest to be the trusted 401(k) service for plan sponsors and participants.”