In 1999, then-Treasury Secretary Lawrence H. Summers stood at the podium of the White House press briefing room and said, “There are 70 million Americans who do not have a pension, who do not have a 401(k), and the vast, vast majority of whom do not have an IRA. And finding the right vehicles to help them save seems to us to be the highest priority.” Nearly 20 years later, there is still a lot of work to do.
It’s bad enough that nearly half of small- and medium-sized business don’t offer their employees 401(k)s. But it’s downright embarrassing that so many people who do have these retirement accounts are robbed of their savings little by little, year after year, by fees that can end up cutting their nest egg in half. Certainly, there are employers who go out of their way to find quality plans from providers who take fiduciary responsibility for their clients’ assets. But the sheer complexity of those plans discourages employees from taking advantage of them, even if their employer encourages it.
Your golden years are supposed to be relaxing years—or if not exactly relaxing, then spent chasing after grandkids or traveling the world. Those years shouldn’t have to include worrying about how to make ends meet, and definitely not going hungry or skimping on medicine. It’s past time that someone use smart technology, the latest financial research, and elegant design to help more people not only save for retirement but achieve the financial security to enjoy it. Enter ForUsAll.
ForUsAll, an emerging FinTech company, is pulling all three of those levers to make 401(k)s dramatically more accessible to America’s 28 million small- and medium-sized businesses. After decades of bad “solutions,” those millions of businesses finally have an alternative to high fees, administrative headaches, confusing products, and self-interested providers.
Foundation Capital was proud to invest in ForUsAll at the seed stage. And we’re even prouder to announce that that seed has grown into a Series A round, which Foundation is leading.
ForUsAll’s founding team was forged in the fire of Financial Engines, in which we were also an early investor. Shin Inoue, David Ramirez, and Dave Boudreau helped build Financial Engines from $0 to $55 billion under management, and when we learned what they had in mind with ForUsAll, we were eager to back them.
At a time when too many financial advisors push complex products designed to confuse, in the hopes that you’ll believe they’re worth their fees, ForUsAll designed their low-fee service to be simple, with intelligent default settings that boost participation and savings. ForUsAll automatically enrolls employees, establishes a healthy starting savings rate, escalates it automatically and annually, and invests in age-appropriate Target Date Funds. Hands-on investors can customize or cancel, but as Richard Thaler and Cass Sunstein have noted, for most people getting the defaults right is more than half the battle. As a result, ForUsAll is delivering average savings rates of more than 7%, compared to 3-4% for a typical plan.
And this is not in the name of simply taking more fees, something for which traditional 401(k) plans have been chastised by the federal government. ForUsAll’s fees (0.54 percent) are less the half of the typical plan, and smaller fees means bigger savings—especially when the returns are compounded over a career of savings.
ForUsAll’s impressive market traction in the first 12 months speaks for itself. Its expanding footprint now includes customers across 28 industries – from arts and entertainment to construction and education – and even startups, like Blue Bottle Coffee and our friends at Bolt Threads. Bolt found that with ForUsAll they could offer new recruits the same sorts of benefits that they had been getting from larger, more established past employers.
Foundation Capital believes that Shin and his team are building a next-generation 401(k) – and we’re not alone. As another proof point that ForUsAll is one of the “right vehicles” for retirement savings that he called for two decades ago, Secretary Summers has joined the company as an advisor.