A Rollover Isn't Always Best: Pontera Helps More Americans Stick With Their 401(k)s

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Jun 29, 2023, 08:43 ET

A new survey shows Pontera helped 59% of financial advisors and their clients manage assets in plan versus a suboptimal IRA rollover

NEW YORK, June 29, 2023 /PRNewswire/ -- Pontera, the fintech platform that enables retirement savers to get help managing their 401(k)s from their trusted financial advisor, just released a new finding: 59% of surveyed advisors chose not to roll over a client's 401(k) into an IRA or other account in 2022 due to better plan benefits and the advisor's ability to manage these assets in plan via Pontera. This is encouraging validation for the roughly 35% of working Americans with workplace retirement plans: You don't have to choose between your financial advisor and 401(k).

Your 401(k): To roll over, or not to roll over?

Pontera's 2023 infographic "Your 401(k): To roll over, or not to roll over"

In the period from 2016 to 2021, rollovers from retirement plan accounts totaled approximately $2.9 trillion in IRA asset growth, over half of which is estimated to have been intermediated by financial advisors.^{^[1]} The majority of investors wish they could completely hand over retirement planning to an expert and often believe a rollover is required—it isn't, and rollovers can be costly.

Depending on the retirement saver's circumstance, a rollover to an alternative retirement account may come at the expense of better 401(k) benefits, such as lower fees, institutional fund access, tax benefits to employer stock, creditor protections, and loan options. Pew Research has quantified that of the $516.7 billion in IRA rollovers from plan accounts in 2018, retail investors could lose $45.5 billion over the next 25 years from higher fees alone.

Financial advisors can professionally manage 401(k)s

For years, financial advisors have been compliantly providing advice on 401(k)s, 403(b)s, and more by logging into the accounts with client credentials or manually reviewing 401(k) plan documentation to provide recommendations. So why do advisors recommend rollovers so often? Between the paperwork, security measures, and compliance requirements, these manual 401(k) advisory methods can be expensive and difficult to scale.

Furthermore, if the advisor doesn't already charge for 401(k) advice, a rollover can mean more revenue. This potential conflict of interest sparked the Department of Labor (DOL)'s PTE-2020-02 on December 18, 2020. This regulation is predicted to be amended with more protections this year.

Eliminating Conflict of Interest, Helping Americans Keep Their 401(k) Benefits

Advisors who provide quality, equitable, level-fee services to clients' 401(k)s and IRAs alike are eliminating conflicts of interest altogether. Evidenced by its recent finding, Pontera is helping advisors do just that by providing a seamless alternative path to comprehensive 401(k) management—enabling rollover decisions in the best interest of the client.

"Before Pontera, clients who asked our firm for 401(k) recommendations would need to share pages of complex plan documents and statements," said Cean Kenefick-Rogers, CEO and Founding Partner of Ironwood Wealth Management. "But, most clients don't want to dig for hard-to-find paperwork and rebalance their own accounts. When we launched Pontera, about 80% of eligible clients were happy to receive professional management on their 401(k)s."

Ironwood client Greg Zych, a healthcare technology leader in Chandler, Arizona, echoed this sentiment:

"Ironwood Wealth Management has excellent financial expertise and has delivered a highly personalized plan. Since they have been able to proactively manage my 401(k) account, it has made my life much easier," commented Zych.

Here's how it works: A financial advisor invites a client to the Pontera platform. Once the client has completed Pontera setup, their 401(k) accounts appear in one consolidated view for their advisor to manage. At the same time, Pontera prohibits the advisor from taking any actions outside of plan account management (such as transfers, beneficiary changes, or credential changes).

Pontera serves retirement savers across America by partnering with thousands of financial firms, including: registered investment advisors, broker-dealers, asset managers, and plan advisors. The Company was recently named the "Best Retirement Management Platform" in the 2023 FinTech Breakthrough Awards.

"We are proud to see that the majority of Pontera advisor partners have concluded that it was in their clients' best interest to keep assets in plan instead of rolling them over," said Yoav Zurel, Chief Executive Officer at Pontera. "This finding shows that our partners are employing their fiduciary duty in the face of an excessive rollover trend, costing Americans billions of dollars each year. Retirement plans are often designed with exceptional benefits by employers and plan fiduciaries. We founded Pontera for this very reason—to help Americans reach the best retirement possible."

To learn more about how Pontera helps retirement savers with personal financial advisors, visit pontera.com/my401k. Retirement savers who are interested in obtaining professional advice can search for a personal advisor in their area here.

About Pontera

Pontera is a fintech company on a mission to help millions of Americans retire better by enabling financial advisors to manage, balance, and report on assets in held-away accounts, including 401(k)s, 403(b)s, and more. The platform is designed to work across many account types and seamlessly integrate with existing portfolio management tools to help advisors improve their clients' financial outcomes. Founded in 2012, Pontera is headquartered in New York City. Learn more at pontera.com.

^{^[1]} On the basis of cumulative asset value

SOURCE Pontera