Pontera CEO: Advisers Agnostic as to Where Retirement Assets Sit

Pontera CEO Yoav Zurel and his team of roughly 200 people have been penning a string of partnerships in both retirement and wealth management in recent years, using the company’s technology to help advisers trade and manage assets within clients’ defined contribution accounts.

In March 2022, Pontera announced SageView Advisory Group would have access to manage “off platform” retirement accounts, along with other assets through professionally managed accounts. A month later, it announced a partnership with Morningstar Inc. through which financial advisers can access client retirement accounts through Morningstar Office. In February, Pontera and wealth management technology and services firm Envestnet announced a strategic partnership in which Pontera’s technology integrates into Envestnet’s financial wellness platform.

Yoav Zurel. Photo by Maya Rado.

On Thursday, Pontera announced yet another partnership, this time with registered investment adviser and broker/dealer Founders Financial Securities LLC, which manages more than $4 billion in assets, a figure that, according to the announcement, “does not yet encompass retirement plan accounts.”

“Founders seeks to empower Member Partners and help them further serve those looking for help with their 401(k)s,” Founders Financial wrote in the announcement. “In partnership with Pontera, Member Partners can easily and securely manage held-away retirement assets as part of the full financial picture of their client relationships.”

When asked about the contractual terms for these partnerships, Pontera CEO Zurel stresses that they are generally not long-term, stringent agreements. He equates the relationships to those of wealth managers and their clients: “No one is locked in, and we always have to prove ourselves to our customers,” he says. “Our view is that we always want to make sure that we have the best possible experience. … We like it this way because it keeps us innovating and improving the customer experience.”

Professional Management

A key to Pontera’s offering is turning the keys of 401(k) management over to advisers so they can provide both holistic and compliant services, according to Zurel.

In SageView’s announcement, the retirement, insurance and wealth management aggregator noted that Pontera’s technology gives advisers the opportunity to locate all of a client’s assets, as well as provide professionally managed account services, which “outperform self-directed accounts by 3% or more annually, net of fees,” according to the advisory.

“Advisers must be able to present a comprehensive plan that delivers the best possible solution for their clients,” Jim Dario, head of wealth management at SageView, said in a statement announcing the partnership. “This is extremely difficult to do without incorporating a client’s held away accounts, which often make up a significant portion of their assets.”

Zurel says, in his dealings with advisories, a shift has occurred in which advisers are  focused less on where retirement assets sit and more on how to manage those assets, directly or through a plan sponsor.

Advisers are also focused, he notes, on ensuring compliance, cybersecurity and operational seamlessness, all of which he cites as selling points for Pontera.

Not Rolling Over

In the past, Zurel notes, advisers traditionally wanted clients to roll over retirement funds so the advisers could better manage—and therefore monetize—clients’ savings. But an increase in regulatory scrutiny from the Department of Labor on rollovers has partially crimped that push, he says.

Meanwhile, the advancement of defined contribution savings accounts and the ability for advisers to make relatively more complex decisions for clients within plans have evolved advisers’ priorities.

“Now that advisers don’t really care where the 401(k) is at, they are more incentivized to look deeper into the plan,” he says. “Maybe the plan sponsor negotiated with the recordkeeper and got an amazing fund lineup. You sometimes see unique, proprietary funds at a lower cost. … Sometimes the adviser looks at the plan and says, ‘This is much better than what I can offer through an IRA, so let’s just keep you where you are.’”

To be sure, there is still an intense focus on capturing rollovers within retirement and wealth management. IRA account assets are the largest segment of the retirement market, increasing to 38% from 31% of the market in the past 10 years to hit $13.9 trillion in 2021, according to Cerulli Associates. The consultancy estimates that share will grow to 47% by 2027.

In July, Pontera released its own research on the topic. In a survey of 124 advisers it found that 59% opted not to roll over a client’s 401(k) into an IRA in 2022.

Zurel notes that, among advisers his team works with, most are not actually looking to client leads. Instead, they want a better way to identify and manage retirement savings assets through professionally managed accounts with strong compliance and administrative backing.

“That is basically the pitch,” he says. “We can help them create and improve the service level for existing customers.”