After 401 (k) account growth catapults ahead of curve, Vestwell CEO scrambles to make big hires and abdicates presidency in favor of released Lori Hardwick



Seeing a projected 300% growth in plan sponsors, Aaron Schumm promoted one executive, added another and reshuffled Vestwell’s board, putting Hardwick in the lead.

Vestwell CEO Aaron Schumm has just stepped down from his chairmanship to Lori Hardwick as part of a senior management team reshuffle, after experiencing tremendous growth in the 401 (k) accounts workplace that it serves.

“The biggest thing that holds us back is the number of hours in a day. When you layer the breadth of what we do and what we want to do… staying focused is essential,” Schumm explains, via email .

Aaron Schumm: The most important thing that holds us back is the number of hours in a day.

“With Lori stepping in to help more on the board front, it gives me time to stay focused on executing the vision.”

In 2018, Vestwell had 100 RIAs under contract; in 2019, it administered 1,000 plans. In 2020, the numbers soared to 425 and 7,000, respectively.

Today, Vestwell alone administers 22,000 small business plans and serves 850 RIAs, according to the company.

The volume of small businesses signing up to use Vestwell’s record keeping and plan administration services has also quintupled, according to Schumm, who is refusing to receive offers for a business he says will become a ” several billion dollars in the short term “. form.”

“Our future is already mapped out before us … [and] we will have many options to put on the table for discussion when the time is right, ”he said. “There are no other players who can do what we do, how we do it.

Next wave

That said, Vestwell is still losing money, although Schumm insists he sees a “clear line of sight on profitability.”

Marie Dent
Mary Dent: “Vestwell is at a crossroads in its growth. “

Vestwell is currently selling its software to giants like Morgan Stanley, BNY Mellon and Voya Financial, formerly ING US and Wells Fargo is in negotiations to use Vestwell’s software.

To further close the gap, the company is also aiming to increase revenue by expanding its business lines. The company will soon add support for 529 education savings plans, IRAs and emergency savings.

“This [business expansion] has already started and we have had great success with very large institutions, ”says Hardwick, via email.

Vestwell needs large volumes because its fees start at just $ 100 per month and $ 6 per plan, or $ 1,200 per year, plus employee fees.

Time to shine

Indeed, part of the reason small plans – primarily served by Vestwell’s work program – remain underserved is the sheer difficulty of scaling a profitable business out of a large number of micro-accounts.

Ryan anderson
Ryan Anderson has become Vestwell’s new Product Director, a position he last held at Advizr.

Vestwell administers several plans worth over $ 50 million, but the average 401 (k) plan run through its software and services is “just shy” of $ 1 million. The company manages more than 172,000 individual plan accounts, with an average company size of 7.8, according to Schumm.

Yet, by combining Vestwell’s software with its significant private equity backing, the company is confident it can turn the industry narrative that a profitable business can’t be built on small plans, according to its survey. on industry trends 2021.

“This has been mostly crickets in the 401 (k) world. Now investors agree it’s time for the retirement industry to shine,” the company says.

There are over 30 million small businesses in the United States, but only 600,000 401 (k) plans. New technology is rapidly turning the 401 (k) world into a different kind of ball game, ”he adds. .

Rocket rhythm

Vestwell finds the segment fertile ground for new customers.

“We integrate five to ten [fold] the volume of small businesses each month than a year ago, ”says Schumm.

“Now we see the next wave coming towards us, it’s still five to ten- [fold increase] in volume. We plan actively so that we don’t get overwhelmed; a lot of it is time optimization, ”he explains.

Not only did Vestwell grow its business by 200% last year, “but it is on track to achieve 300% growth this year, which means we are having a real impact on small businesses across the country. and all of their employees, too, ”says Hardwick. .

Indeed, Vestwell’s recent growth owes much to the company’s decision to expand in 2018 to sell its recordkeeping and administration services directly to plan providers and payroll administrators.

About 50% of plans administered by Vestwell are managed through its workplace program, Schumm said in July.

Growth potential

The move gave him access to roughly 40 million American workers, who don’t have a retirement plan, in part because only 49% of employers with less than 50 employees offer one, according to Boston-based Cerulli Associates.

Rob molchon
Rob Molchon is Vestwell’s new CTO.

On the other hand, 69% of companies with less than 100 employees have a pension plan. See: Vestwell Creates Tough Payroll Startup, Its Portal to Winning Plan Sponsors for RIAs and IBD Representatives It Serves.

Additionally, according to Vestwell’s 2020 Employee Retirement Trends Report, only 16% of Latinx respondents and 11% of African-American respondents had at least $ 50,000 set aside for retirement, while 40% of white respondents had such a sum aside.

Hardwick also says his decision to take over as Vestwell’s chairman, just three months after leaving Riskalyze, is not limited to the growth potential of the company.

“I prefer to sit on boards where I am passionate about the mission of the company and frankly, Vestwell does a really meaningful job.

“The pension gap in the United States is a real problem, and we are tackling it head-on … Vestwell hits the mark on three fronts: team, mission and growth trajectory,” she explains.

Building expertise

To stay on top of its expected year-over-year growth, the New York-based company has also appointed data scientist Rob Molchon as the new chief technology officer; promoted Ryan Anderson to chief product officer (CPO) and added former Green Dot Bank CEO Mary Dent to its board.

John moody
John Moody has stepped down from Vestwell’s board to be replaced by Mary Dent.

New recruits are part of this plan. By removing his presidency, Schumm will free up about five hours a week from his schedule. Directors typically work 250 hours per year, according to the National Association of Board Directors.

Molchon’s experience as senior vice president of engineering in New York City, advertising data and risk monitoring, Integral Ad Science, will boost the company’s software development schedule. Molchon replaces retired CTO John Skovron, who will leave in 2022.

Anderson, the company’s first CPO, will focus on improving the fit between Vestwell’s product and marketplace, likely reducing the time the company has to spend customizing its software, according to industry observer .

Formerly CPO of financial planning software provider Advizr, Anderson joined Vestwell in 2019. But Schumm dismisses the idea that Anderson’s promotion signals change. Rather, he calls it a formal elevation.

“Vestwell is at a crossroads in its growth,” Dent says, via email, saying that it is growing healthily as a mature startup.

As the latest member of the company’s board, Dent replaces John Moody, appointed to Vestwell’s board in 2018, president of Matrix Financial Solutions, the Broadridge-owned software outsourcer.

Tight ship

Hardwick’s appointment as president comes three months after he stepped down as president of Riskalyze, a fintech company in Auburn, California.

Aaron Klein
Aaron Klein: ‘Vestwell chose wisely… I can speak from experience.’

She left the risk management software and model market provider following a giant clash between Orion and Riskalyze. The problem was the quality of their respective risk management software. See: The ironic result of Riskalyse’s negative advertising attack.

Hardwick sits on the board of directors of HiddenLevers, which bore the brunt of Riskalyze’s wrath, as well as the boards of New York-based private equity investor Genstar Capital, Omaha, Neb., Of the sub -treating Orion Advisor Services and El Segundo, Calif., IBD Cetera Financial Group. Genstar is one of the main private funders of Orion and Cetera.

She told Financial-Planning magazine that she left Riskalysis to avoid conflicts of interest. Riskalyse plans to replace it by the end of the year, according to its CEO Aaron Klein.

“Vestwell chose wisely… I can say from experience that Lori Hardwick will be a great president for them,” he said. “As for Riskalyse, we plan to appoint additional board members by the end of the year. More on this front, in time. “

As chairman of Vestwell, Hardwick, who has stepped forward for the role in talks with Schumm, will take on the delicate task of satisfying some of Vestwell’s most demanding investors – the bank holding companies in particular, according to Schumm.

She will also coordinate board meetings, governance and sub-committees, he said.

“Considering the number of highly regulated entities that we have in the room, it is important for everyone that we are running a tight ship,” he adds.

Schumm Sherpa

Hardwick, who joined Vestwell’s board in 2017, says guiding Vestwell to meet the demands of private equity growth is as much part of his new role as it is freeing up time for Schumm.

“My job is not only to stand up for Aaron and his vision, but to balance that with the expectations of shareholders,” she says.

Wells Fargo and Fin Venture Capital co-led Vestwell’s latest funding round, in which nine previous investors reorganized, including Goldman Sachs. See: How Aaron Schumm took on Goldman Sachs’ brightest young star; he attended a meeting for a friend and accepted an offer he couldn’t refuse – $ 30 million

Other backers include Goldman Sachs, Morgan Stanley, Manulife, Point72 Ventures, and Nationwide Ventures.

Allianz Life Ventures, Northwestern Mutual, FinTech Collective, Greenspring Associates, Primary, Teamworthy Ventures, F-Prime Capital, Industry Ventures and Commerce Ventures round out the list.

Dent, Hardwick, Molchon also all took a stake in the company, as part of company policy, according to Schumm.



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