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Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

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Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#21

Post by danvoell »

Just my 2 cents. The really exciting part about what you are doing is making 401Ks easier for businesses.

The really scary thing is this whole page - https://captain401.com/investment-philosophy

I for one don't want a startup investing my retirement fund. I just want to see a list of names that I know (Vanguard, Goldman Sachs...) that I can choose from. If you are providing regular funds as options I would make this abundantly clear and I would push your own investment strategy to the backburner. The core value-add that you are offering is making 401Ks easier for businesses.

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#22

Post by No1 »

wj wrote: post #18
No1 wrote: post #16

"The 401k is tied to dozens of Vanguard index funds" Would be great if someone would offer self-directed 401k plans. In theory, they exist, but in practice, they're nowhere to be found.

A lot of plans (well, a growing number) are now offering a self-directed brokerage account so that participants can opt out of the preselected investment options and pick their own. You should ask your H.R. department about adding that as an option.

As luck would have it, I have asked HR ;)

They have no clue what self-directed means, who to contact at the 401k provider, and aren't really interested in making more work for themselves. Simply getting some paperwork forwarded along to the provider took a couple of months. Unless you're a C-level exec, it ain't gonna happen.

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#23

Post by wj »

No1 wrote: post #22
wj wrote: post #18

Earlier quoted context omitted.

A lot of plans (well, a growing number) are now offering a self-directed brokerage account so that participants can opt out of the preselected investment options and pick their own. You should ask your H.R. department about adding that as an option.

As luck would have it, I have asked HR ;) They have no clue what self-directed means, who to contact at the 401k provider, and aren't really interested in making more work for themselves. Simply getting some paperwork forwarded along to the provider took a couple of months. Unless you're a C-level exec, it ain't gonna happen.

I think you are onto something there. I feel like it usually is the C-level exec that feels he can out perform both the advisor's models and the market in general.

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#24

Post by boomshucka »

danvoell wrote: post #21

Just my 2 cents. The really exciting part about what you are doing is making 401Ks easier for businesses. The really scary thing is this whole page - https://captain401.com/investment-philosophy I for one don't want a startup investing my retirement fund. I just want to see a list of names that I know (Vanguard, Goldman Sachs...) that I can choose from. If you are providing regular funds as options I would make this…

"Modern Portfolio Theory, Efficient Market Theory, and Capital Asset Pricing Model espoused by the world's leading financial economists" is also a fantastic lie. Who are these world leading financial economists? The worlds best investors believe such theories are pure nonsense. The best minds in finance do not believe in MPT, EMT or CAPM. Pure garbage written by people with physics envy.

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#25

Post by joshpadnick »

danvoell wrote: post #21

Just my 2 cents. The really exciting part about what you are doing is making 401Ks easier for businesses. The really scary thing is this whole page - https://captain401.com/investment-philosophy I for one don't want a startup investing my retirement fund. I just want to see a list of names that I know (Vanguard, Goldman Sachs...) that I can choose from. If you are providing regular funds as options I would make this…

Totally agree. Setting up a 401(k) seems hard and I'd love help. Picking the right investment fund might also be hard, but placing my savings under the management of a relative stranger feels very uncomfortable.

In a world where Bernie Madoff existed, it'd be almost irresponsible to invest retirement savings with a startup. That being said, WealthFront and Betterment are basically startups, but they seem to be at a different level of maturity.

Of course, I'm not sure how objective my perception is. Would a more credible looking website be all the difference?

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#26

Post by jhundal »

wj wrote: post #12
BradRuderman wrote: post #8

Assuming a company doesn't match their employee's 401k, what is the cost for a company to offer a 401k, traditionally, and what is the approx cost using Captain401?

From my experience costs for a 401(k) can be all over the board and the larger the plan the less the fees will be as a percentage of assets. I've seen as low as 20 bps and as high as 100 bps. The fees usually involve an advisor fee, a recordkeeper fee, and a custody and trust fee. A lot of providers provide all three services and bundle that into one fee. Some advisors use third party recordkeepers and a separate cus…

Employee Fiduciary is at 8 bps: http://www.employeefiduciary.com/401k-plan-pricing/

Don't know if they would come out lower than Captain401 though (no mention of any cut of the overall assets on the Captain401 page, if that's correct, they're very likely lower priced).

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#27

Post by wj »

jhundal wrote: post #26
wj wrote: post #12

Earlier quoted context omitted.

From my experience costs for a 401(k) can be all over the board and the larger the plan the less the fees will be as a percentage of assets. I've seen as low as 20 bps and as high as 100 bps. The fees usually involve an advisor fee, a recordkeeper fee, and a custody and trust fee. A lot of providers provide all three services and bundle that into one fee. Some advisors use third party recordkeepers and a separate cus…

Employee Fiduciary is at 8 bps: http://www.employeefiduciary.com/401k-plan-pricing/ Don't know if they would come out lower than Captain401 though (no mention of any cut of the overall assets on the Captain401 page, if that's correct, they're very likely lower priced).

That is definitely lower than I have seen (edit: for mid-sized plans at least). Thank you for bringing that to my attention.

Is that advisory only? I don't see any mention of that including recordkeeping and custodial services in that fee but do see them on another page.

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#28

Post by roger_lee »

joshpadnick wrote: post #25
danvoell wrote: post #21

Just my 2 cents. The really exciting part about what you are doing is making 401Ks easier for businesses. The really scary thing is this whole page - https://captain401.com/investment-philosophy I for one don't want a startup investing my retirement fund. I just want to see a list of names that I know (Vanguard, Goldman Sachs...) that I can choose from. If you are providing regular funds as options I would make this…

Totally agree. Setting up a 401(k) seems hard and I'd love help. Picking the right investment fund might also be hard, but placing my savings under the management of a relative stranger feels very uncomfortable. In a world where Bernie Madoff existed, it'd be almost irresponsible to invest retirement savings with a startup. That being said, WealthFront and Betterment are basically startups, but they seem to be at a d…

Just to clarify, all index funds are managed by Vanguard, and employees who want to choose their own investment allocation are free to do so. However, for the majority of employees that need help with their investing strategy, we use the same investing principles as Wealthfront and Betterment to make sure they're globally diversified and automatically rebalanced. Also, all funds are held in an SIPC-insured secure trust account by one of the nation's largest third party custodians that deals with billions of dollars -- we never touch the money ourselves.

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#29

Post by psawaya »

myblake wrote: post #14
roger_lee wrote: post #4

Earlier quoted context omitted.

Thanks for pointing that out -- we're hoping TechCrunch will fix this shortly. Our 401k actually offers dozens of Vanguard funds, and companies can even customize the investment options if they wish.

Can individuals customize their investments as well or is it all set at the company level?

Individuals are free to invest in any of the low-fee Vanguard index funds we include in our plan as they wish.

Re: Captain401 (YC S15) Wants to Make Creating a 401k Easier for Businesses

#30

Post by roger_lee »

aresant wrote: post #13

Having done this for a small biz ( a) We spent about $5000 to set up with an attorney. b) It's a !@%!@ nightmare to deal with the guy, with the taxes, etc. I would estimate 20 - 40 hours of set-up time for me, 1hr a month of ongoing paperwork and administration. c) It's at LEAST $2500/yr to administer with the variety of little fees. d) It's not straightforward for employees. So suffice to say at $90/mo + $4 per this…

Oh wow! That sounds terrible. Would love to hear from you: https://captain401.com/join
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