401 harmony
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Transcript of 401 harmony
401 Harmony Aspires to Provide the Retirement Planning for the Neglected
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5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
<10000 10k-20k 20k-30k 40k-50k 50k-60k 60k-70k 70k-80k 80k-90k 90k-100k 100k-200k >200k
401k Number of Participants by Individual Asset Size Source: EBRI
Traditional Personal Advisor who invests to acquire a customer gets his money back in
12 Yrs
Robo Advisory Service that invests to acquire a customer gets its money back in
6+ Yrs
401 Harmony that invests to acquire this customer will get its money in
1.8 Yrs
33 MM
9 MM
10 MM
Traditional Personal Advisor who invests to acquire a customer gets his money back in
0.7Yrs
Robo Advisory Service that invests to acquire a customer gets its money back in
1.4 Yrs
401 Harmony that invests to acquire this customer will get its money in
1.8 Yrs
Traditional Personal Advisor who invests to acquire a customer gets his money back in
4 Mth
Robo Advisory Service that invests to acquire a customer gets its money back in
1 Yrs
401 Harmony that invests to acquire this customer will get its money in
1.8 Yrs
Neither Personal Financial Advisor Nor newly formed Robo Advisors can serve the neglected based on their current business model
How do we do it?
• We provide software as a service tool for 401k investors. We do not manage their money
• Therefore, Employer can make decision to purchase the software tool for all of their employees (whether they pay it or charge back to the employees)
• We will undertake their obligation to educate 401k employees
• In return we charge a very small fee per month per employee for our service
How are we different?
Advisor Fee
Customization of Service
1%
0.5%
0.0%
Advantage Free
Disadvantage Identify need but no plan
Advantage Use Age as the only factor
Disadvantage Do not consider Risk, need, or contribution
Advantage Risk Based (may use age)
Disadvantage Do not consider need and contribution, High Fees
Advantage Use Age, Risk, and some may consider need
Disadvantage Too expensive for most 401k participants
Advantage Use Age, Risk, Need, and Contributions
Disadvantage Requires users to act on the advice
Advantage Looks at all needs like insurance, etc.
Disadvantage Most expensive
Personal Financial Advisor
Packaged Funds
Free Calculators
What is under the hood?
• We use an optimization program to come up with asset allocation for each individual
• Three factors decide individual’s asset allocation
– His return requirement based on this current salary, retirement year, salary
increase, longevity, and social security
– Historical Diversification of asset classes using probability of loss
– Individual’s own appetite to take risk
• We select funds on 7 attributes broadly in three categories
– Fund’s historical “fee adjusted returns against a benchmark”
– Fund’s historical risk taking
– Consistency of performance in both up and down markets
What is included in our service?
• 24*7 Access to our website with unlimited use, quarterly rebalancing
• Quarterly Webinars and Onboarding training to train employees to use material
• Access to customer service representative
9-5CST (M-F)
• Access to all future development in our product
Benefit of using 401 Harmony
• Personalized Retirement Advice
• Increase 401k participation -> secured Retirement
• Improve Returns through Rebalancing
• More money for Retirement
• Employee Retention and Recruiting
• Meet 401k obligations to educate employee
• May help in meeting Section 3 38 Compliance
• Could be Free - You can pass on the cost to employees account
How do employees sign up?
• Company provides us email list
• We create user accounts
• We invite users for online onboarding webinar
• Each Employees agrees to our TOFU (Terms of Use)
• Each employees finishes the session with his/her own plan
Demo
This is a story of John and Jane who are similar in all respects except they contribute differently in their plan
Both have similar risk profile
Both used to work for Oracle but now work for SunGard and both have same assets
John’s plan assets at Retirement will be smaller because he contributes lower amount
Both score same on risk profile, they take risks if they see return potential
John’s plan assets allocation is different from Jane’s in SunGard plan
But d because both are no longer contributing differently in Oracle plan, the allocation is same
Vanguard Wellesley Income Fund was selected in SunGard Plan for High Yield Category based on 7 different attributes including fees
Fidelity Contra Fund provides best score in large cap growth category in the Oracle Plan
John and Jane both get their own customized advice on rebalancing their SunGard Plan
Both John and Jane will get the same advice to rebalance their portfolio in Oracle Plan