401(k) startup Guideline doubles AUM to $4B during pandemic

While free lunches and ping pong tables may have been popular office perks prior to the pandemic, one 401(k) startup discovered that many remote businesses decided to invest in 401(k)s as workplace benefits instead. Businesses’ enthusiasm for these long-term benefits led to Guideline doubling its assets under management to $4B and adding 7,000 new client companies over the past year.

Why should we care?
For small businesses, 401(k)s can be complex, expensive benefits to run, with AUM-based pricing that can be as high as 2%. Startups like Guideline and others in the space – including Human Interest and robo-adviser Betterment – have rushed to fill a void by offering small businesses transparent and competitive pricing alongside intuitive, digital-centric user experiences. San Mateo-based Guideline experienced growth during the pandemic, which, according to CEO Kevin Busque, was driven by companies wanting to offer longer-term, sustainable benefits instead of in-office perks like parties or dinners. “[The small-business community] has developed a new approach to servicing their employees, where it’s less perk-centric and more benefits centric,” he said in an interview. Guideline also learned that client employees on its 401(k) plans were setting aside more money from their paychecks toward 401(k) contributions, a factor that may have been influenced by attractive employer matches and stimulus payments. Of course, Guideline isn’t the only 401(k) startup that’s experienced growth during the pandemic: Human Interest is reportedly adding $1 million a month in net new revenue, and Betterment for Business (Betterment’s business unit that oversees its 401(k) offerings) saw its number of plans grow by almost 30% during the pandemic.