Betterment for Business Teams Up With ADP

Will Trout, Head of Wealth Management Research at Celent, said the Betterment for Business partnership with ADP is "a strategic initiative that helps Betterment and plan sponsors, the latter of whom have been under withering assault by plaintiff's attorneys for the excessive fees charged to employee-investors."

He explained that the "partnership reduces the exposure of sponsor-employers to fiduciary liability and boosts their attractiveness to potential new hires [while it] helps Betterment increase assets in its RetireGuide program."

Betterment, the largest independent robo-advisor, described the new service as a "360-degree integration that will allow for payroll information from ADP to be fed directly into Betterment for Business, and vice versa, providing:

• A seamless and efficient exchange of information, freeing up firms to engage in other valued-added work on behalf of employees
• Easier collection of data including eligibility tracking and plan entry dates, which can simplify compliance
• Improved scale in adding new employees to the platform

Betterment for Business said the partnership represents "ADP's first-ever API integration," with a 401(k),  service referring to an application program interface, which is the source code that allows two software programs to communicate with each other.

It noted that the API integration is smoother and more efficient that the more typical file transfer protocol (FTP), which is exchange of files between companies, or screen scraping whereby a computer program copies data from a website.

As for what the new partnership could mean for advisors working with 401(k) plans, a spokeswoman said, "Betterment for Business wants to partner with advisors and consultants that are true fiduciaries to their plan sponsors and participants" and currently partners "with several different consultants and firms across a number of clients."