Pontera Raises $60M to Allow Financial Advisors to Help Clients with their 401(k)s and other Retirement Plans – AlleyWatch


56% of Americans feel they are not on pace to have enough to last through retirement.  Among those nearing retirement age (60-67), the figure drops to just 24%.  Taking advantage of a 401(k)’s tax-deferred and employer contribution benefits and maximizing the value of these funds is a critical mechanism for the 68% of US employees eligible for a 401(k) to ensure a smooth financial transition to retirement.  Pontera is a platform that allows financial advisors to manage retirement accounts like 401(k), 403(b)s, etc. on behalf of their clients.  Traditionally, financial advisors have had little incentive to manage these accounts that are typically cordoned off by the plan sponsors and also due to compliance challenges.  Pontera empowers financial advisors to actively manage retirement plan assets in coordination with the other financial holdings of their clients seamlessly.  Clients are able to receive the professional guidance they desperately seek as over 52% of plan participants report they are presented with more information than they can absorb when it comes to retirement planning. For plan sponsors, the platform ensures that assets aren’t transitioned out into IRAs and remain within their institutions.  Pontera collects a fee based on the assets under management on the platform from the advisor.

AlleyWatch caught up with Pontera CEO Yoav Zurel to learn more about the business, the company’s strategic plans, latest round of funding, and much, much more…

Who were your investors and how much did you raise?

Pontera raised $60M in this latest funding round. ICONIQ Growth led the funding round, with participation from Lightspeed Venture Partners, Collaborative Fund, Hanaco Ventures, The Founders Kitchen, and Blumberg Capital. This was a modest up round, with Pontera raising $160M to date.

Tell us about the product or service that Pontera offers.
Nearly half of Americans think reaching a comfortable retirement will take a “miracle”, while over 85 million workers have 401(k)s or another workplace account. As retirement savers seek professional help, they are often met with little to no advice at all on their workplace retirement accounts because financial advisors face compliance, security, and data challenges in managing these assets.

Pontera provides a platform that enables financial advisors to securely and compliantly manage retirement 401(k)s, 403(b)s, and more. Advisors invite their clients to the platform to authorize professional management, and advisors are then able to review, analyze, monitor, rebalance, and report on these assets as part of the client’s complete financial picture.

Studies show an advisor can bring up to 4% of additional annual returns to client portfolios through coaching, rebalancing, and smart tax planning. This means a 401(k) inside of a professionally managed household portfolio could double in 20 years.

What inspired the start of Pontera?
Pontera was founded in 2012 with the goal of empowering retirement savers to achieve a better retirement. We started with providing a consumer platform for data transparency that focused on fund options and fees in plan participants’ retirement accounts. During the years, we have come to the conclusion that retirement savers need more than just information–  They want assistance with managing their 401(k) assets, and surprisingly, when they turn to their personal financial advisor, they are most often met with little to no assistance at all.

In 2018, we pivoted to offering our platform to financial advisors to proactively manage workplace retirement accounts to create better financial futures for their clients. It was then that we achieved true product-market fit. Today, we serve retirement savers across the nation with thousands of financial advisor partners. Our brand is formed out of the Latin word “Pont”, representing our focus on bridging people to a better retirement.

How is Pontera different?
Many tech companies describe themselves as disruptive. We focus more on being accretive. Investors have told us Pontera uniquely provides a solution that is beneficial to all stakeholders in our ecosystem. Consumers benefit from better retirement outcomes, transparency, and peace of mind. Financial advisors benefit from growing their business with more assets under management and a wider addressable market of eligible clients. This in turn dramatically reduces the advisor’s need and incentive to roll over a client’s 401(k) out of their retirement plan into a managed IRA with their select custodian, which leads to huge benefits for both financial institutions and plan sponsors: better plan asset retention and stronger plan participation.

Pontera has no direct competitors; however, financial advisors may still choose to manage these assets with the proper in-house cybersecurity and regulatory compliance measures taken. To do so, advisors store their client’s credentials and access 401(k) accounts from their own devices. This presents cybersecurity risk and regulatory risk. It is also difficult to scale as a practice as clients have varied retirement plans across hundreds of different  financial institutions.

What market does Pontera target and how big is it?
Pontera enables retirement savers to attain professional management of their workplace retirement plan assets. There are an estimated $12 trillion in workplace plan assets.

What’s your business model?

Pontera charges a fee for assets managed on the Pontera platform. This pricing represents a fraction of the management fee billed to the client by the financial advisor.

How are you preparing for a potential economic slowdown?
Pontera has over $100M on our balance sheet and deploys capital with a lot of careful thought and prudence. We plan to continue to grow this way. Additionally, we believe financial advice becomes even more important during turbulent economic times.

What was the funding process like?
Pontera has been approached by many investors this year. With the entirety of the last fundraise on our balance sheet, we were not actively seeking funding. However, when ICONIQ Growth approached us, we soon learned their deep belief in the problem we’re solving and our approach. We welcomed them as a new partner because they are the right partner with a stellar network and track record of investing in industry shapers.

What factors about your business led your investors to write the check?
We have been told our product, operations, revenue growth (over 4x since our last fundraise), and accretive model make Pontera an attractive investment target.

What are the milestones you plan to achieve in the next six months?
In the next 6 months, we will execute growth plans to expand operations predominantly in research and development, marketing, sales, and customer support. We are expanding our office space in midtown and looking for great talent in the New York City area.
With a growing team, we will focus on executing our product roadmap to deepen value for customers. We will also expand our efforts to assist financial advisors as they educate retirement savers on the benefits of holistic retirement planning.

What advice can you offer companies in New York that do not have a fresh  injection of capital in the bank?
Don’t scale what doesn’t work. Very often, startups get caught up in building processes, meetings, even entire departments around unproven activities to reach their goals. To maximize efficiency and manage risk effectively, the company should engage in experimentation— but be ready to eliminate what doesn’t work and only scale what does.

Where do you see the company going now over the near term?
We expect to double the team size (now 220 people) in the next 24 months to continue to execute on our mission to help people retire better.

What’s your favorite winter destination in and around the city?
Shmoné in the West Village is a great place to warm up with Israeli cuisine by Chef Eyal Shani.

You are seconds away from signing up for the hottest list in NYC Tech!

Sign up today


Source link