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LearnVest Tries Reaching Clients Through Their Employers

By Joan Warner January 6, 2015

Financial-planning provider LearnVest has a strategy for serving mass-affluent clients without going out of business: Serve lots of them.

Through its LearnVest at Work channel, launched about a year ago, the company has signed up “tens of thousands of employees at 15+ employers, with plans to rapidly increase in 2015,” according to an e-mail from a spokesman. Users get access to LearnVest’s online budgeting, saving and debt-management tools, plus occasional help from a human planner. Their employers — so the business case goes — get happier, more productive employees.

To spread awareness of the program, LearnVest is circulating a new white paper showing that Americans grow increasingly anxious about money during their thirties and forties as financial responsibilities mount up, even though they’re in their peak earning years. Their stress takes a measurable toll on job performance. “Financial wellness is a huge concern, and it’s coming directly from Washington,” LearnVest CEO Alexa von Tobel tells FA-IQ.

Indeed, the Consumer Financial Protection Bureau published a sobering study last August in which a quarter of surveyed employees reported being distracted from their jobs by money worries. About the same percentage had to take time off from work to deal with a financial problem at least once in the previous year. Productivity issues aside, says von Tobel, “if nobody wants to retire because they’re not financially able, it becomes a liability for the company.”

Alexa von Tobel

She says LearnVest at Work was born when the country’s largest 401(k) plan providers, Putnam and Fidelity, approached her company with the idea of using its financial-planning platform to improve employee participation and contribution rates. Von Tobel also heard from human resources executives at big companies who told her, for example, that workers weren’t opting in for disability benefits because they didn’t understand the importance of income-replacement protection.

Other financial-advice firms are clued in to this demand. A Bank of America Merrill Lynch report from December 2013 found 46% of large companies either already ran a financial-wellness program for employees or intended to start one within two years.

But the AUM-based advisory business model isn’t designed to meet the need. LearnVest’s model is. Although it’s an RIA, the company doesn’t manage client funds and doesn’t get paid a percentage of assets. Employers with 1,000 or more workers pay $35 per employee per year for LearnVest at Work. That rate may get lower as employer size scales up, but the company declined to provide details. The costs can be paid out of ERISA budgets, according to the program’s website.

Von Tobel says LearnVest at Work gets results. “On average, 82% of employees who go to the program increase their 401(k) contribution level,” she says, adding that users also pay down their personal debt faster. As for her company, using employers as a point of entry lets her “reach not dozens of people at a time but literally thousands of people at a time,” says von Tobel. “LearnVest has made it profitable to serve a client that the industry formerly couldn’t serve.”

We have to take her word for it, as LearnVest does not disclose revenues. Its latest infusion of venture capital — $28 million in mid-April 2014, which brought the total to a reported $72 million since launch — was earmarked in part to expand LearnVest at Work.