Pontera announces non-discretionary 401(K) management tool

Most financial advisors bill on an AUM basis, which works well when their clients have assets for them to manage (and bill on), but runs into problems when the client either doesn't have the assets to meet the advisor's minimum, or when the client's assets aren't available for the advisor to manage. Of which one of the more common scenarios is when a large proportion of the client's net worth is inside of a 401(k) plan – because although a client who has retired or left their job may be able to roll the account over into an IRA which can be subsequently managed by the advisor, if they are still working and contributing to the plan the assets are for the most part 'locked up' in the plan where the advisor can't manage or bill them directly.

And so advisors historically only worked with clients with 401(k) assets when the client had other investable assets that the advisor could bill on, in which case the cost of advising on the 401(k) plan was effectively bundled into the fee the client paid on their other assets. To the extent that the advisor actually 'managed' the 401(k) plan assets, it was typically either by having the client log into their 401(k) account during a meeting and walking them through the process of rebalancing, or else by actually obtaining the client's login information and doing the rebalancing themselves (which came along with a host of compliance and custody issues related to holding client credentials).

In 2018, however, Pontera launched with the aim of bridging the gap between advisors and their clients' 401(k) plans by allowing the advisor to directly trade in the client's 401(k) plan (without holding the client's login credentials, since the client logged in and gave the advisor permission to trade in their accounts on their own side of Pontera's portal). Although some advisors viewed this as a mere convenience – since trading in the clients' accounts directly saved some of the hassle of relying on the client to implement the advisor's recommended trades themselves – Pontera positioned it as a growth platform whereby advisors could start to count their clients' 401(k) plans among the assets that the advisor managed and billed on. And Pontera priced the offering as such, charging advisors a 30bps fee on the assets they managed through the platform with the clear expectation that advisors would charge their clients at least that much (if perhaps not their full ~1% management fee).

The formula appeared to work for Pontera, which had good growth momentum over its first five years. Starting in 2023, however, a series of state regulators issued notices to advisors scrutinizing the use of Pontera amid concerns that sharing login credentials was a violation of clients' user agreements with their 401(k) providers (and that advisors' use of the platform effectively abetted that violation), which began to give some advisors pause about whether they'd be able to continue using the tool (although confusingly, other state regulators issued their own contradictory guidance that explicitly allowed the use of Pontera to manage client assets, making the ability to use Pontera contingent on the state or states where the advisor did business). But the real blow came in the fall of 2024, when Fidelity – by far the largest 401(k) provider – started to block credential sharing systems including Pontera, effectively locking advisors out from their clients' accounts. At which point Pontera could do little more than issue strongly-worded letters asking Fidelity to reconsider, and advisors were left to question whether it was really workable to use Pontera for managing clients' 401(k) assets when a sizeable portion of those would be off-limits due to being held at Fidelity.

Which makes it interesting to see that this month Pontera announced a new "non-discretionary" 401(k) advice tool for financial advisors, which allows advisors to view and make recommendations for clients' 401(k) plan assets but leaves the implementation – i.e., the actual trading and rebalancing actions – up to the client.

The tool itself appears to be focused around streamlining the workflows associated with giving advice on 401(k) assets. It has tools for advisors to review clients' current assets and available investment options, communicate rebalancing recommendations, give guidance on the actual steps the clients can take to implement the recommendations, and send follow-up reminders and monitor the plan for future review. Which at its core makes Pontera's non-discretionary platform sound little different from many of the other account aggregation tools in advisors' portfolio management and financial planning software, with some extra features geared specifically towards 401(k) plan implementation.

But it's hard not to view Pontera's new features in the context of the struggles they've had over the past several years, first with state regulatory issues and then with Fidelity's crackdown, at maintaining the growth of its flagship discretionary 401(k) management tool. After years of fighting to make their case that managing clients' 401(k) accounts was in alignment with advisors' fiduciary duties (since after all, it was an improvement over the advisors holding their clients' credentials themselves), it could be that Pontera has resigned itself to the idea that it's unlikely to break through with resistant state regulators or the likes of Fidelity, and that a more traditional data-sharing arrangement (where the advisor can see what's in the client's account but not actually take any action within it) was the only hope of salvaging some of the value of its relationships with advisors who can no longer (or who no longer wish to) manage client 401(k) assets directly.

To that end, it will be interesting to note how Pontera positions and prices its new non-discretionary feature. While theoretically it only differs from the original Pontera tool in its inability to implement client trades after analyzing and recommending them, it may be hard to argue to advisors that it represents the same revenue growth opportunity that the original Pontera once promised now that it's clear that not all states or recordkeepers will allow its use. Meaning that advisors could likely be unwilling to pay in the neighborhood of the ~30bps that Pontera charges for its original product, and may not be willing to pay a bps fee at all for a product that doesn't seem as likely to directly grow their revenue.

This article first appeared on the Nerd’s Eye View at Kitces.com at https://kitc.es/advisortech-sep2026, and has been reprinted here with permission

Ben Henry-Moreland

Ben Henry-Moreland is a Senior Financial Planning Nerd at Kitces.com, where he specializes in writing and speaking on financial planning topics including tax, practice management, and technology. He also co-authors the monthly Kitces #AdvisorTech column. Drawing from his experience as a financial planner and a solo advisory firm owner, Ben is passionate about fulfilling the site’s mission of making financial advicers better and more successful.

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Michael Kitces

Michael Kitces is Head of Planning Strategy at Focus Partners Wealth, which provides an evidence-based approach to private wealth management for near- and current retirees, and Focus Partners Advisor Solutions, a turnkey wealth management services provider supporting thousands of independent financial advisors through the scaling phase of growth.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

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