Betterment beefs up 401(k) advisory board with ex-Vanguard expert

Barbara Fallon-Walsh, a former Vanguard executive, could help the robo boost its record-keeping business.

Jan 23, 2018 @ 5:20 pm

By Ryan W. Neal

Betterment is beefing up its 401(k) business' advisory board, a sign that the robo-adviser could be preparing to make a more aggressive play into the retirement plan provider market.

The Betterment for Business board is adding Barbara Fallon-Walsh a 30-year veteran of the financial services industry. Most recently, Ms. Fallon-Walsh served as the head of Vanguard's institutional retirement services division, which administered plan programs for corporate, academic and government entities for the investing giant.

Ms. Fallon-Walsh retired from Vanguard in 2012. She still serves on the boards of Alliance Bernstein, AXA Financial, AXA Equitable Life Insurance Company and MONY Life Insurance Company of America.

"With her extensive experience in retirement investing and helping financial services companies grow, Barbara will bring a unique perspective to our advisory board as we work to become the most trusted 401(k) service for plan sponsors and participants," said Jon Stein, Betterment's CEO, in a statement.

Speaking to InvestmentNews, Ms. Fallon-Walsh said she was interested in the approach Betterment is taking with its retirement business, particularly the focus on closing the retirement-savings gap, especially for a segment of the market traditionally avoided by the financial services industry.

(More: Betterment retirement robo attracts 300 companies to 401(k) platform)

Ms. Fallon-Walsh said that while large plans tend to have internal teams focused on the investment plans, smaller companies often rely on human resources or even the company's president even when those individuals may not have expertise in retirement. Ms. Fallon-Walsh believes Betterment for Business' technology removes the barriers of entry that would prevent these companies from offering retirement as a benefit to employees.

"We should all be equally focused on closing the savings crisis," she said. "Betterment is right in there focusing on it. There isn't any one company that will solve this for everybody. Putting the best thinking on it to provide innovative breakthroughs – ultimately the beneficiaries will be the plan sponsors and participants."

When Betterment for Business launched in 2015, becoming the first online automated investment service to begin providing 401(k) plans to employers, some pointed out that the market Betterment was targeting can be difficult to reach.

Bringing on Ms. Fallon-Walsh's expertise in the retirement industry and experience at Vanguard seems to indicate that the company is ready to compete with other record keepers in the space, such as TIAA, Prudential Financial, Charles Schwab and Fidelity Investments to attract the largest retirement plans.

Joe Ziemer, Betterment's vice president of communications, said the company's strategy isn't changing, but it is a continuation of adding expertise to a board that already includes a former policy expert from the Department of Labor, the director of benefits from Google, and a former BlackRock managing director.

"We entered the space not a great long time ago, and we certainly have a lot to learn," Mr. Ziemer said. Experts like Ms. Fallon-Walsh help the company prioritize its product roadmap, he said. He wouldn't give specifics of what Betterment has planned.

Mr. Ziemer said the company will continue to market to small- and medium-sized plan sponsors, but said the company would like to start winning plans that have several hundred plan participants.

"Certainly, we have ambitions," Mr. Ziemer said, adding that external resources like Ms. Fallon-Walsh "can be valuable with helping that process."

Ms. Fallon-Walsh said she thinks Betterment has the ability to move up-market with its retirement business, which she believes would be beneficial for the retirement market as a whole.

"One of the things Vanguard did for investments was always being out there with a low-cost alternative. It keeps everyone honest in terms of what they can charge," she said. "If Betterment can be out there with a low-cost record keeping alternative, it helps the whole industry be better.

But the move up market carries challenges — namely a greater demand for more customization within the plans. This is an area Ms. Fallon-Walsh believes she can lend her expertise.

"I found the retirement portion of my career one of the most interesting and intellectually challenging," Ms. Fallon-Walsh said. "I think my mark on the company would be if I can pull anything from my experience and background [with] providers and plan sponsors that would enable Betterment to cost effectively extend their reach in record keeping."


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