Betterment adds 529 plans to workplace benefits offering

Employers using Betterment at Work, the digital advice company’s workplace benefits business, will soon be able to provide employees with college savings accounts.

The New York City-based robo-advisor Thursday announced a new partnership with record keeper company Ascensus to offer 529 education savings plans alongside automated 401(k) retirement plans. Employees can enroll and contribute to the 529 plans digitally using the Betterment portal, and view account holdings alongside other savings and investment accounts. Companies can offer payroll direct deposits and provide matching contributions using Betterment at Work.

The 529 pans are available to anyone that uses a Betterment's 401(k)s, including advisors in the Betterment for Advisors business, according to Kristen Carlisle, vice president and general manager of Betterment at Work, said in statement. They are no currently available to retail customers using Betterment's core product.

Traditional wealth management firms have also been increasingly getting involved in workplace benefit programs. Earlier in June, Creative Planning acquired BerganKDV, a $2.5 billion accounting and professional services firm, to launch Creative Planning for Business.

A recent Betterment at Work survey found 68% of employees feel financial wellness benefits are more important now than a year ago, Carlisle said. It's up to employers to address the more complex financial needs of their employees, and they are increasingly turning to their advisors for those services.

"One of the largest drivers is the instability of the macro environment in the wake of the pandemic," Carlisle said. "There are also generational shifts happening with a rising number of employees entering the workforce dealing with student debt at a higher percentage than older generations."

“Adding educational savings to our benefits solution further cements our commitment to help businesses support the financial needs of their employees,” Betterment CEO Sarah Levy added in a statement.

This is not Betterment’s first foray into the world of college savings benefits. In 2022, the fintech acquired the partner and customer relationships of Gradvisor, which offered personalized college savings plans, to add 529s to Betterment at Work. Betterment also launched Student Loan Management, a product that allowed employees to add their student loan debt to their Betterment dashboard to receive recommendations, paydown tools and employer matching.

The new partnership with Ascensus, which partners with dozens of state governments, gives Betterment at Work customers access to state 529 plans, Carlisle said.

[Editor's note: this article was updated to include additional information and commentary from Betterment.]

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