Jeff Rosenberger and Guideline’s mission to provide 401(k)s to small businesses

The digital record keeper now has $9 billion in AUM across 40,000 customers.

Jeff Rosenberger is about as close to a “lifer” as one can get in the relatively new financial technology industry.

Growing up just north of San Francisco in Marin County, Rosenberger was exposed to financial products at an early age by his father, a executive with FICO, and mother, a researcher with the Federal Reserve Bank of San Francisco. After earning a bachelor’s degree in statistics from the University of California, Berkeley — which allowed him to take classes in computer science on the side— and a master’s from Stanford, Rosenberger worked for big data companies, often for large bank customers.

He moved fully into fintech in 2010 when he joined Wealthfront, then known as kaChing, as it was pivoting toward automated investing. In June, the company said it oversees $43 billion in assets.

In 2015, Rosenberger got in early on Earnest, a digital lending company, that was acquired two years later by student loan servicer Navient for $155 million.

Now Rosenberger is chief operating officer of Guideline, a fintech company trying to modernize retirement plans for small and midsize businesses. Guideline was founded by a former TaskRabbit executive who, exasperated by the experience of finding a retirement plan for a rapidly growing technology startup, decided to build a digital record record keeper from the ground up. Rosenberger joined in 2016 to bring in more experience with financial products.

Since launching in 2015, Guideline has grown to 40,000 customers and $9 billion in assets under management.

While plenty of fintech companies are working in the defined-contribution space, Guideline is unique for its emphasis on integrating with digital payroll companies, Rosenberger said. Building a record-keeping system allows Guideline to connect more easily and efficiently with a variety of providers that business owners rely on.

“Not all payroll integrations are the same,” he said. “Having deep API integrations is really powerful in terms of bringing down the cost to small and midsized businesses.”

The company also has a different revenue model than many, opting for the Silicon Valley method of charging a service fee for the technology rather than a percentage of assets under management. In addition to using only low-cost Vanguard funds in 401(k) portfolios, the goal is to keep overall cost as low as possible, Rosenberger said.

This difference, as well as the market Guideline is targeting, has helped the company grow under the radar of the larger defined-contribution industry, he added.

“Legacy players monetize mostly, if not exclusively, on the assets,” Rosenberger said. “The biggest players like Fidelity, Vanguard … we’re nonthreatening to them. Our model is additive, we’re growing the overall size of the [401(k)] market.”

Financial advisors are increasingly an important part of Guideline’s growth. Advisors can provide business-owning clients access to a 401(k) plan managed by Guideline and get tools — such as a recently launched mobile app — for monitoring and managing clients while incorporating their own advisory fee.

Because Guideline is the 3(38) registered investment advisor on plans, portfolio customization from advisors is limited to the menu of Vanguard funds Guideline provides. That makes it not the best fit for advisors who want to actively manage portfolio or control all aspects of the investments, Rosenberger said.

However, the market opportunity is huge: According to Guideline’s research, 90% of the 5.8 million small businesses in the U.S. don’t offer a 401(k) plan. Of the 42 million people who work at small businesses, 75% of them do not have access to a retirement plan. This could explain why Guideline for Advisors is one of the fastest-growing segments of the company’s business.

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