On Monday, Goldman Sachs' Investment Management Division announced that it will take over Honest Dollar, a web and mobile-based retirement savings platform based in Austin, Texas where the amount was not disclosed. The acquired startup introduced its savings platform last summer aiming to provide small and medium-sized business with an inexpensive 401(k) alternative.
The agreement that will close by July comes almost a year after Goldman revealed it was hiring Harit Talwar, former Discover Financial Services executive to lead the online lending expansion. This is one of Goldman's strategies to test with less exclusive and cheaper services. Goldman astonishes his counterparts in launching an online business for consumers starting a new exchange-traded fund that targets to beat the Standard & Poor 500 while requiring 0.09% yearly fee.
Honest Dollar said that employers take 90 seconds to sign up and offers as low as $8 retirement plans per employee every month. Once set up, employees will be asked series of questions and one of the six portfolios will be endorsed to them which are all made up of four various Vanguard exchange-trade funds, the Business Insider reports.
According to The Wall Street Journal, Honest Dollar is using Internet distribution and advances together like computer-generated portfolios to lower down the cost of retirement savings. Customers comprise ride-sharing startup Lyft drivers and its investors include Core Innovation, a venture capital firm and Vikram Pandit, former Citigroup CEO.
Honest Dollar is a startup seeking to overturn traditional employer-sponsored retirement business. Some of the most noticed is Betterment, which announced in September that it was transferring further retail accounts into 401(k) s, having a platform that includes investment advice and resort to be a less expensive substitute to traditional plans, based on a Forbes report.
"Honest Dollar has created a simple solution to a complex retirement savings problem," Timothy J. O'Neill and Eric S. Lane, co-heads of IMD at Goldman Sachs, said in a statement. "Together, we have the potential to help millions of people achieve their investing goals."
Acquiring Honest Dollar could increase Goldman's distribution channel for a key business presently more in favor with regulators - asset management - than the firm's finest and largest product trading and investing businesses. No amount was disclosed regarding the acquisition. Honest Dollar chief executive said that Goldman Sachs will help them increase their growth.
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