Shifting 401k Costs to Employers
Kevin Busque and Steven Wu, CEO and CFO of Guideline, on the 401(k) and payroll ecosystem
Guideline’s pricing matters because it moves the economic burden of a 401(k) away from the worker’s growing nest egg and onto the employer’s software budget. In practice, that means a small business pays a predictable monthly bill, around $49 to $129 plus per employee charges in older pricing, while workers pay only a small 0.08% asset fee. Legacy providers more often stack plan fees, advisor fees, and fund fees that rise with assets, so the more an employee saves, the more dollars the provider takes.
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For a legacy small business plan, the employer often sees a mix of setup fees, admin fees, and participant charges, while employees absorb asset based charges through plan expenses. Public small business materials from Fidelity Advantage show a $500 startup fee plus a 0.125% asset based participant fee, and industry fee studies have put John Hancock small plan all in fees around 1.58% on average.
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Guideline’s model looks more like payroll SaaS than wealth management. Revenue grows when a company adds employees, upgrades plan design, and stays for years, not just when markets go up. That is why the business can sell to first time 401(k) buyers that incumbents often ignored, because the account does not need a large asset base on day one to be worth serving.
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The closest modern comparable is Human Interest, but even that still uses more asset based participant fees. Human Interest’s current pricing includes employer monthly fees starting at $120 plus $4 to $8 per employee, alongside participant asset based fees for advice, recordkeeping, and custody. Guideline is more aggressive in keeping participant level charges low and making the employer bill the primary revenue stream.
The direction of travel is toward retirement plans becoming another software module inside payroll, benefits, and HR. As state mandates and SECURE 2.0 pull more small businesses into the market, the winners are likely to be providers that can automate recordkeeping, compliance, and payroll sync cheaply enough to price like SaaS, not like a traditional asset manager.