Spencer Williams compares the 401(k) rollover process to a time when individuals had to go to a physical bank counter to request a cash deposit. It was time-consuming and antiquated compared to the present, when ATMs and electronic payments are the norm.
"The 401(k) system has some very strong parallels," Williams said. "If you change jobs, you can no longer contribute to your old 401(k) and you have to start all over."
Williams is president and CEO of Retirement Clearinghouse, a Charlotte-based company that develops technology for retirement plan sponsors so that employees can transfer their savings without a lengthy, manual process or cashing out the account.
The company, established in the Queen City in 2001 as Rollover Systems, said Tuesday it will add 300 jobs here by 2025. The $4.1 million expansion comes with $3.3 million from a state Job Development Investment Grant and an expected $78,686 investment from the city.
Former Charlotte Bobcats owner and co-founder of Black Entertainment Television Robert Johnson is majority owner of Retirement Clearinghouse. He is also founder and chairman of The RLJ Cos., parent of Retirement Clearinghouse.
Williams said Johnson became majority owner of the company in part because a disproportionate number of Black and Hispanic individuals wind up cashing out their 401(k) accounts when they switch jobs or otherwise, making it harder for them to build up savings for retirement.
A 2012 Ariel/Aon Hewitt study found African-American workers cashed out their retirement savings 63% of the time during the last recession, and Hispanic men and women cashed out 57% of the time. About 39% of white employees and 34% of Asian workers did the same.
Williams said Retirement Clearinghouse has been working for years to obtain a regulatory framework from the U.S. Department of Labor for its system. An advisory opinion was issued in 2018, but last month, the DOL released further guidance and exemption for the firm's auto-portability technology that also created consumer protections around the automatic rollover process.
At the time, Johnson said in a statement the issuance was an example of how policymakers can facilitate private-sector innovation "that will produce benefits for millions of workers, especially the acutely under-saved segments of America’s minority population.”
Also last month, Retirement Clearinghouse landed its first major deal with a financial institution, Alight Solutions, which will offer the company's technology to its contribution plan sponsors.
"That was the starting gun firing off," Williams said.
He declined to talk specifics but said at least six other financial institutions are in various stages of adopting the technology as well.
Retirement Clearinghouse will relocate next year from its current office in Whitehall Corporate Center to a 44,000-square-foot space in Ayrsley, at the Two Silver Crescent building that delivered last year. Williams said the lease will likely start in May.
Williams said it was "a little strange" signing a lease for office space when all employees are currently working remotely. The business has not been materially impacted by the Covid-19 pandemic otherwise, he said.
Predictions about the future of workplace and office are still speculative. But similar to what many in real estate and other industries have said, Retirement Clearinghouse expects to provide flexibility around remote work even post-Covid-19.
"We’re only taking space for about two-thirds of our staff," Williams said. "We think one-third, maybe even 40%, of our workforce will be working from home on any given day."
He said the company will be creating a flexible floor plan and furniture arrangements in the office to accommodate what he expects will be employees coming and going regularly.
"I think that’s a permanent fixture in financial services and technology-driven companies," he continued.
