Technology has drastically changed the way that Americans prepare for retirement, and some major corporations are starting to take notice. Now, global investment management giant Goldman Sachs has made a key acquisition to enter this burgeoning market.
According to Nasdaq, Goldman Sachs Group Inc. is set to acquire Honest Dollar, an online retirement savings startup company that was founded just one year ago. The acquisition was made by Goldman’s investment-management division, which is spearheaded by former Discover Financial Services executive Harit Talwar.
Honest Dollar was founded in Austin, TX, and its headquarters will remain there once the acquisition is completed. The fast-growing company sells low-cost retirement plans to small companies, which often range from just $8 to $10 dollars per month for each employee.
With the rise of computer-generated stock portfolios, the cost of saving for retirement is now lower than it has been in years, particularly for small businesses. Just 39% of part-time employees had access to retirement benefits in 2015, but that percentage will gradually increase as more companies take advantage of this new technology.
In just one year of operation, Honest Dollar has already established itself as a top player in the online retirement benefits industry. In 2015, the company raised $3 million in seed funding, which helped to attract big-name clients like ride-sharing startup Lyft.
As CNBC reported, the acquisition of Honest Dollar is a major coup for Goldman Sachs, which has been competing with other investment corporations to strike while the iron is hot in the online financing industry.
Last year, J.P. Morgan Chase and Co. announced an exclusive partnership with OnDeck Capital, which provides online loans to small businesses. Last week, Bank of America Corp. dispatched one of its top executives to Silicon Valley in hopes of luring a promising online payments startup.
For Goldman Sachs, the acquisition signifies a step into the future. Small businesses and politicians have been speaking out on the need for low-cost retirement savings plans, and Honest Dollar is one of the only companies that offers these services online.
“Honest Dollar has created a simple solution to a complex retirement savings problem,” said Timothy O’Neill and Eric Lane, co-heads of investment management at Goldman Sachs. “Together, we have the potential to help millions of people achieve their investing goals.”
Goldman declined to comment on how many companies are currently using Honest Dollar’s services, but industry experts fully expect its customer base to grow exponentially now that it has the backing of an established investment firm.