Pontera password-sharing business model is a bridge too far for Fidelity; it bans the practice for its 401(k) plans in blow to the fintech's future

The $4.5-trillion recordkeeper cites data security as the immediate concern but it also cites a clash between unauthorized, unidentified third-party advisors executing trades -- without plan sponsor oversight

Author Lisa Shidler September 24, 2024 at 2:15 AM

4 Comments

Yoav Zurel will seek to forge partnership with recordkeepers.

Brooke Southall and Keith Girard contributed to the editing of this article.

401(k) Stories

Fidelity

Pontera

Brian Murphy

September 25, 2024 — 3:08 AM

A sad commentary on both Pontera and the VCs that are supposed to conduct "due diligence" before making investments. Throw this idea in the bin alongside Blooom. Funny story - they called me at least a dozen times trying to get me to sign up. I refused on the grounds that what they were doing would eventually get shut down by the regulators on the basis of their holding username/passwords. They assured me that their compliance lawyers had vetted them and found them to be a "technology provider", not a "financial service provider" - hence no issues. Uh huh...looks like Fidelity beat the SEC to the punch!

Joe

September 25, 2024 — 5:57 PM

Pontera also has an option that the advisor takes the credentials and does the linking for the client so what pontera says is in accurate . It creates a huge security risk. Then people at the firm are trading the 401k through ponteras platform. The whole arrangement is so that firms can siphon off fees from 401ks like vampires. How about you simply have the client send you the 401k invest options and then provide a recommendation if you are so concerned about them leaving their funds unallocated? Is this article saying pontera is so dependent on Fidelity assets for revenue that this decision puts their whole business model into question? That’s concerning since there are dozens of 401k providers who still allow access and also allow screen scraping through by all accounts. The whole thing is so shady.

Gregory Spickard

September 29, 2024 — 10:24 PM

Pontera only provides access for the RIA to the clients 401(k) retirement account. The client, who is a participant in the 401(k)-retirement account, nor the RIA are able to pull fees from the trust account. Firms cannot "siphon off fees from 401ks like vampires".

joe

October 1, 2024 — 3:51 PM

correct they get billed to the clients non qualified account. Advisors would much prefer to suck from the 401ks directly. Then Pontera gets a 30bps cut.

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