BlackRock Invests in Small Businesses 401(k) Provider Human Interest

Global investment firm BlackRock said Friday it is investing in small business 401(k) provider Human Interest Inc., in a sign the asset manager is interested in capturing the potential growth of small and medium-sized companies that offer retirement plans. The companies did not disclose the amount.

BlackRock is making a minority investment in the company and is leading a funding round to support the growth of the San Francisco-based record-keeping defined contribution platform, according to a press release. The investment from New York-based BlackRock will go toward helping the company improve its technology platform and enhance its operational processes and infrastructure, while also sharing its “experience and expertise,” it said in a statement.

“Getting people on the path to a secure retirement is key to BlackRock’s purpose, from pioneering target-date funds 30 years ago to managing retirement assets for more than 40 million Americans today,” said Anne Ackerley, head of BlackRock’s retirement group. rid. “We look forward to helping Human Interest bridge the access gap.”

BlackRock’s investment comes just weeks after the passage of the SECURE 2.0 Act of 2022, a series of retirement savings reforms aimed in large part at improving the creation of a new retirement plan through a combination of tax incentives and mandates in areas such as automatic enrollment. Many states, including California, Oregon, Connecticut and Massachusetts, already have mandates for employers to provide pensions, either through a state plan or other providers.

Human Interest, which was founded in 2015, said it has received $500 million in funding to date. is marketed as a provider of affordable, full-service 401(k) and 403(b) plan services for small and medium-sized businesses that are not equipped to take on the many administrative and fiduciary burdens that come with a plan offering. The company said it has seen more than 400% growth in customer numbers and revenue since its last funding round in 2021.

Human Interest has plenty of competitors who have also recently discussed the rise of the sector. In interviews last month in PLANADVISER, small business 401(k) providers Vestwell, Ubiquity Retirement + Savings and Icon Savings Plan discussed client growth due in part to market demand, government mandates and their low-cost models that offer 3(38) investments and 3(16) administrative fiduciary services.

BlackRock’s defined contribution division, which Ackerley leads, develops and distributes plan strategies and services for institutional as well as retail clients, reaching 65,000 plans and 35 million people, according to the company’s website. He also pioneered a target-date lifetime income strategy in the plan called LifePath Paycheck, which uses annuity contributions within retirement plans.

Neither BlackRock nor Human Interest immediately responded to a request to clarify the partnership and its goals.

“We are excited to work with BlackRock to find ways to provide retirement benefits for millions of additional workers in the coming years,” said Jeff Schneble, CEO of Human Interest, in a statement.

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