BrightScope Illuminates Corporate 401k Plans, Compares yours to those of Competitors

Posted by Kyle Psaty on September 30, 2010 in Bright Future, Retirement, Tech Tools

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Let’s be serious. Understanding how your 401k is performing for you, personally can be confusing enough. But have you ever thought about how well your company’s 401k measures up against those of your competitors?

Neither had we, until we checked out BrightScope — a California-based Internet startup that’s helping people better understand the 401k landscape. Founder and COO Dan Weeks says BrightScope’s vision is “Millions more retiring with dignitiy,” and that’s something we can get behind here at PerkStreet.

Over 70 percent of all 401k participant plans are currently rated by BrightScope.

We touched base with him last week as part of a new series we’re launching, aimed at introducing you to other tech startups like PerkStreet Financial — companies out to help you better manage and understand your personal finances.

“What we’ve found is that the difference between (401k) plans is much larger than we expected,” said Weeks. “If you look at our site you can see that even within the same industry, if you move from Company A to Company B, it could mean 12 years earlier retirement.”

According to Weeks, whose company has received national news attention for cracking into the U.S. Department of Labor to mine 401k data, people don’t give enough thought to their company’s retirement plan when job hunting.

“What people assume is that a 401k is a check mark for a company as opposed to asking, ‘How good is the plan?’ We enable you to see how competitive your company plan is,” he said, noting that 401k reports often don’t include details about the fees enrollees are paying. This is just one factor contributing to the widespread mis-understanding of corporate retirement plans by employees.

To solve this problem, BrightScope recently released a personal 401k fee reporting tool.

The data BrightScope shares on the website isn’t just for individuals, either. Weeks says many companies are uninformed about choosing a 401k plan that’s best for their employees. It’s a big problem.

“To a large degree, the people within companies who set up the 401k plans don’t know if they’re picking a good or a bad plan,” said Weeks. “It’s why we rate these plans independently, and it’s also why we rate six sub-attributes for each plan on BrightScope.”

Human resources people and benefits people are used to benchmarking salaries. BrightScope simply allows them to do the same kind of research for 401k plans.

Said Weeks: “If the bad plans become more like the good plans, millions more will retire with dignity. But a lot of the bad plans don’t know they’re bad plans.”

BrightScope is a great resource for individuals and for those with fiduciary responsibility over corporate 401k plans at the firms themselves. Moreover, BrightScope’s industry-specific slant makes it easier to compare a company’s plan with the plans of competitors — so it’s good for those who are weighing employment options. If your company’s corporate retirement plan isn’t listed on BrightScope, you can find it on the site and supply them with some simple information to make sure it gets rated.

Here at PerkStreet, we’re committed to being a financial institution you can trust to tell you about new websites and companies that help you better understand your personal financial situation. Do you know of others we should be in touch with for this series? Let us know in the comments!