In this Tech 4 Change spotlight, Singlebrook talks with Social(k) Founder and President Rob Thomas about emerging from the tech boom and crash of 2000 as a social entrepreneur, and future plans for his green, responsible retirement plan offerings. 

Social(k) is a recordkeeper and third-party administrator (TPA) for 401(k) and 403(b) retirement plans. In its 10 years in business, Social(k) has invested $150,000,000 on behalf of of 7,500 people working for over 300 organizations.

Singlebrook: How did you come up with the idea for your organization? How did your background prepare you to turn your ideas into reality?

Rob Thomas: After I sold my previous company, Krank2o--a caffeinated water company, a friend said I should think about becoming a stockbroker. He said I had nothing to lose and introduced me to Bill Guerin, who’s quite a guy. I hung around Bill’s office in Hartford for a week and talked to anyone who had anything to do with the financial business. Everything that I saw and heard told me this guy runs a really unique office. That’s why there were successful people there from all walks of life. In the financial industry, it’s hard to get people and keep them. It’s hard to be successful and stay motivated. Bill had gathered all of these people at the UBS office who were each running their own successful businesses. I was fortunate enough to be hired in late 1999, and for a brief moment, I was a stock picking guy.

This was when the tech boom was going on. It was crazy, the valuations of the stock were astronomical. This was the greatest business in the world! Then in March 2000, the stock market crashed, and the tech boom was over.

I had been working with one of the teams at the office that did a lot of work with 401(k) plans. I started working on some of the smaller plans and learning the business. They were one of the top teams in the country. Now they’re overseeing over $20 Billion of retirement endowment money. They taught me the 401(k) business, and I went and called on people I knew.

Throughout my life, I’ve always been a part of cooperatives. I went back to where I’d spent my time--in the natural products industry--and started talking to businesses about 401(k)s. I was on the bus to an Organic Trade Association conference, and PLANSPONSOR magazine had an article about three companies that were experimenting with a new thing called the internet. They offered a paperless 401(k). I called all three of them, and one called me back. They were the one that outlasted the others by a decade.

I ended up doing business with ExpertPlan. I was offering Calvert Funds on a paperless platform for Organic Trade Association members. It was a pretty successful little project. The clients that I spoke to said, “We’re an organic seed company. We don’t want to own Monsanto.” There was a need for green, responsible funds in these 401(k)s, and the industry wasn’t providing it at all. I started doing pretty good, and after about five years, I went back to UBS with ExpertPlan and asked about creating a new platform.

As a recordkeeper and TPA, the plan keeps records of the money in the group retirement account. The recordkeeper runs the website so you have access to your money and they keep track of how much is the individual’s money or earnings, and how much is the employer’s contributions. The TPA administers the plan. The recordkeeper is the accountant function, and the TPA is the lawyer function. What the TPA is doing is saying there is a plan document, or contract, between the plan sponsor and their employees and the federal government, which gives tax advantages for certain employee benefits. That’s the 401(k) code, and you have to have the contract in place and file the tax return. You can do all that on your own, but most of the time, you’re busy making green widgets and really aren’t interested in figuring that out.

Ten years ago, when you went to the recordkeepers and TPAs looking for a socially responsible fund, they laughed at you. There was no call for them, and they didn’t know much about green funds. Even today, ten years after I founded Social(k), ExpertPlan was an experiment that didn’t work, it turns out. It was bought by Ascensus three years ago; I assume because of the access and because they had a low-cost, web-based platform.

Ascensus has decided to close that platform down after three years. Well, not all of our plans want to move to Ascensus. They’re the country’s largest private recordkeeper for 401(k) and cafeteria health plans, and they’re a big accounting firm. But you don’t necessarily need to go with a big firm when you’re a small company.

Now Social(k) is free to use other providers, where we had an obligation to do business with ExpertPlan before. We’ve identified three recordkeepers and we’re going through the efforts of getting all the green options that are available ready to trade. We’ve got a lot of different skill-sets to bring to your plan to make sure your plan is successful and works.

That’s where the new Social(k) website comes in. We’re making it easy to go into your recordkeeping system through socialk.com, so you don’t have to remember which recordkeeper you’re using. You login from one site regardless of who your plan is with. We also discuss: what are the obligations of owning a 401(k)? how does green investing work? what are the associated costs? We’re doing more than just offering a gateway to a recordkeeping system. We’re offering a place where the information is straightforward, so you can come and do your due diligence.

Because of the ExpertPlan shut down by Ascensus, every single Social(k) plan has to move. The move to Ascensus is appropriate for maybe 20% of those plans. It’s not a move you would pick, except if it’s the path of least resistance. But when you're a fiduciary on a plan, you have an obligation to look at the options. You can be told you’re moving to Ascensus, or you can look at your options.

Looking at the options includes finding funds that have been screened, meet your criteria for green plan options, and put all that together in a way that is priced appropriately and compliant. You can have your advisor do that too. We now have technology that runs proposals and compares 3-4 so you can see what makes the most sense. We’re finding that people are liking it!

Green investing is growing. There’s a big march toward greening up portfolios. Fossil-free divestment (similar to the South African divestment) is bringing the conversation out into the open. It's bringing a lot of people to the question of, “What do I own, and what should I own?” Technology makes it easy. You can look at a portfolio much more easily today.

SB: Can you give an example of how web or mobile technology is used to help further your mission?

RT: One of those examples is HIP Investor. The platform does a deep dive into the impact of companies. It looks at sustainability and the impact a company has on the environment and society, and measures and scores its impact. It scores assets, bonds, and funds. So an advisor can say, “You’ve done a good job including some green funds. Would you like to know more about the impact of those companies?” That costs a tenth of a percent. That’s an example of where technology can deepen understanding through mining the data and putting it out there where the participant can engage.

We know that with two companies that do the same thing, like Fidelity and Social(k), with everything else equal, but one company is not divesting in things like Chinese oil companies that are involved with arming people in South Sudan so they can get their oil--it’s a nasty war and Fidelity has been asked a couple of times to look at that and not support this humanitarian crisis--with everything else equal, people are going with Social(k).

You look in those other funds and see Monsanto, BP, and Private Prison Corporation of America in there. You look at Social(k), and the fund options have good returns and have companies that are doing good beyond the financial bottom line. It’s a no-brainer.

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Singlebrook’s T4C campaign spotlights entrepreneurs and organizations that are using technology in unique ways to scale their ideas and create a massive impact. We are also creating our own high impact T4C projects. Check them out at: singlebrook.com/t4c. Share your stories of T4C or other inspirational resources and tips on Twitter (@Singlebrook) using #Tech4Change and on the T4C Facebook group, or contact us to be spotlighted in an upcoming feature interview or blog article!