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The letter Kelly Havins received in September seemed fishy.
Havins, 63, lives in Phoenix and works as a food retail consultant. The letter appeared to be from Fidelity Investments, where he has had 401(k) accounts for decades.
The letter said that some Fidelity customers may have given their online login credentials to a “third-party platform used by their adviser to access their account.” It instructed Havins to contact Fidelity to authenticate his credentials, or he’d be locked out of his account.
“With all the scams going on lately, I immediately made a copy of and sent it to Kyle,” Havins said.
Kyle Louvar, CEO of wealth management firm Guided Capital, has been Havins’ financial adviser for several years. Louvar, based in Houston, uses the kind of platform described in Fidelity’s letter, with Havins’ blessing.
“I don’t know how to use stocks and trade,” Havins told USA TODAY. “That’s their job.”
The tool that makes remote access possible for advisers like Louvar is called Pontera. When Fidelity made good on a monthslong decision to crack down on its use, many clients lost digital access to their accounts, and were forced to contact Fidelity to reestablish their credentials.
Fidelity says it’s safeguarding client account information and funds, and that there are more secure alternatives to Pontera for advisers who want to access client accounts. For its part, Pontera says its technology is sound, and that the behemoth investment firm is trying to keep out third parties in order to sell its own advisory services to captive clients.
At its heart, industry observers say, the dispute exposes hard truths about America’s retirement savings conundrum. With the decline of pensions, the responsibility for preparing financially for the end of life is now squarely on the shoulders of ordinary people with jobs, kids, aging parents and plenty of other day-to-day concerns.
What’s more, the questionable financial literacy and investment skills of most Americans leaves them at the mercy of providers of financial services and products of all kinds.
This shift to do-it-yourself “is probably one of the biggest mistakes as a society we have made over the last 40 years,” said William Birdthistle, a professor at the University of Chicago Law School who previously served as director of the Division of Investment Management at the Securities and Exchange Commission. “It reminds me a lot of the cigarette ads I saw as a child, because almost invariably it is pitched like Marlboro Man for finance. You’re in charge of your own destiny financially.”
Financial advisers want access to 401(k) accounts
Financial advisers who spoke with USA TODAY about Pontera say it solves a real problem.
Clients may have significant amounts of money in accounts like 401(k)s, 403(b)s, and so on – and little to no idea what’s in them. The allocations may have been chosen when they first started the accounts years ago, and changed rarely or never. They may duplicate some of the investment strategies advisers are implementing in more actively-managed accounts – or they may clash with those objectives.
Pontera “creates a bridge between us as advisers and our clients’ retirement portfolios that are sponsored by their company or municipality or the federal government,” said Gregory Guenther, managing partner at New Jersey-based GRANTvest Financial Group.
“It just replaces that archaic framework of ‘Send me your statement, I’ll add it to the file, we’ll include it in a review.’ It’s 2025. This is a 2025 solution.”
Are there other ways to view retirement accounts?
But Pontera isn’t the only alternative to old-fashioned or manual attempts to share account information.
In response to a USA TODAY request for comment, a Fidelity spokesperson said in an email that “the practice of requiring a customer to share their login credentials with a third party – which are then stored with the third party – is widely regarded as unsafe and is not supported by Fidelity, particularly because it enables third parties to take actions, like executing trades, in all the customers’ Fidelity accounts. If a customer chooses to work with an adviser to manage their 401(k), they can do so, as there are solutions and advisers available that leverage safe practices.”
One such solution is Absolute Capital, a Pittsburgh-based company that makes formal agreements with Fidelity and other retirement plan providers. Those agreements, said the company’s CEO Brenden Gebben, make it clear to a company like Fidelity that it’s Absolute logging in on behalf of the client, not an adviser posing as the client, which is what happens with Pontera.
“We are a regulated entity,” Gebben said. In contrast, he said, Pontera is not regulated from a financial perspective. “They’re a financial tech company.”
Pontera’s perspective
Pontera, founded in 2012 and based in Manhattan, says that as a technology provider, it doesn’t need to be regulated in the traditional sense. The company says Fidelity’s stated concerns about security are disingenuous, and the restrictions on access are really a way for Fidelity to sell its own services to clients.
In response to a request for comment, a Fidelity spokesperson said, “We work closely to support many RIAs who securely advise on employer-sponsored retirement accounts with plan sponsor oversight,” referring to Registered Investment Advisors who do not work for Fidelity.
Retirement accounts are “one of the only situations where the consumer – the plan participant – is held captive and is subject to any requirement that the plan provider unilaterally imposes on them,” said Zachary Pardes, a Pontera spokesperson, in an email. “If Fidelity decides to lock you out from your 401(k) account forever – for any reason – there is nothing you can do to switch providers except quit your job.”
Pontera cites various regulations, from Labor Department guidance to SEC rules, that it says shows it’s operating within generally accepted industry standards. It also has agreements with Fidelity competitors like Manulife John Hancock, 401Go, and many others.
The company says it’s offered repeatedly to work more closely with Fidelity to establish best-in-class “API” electronic interfaces, but that Fidelity has not responded to those requests.
Fidelity, meanwhile, told USA TODAY that many retirement accountholders “said that they were unaware that they had shared their credentials.”
In the absence of an API or interface like the one Fidelity has approved with Absolute Capital, “Fidelity has a legitimate concern about the way Pontera is currently accessing their information,” said Corey Frayer, director of investor protection for the Consumer Federation of America, a nonpartisan advocacy organization. “In addition, Pontera’s model from my perspective certainly looks like an attempted end run around some of the (regulatory) rules that would be triggered if the advisers did this same thing directly.”
Customers want choices
Pontera portrays itself as the ally of consumers who want choices. “Retirement savers, you deserve better. You deserve choice, not captivity,” wrote Yoav Zurel, its CEO, in an Oct. 10 blog post.
But it’s financial advisers, not savers themselves, that pay for and use Pontera, which means that only clients with the financial resources to employ an adviser benefit from its services.
That speaks to the disparities that have arisen in the employer-sponsored, manage-it-yourself retirement system that’s evolved over the years. Scholarly research shows that Black and Hispanic workers with access to a 401(k) or a 403(b) plan contribute approximately 40% less than white workers, and Black workers get $0.31 of tax benefit for every $1 that white workers get.
The tax benefits that employees enjoy come at a cost to taxpayers overall: it’s equal to over 1.5% of GDP annually, that 2024 paper found.
Whatever the shortcomings of the current system, consumers like Kelly Havins, say control over their funds is what matters. He believes working with an independent financial adviser and using Pontera both serve a purpose.
“I realized what they were doing,” he said of Fidelity. “It was a power play to get rid of Kyle and his team … and then they would sell me their program to manage my money, you know, keep it in house.”
A Fidelity spokesperson did not respond to a request for comment on Havins’ views.
“I just didn’t want to be pushed around by a big company,” Havins said.