Smart US CEO Jodan Ledford — The Future of US Retirement, PEPs, and The SECURE Act
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In today’s episode, I sit down with Jodan Ledford, CEO of Smart USA.
Smart was founded in the UK in 2004 and has since become one of the UK’s largest retirement plan providers. Their investors include JPMorgan Chase & Co. + Barclays. Smart hired Jodan to lead their US market entry in the wake of the passing of The SECURE Act. In accordance with The SECURE Act, Smart is bringing technology to the US that will facilitate retirement income solutions, notably Pooled Employer Plans (PEPs).
In this episode, Jodan and I cover a number of topics, including:
Nashville becoming a technology hub:
For those of you that don’t know, I went to college in Nashville, and am a huge fan of the city. Jodan and I spend some time talking about the benefits of working in Nashville as it becomes a major technology and financial services hub.
Retirement planning history in the United States:
Defined benefits plans (pensions, etc.) dominated the landscape in the early 1970s starting with the ERISA legislation. This format guaranteed that a portion of the retiree’s income would be replaced until they die. Due to poor management, increasing cost, and growing life expectancy, funds went into a deficit and companies began moving away from this format. By the 1980s, the 401K (defined contribution) became the dominant retirement plan, which shifted the risk from companies to consumers. Fast-forward to 2019, and the SECURE legislation, which helped create a pooled employer plan, allows small businesses to ‘pool’ together onto one platform.
With this legislation, you can be a small retirement plan, and still operate like a $10B — $20B plan by combining with other businesses.
How Smart differentiates itself:
There are a number of name-brand (Charles Schwab, Empower) and emerging technology players (Alight) in the United States.
However, if you translate what Smart has done in the UK to the US, Smart would be the second-largest player by plan volume!
Their main goal is to help close the retirement coverage gap in the United States and provide a platform solution that is built for the volume to take on this challenge.
Jodan’s view on recent regulatory changes & The SECURE Act:
The recent passage of the SECURE Act 2.0 is a positive step forward. With it, companies can:
- Get 100% of administrative expenses covered for the first 3–5 years for retirement plans
- Create default enrollment for individuals in their organization
- Cover $1000 a person of matching contributions for the first 5 years
Jodan hopes that moving forward there is compulsory plan adoption for companies. He provides some creative solutions to limit the impact this has on government tax income, including using Roth IRA accounts. Either way, mandatory plan legislation would be impactful in reducing the coverage gap.
Jodan’s first 100 days at Smart:
A job switch is never easy, and even harder during the pandemic. During his first 100 days at Smart, Jodan emphasized developing a vision of where the world and company are moving, developing a 3–5 year plan, a product roadmap, and executing on that roadmap. He also emphasized a smooth transition to a virtual environment.
Rapid-fire questions:
- Should 401Ks be auto opt-in?
- Favorite fintech professionals?
- Thoughts on alternative assets in retirement plans?
- Best place to eat in Miami (Jodan is a Miami native)?
- Favorite thing about Nashville?
- Funniest work-from-home moment?
Special thanks to Anirudh Singh, future host of the Wharton Fintech Podcast, for his help in editing this episode and post. Look out for his first episodes this spring!
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Ryan Zauk
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Ryan Zauk is an MBA Candidate at The Wharton School, where he runs the Wharton FinTech Podcast. He currently works with the US International Development Finance Corp looking at technology impact investments in developing markets. He has a passion for music, media, and all things FinTech.
You can reach him at rzauk@wharton.upenn.edu or on Twitter.
