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For 2002, a Remarkable Success
ExpertPlan is an Internet company, an Internet company
in the financial services industry. And, no, it is not going out of
business, as have hundreds of well-funded dot-coms. It isn’t
either, as are any number of venerable financial services firms.
with its business in cyberspace and its offices in East Windsor, is
a retirement plan administrator. Last year it added products,
and clients, and received substantial new funding. Winthrop Cody,
ExpertPlan’s founder and president, says his company is on track to
achieve profitability by the end of this year.
ExpertPlan was founded in July of 1999, and began life in the Trenton
Business and Technology Incubator. Cody, an MIT graduate (Class of
1982), had been vice president and CIO of the Copeland Companies,
the retirement planning division of CitiGroup. His long-term goal,
pre-Internet, was to move up with a corporation. But he saw the
inherent in the Internet, and believed it to be a natural fit with
the retirement planning industry.
Many small and mid-size employers — fully 80 percent of them —
do not offer their employees 401(k) retirement plans, most often
the plans are difficult and expensive to set up and to administer.
Yet the benefit is among those employees most request. With pension
plans a rarity, particularly at smaller companies, and Social Security
at least something of a question mark, a 401(k) is what most American
workers are counting on to provide a retirement cushion.
Cody set out to create the technology that would make it feasible
for all employers to offer the plans. His answer is software that
allows financial planners to easily set up 401(k) plans — and
similar tax-sheltered retirement vehicles — for their clients.
These clients most often are employers, but, as of this year with
the introduction of ExpertPlan’s Solo 401(k), clients can also be
ExpertPlan typically cuts the cost of 401(k) set up
and administration in half. For a company of 50 people, the cost is
$750 for set-up, and $750 for yearly administration, plus $30 for
each employee enrolled. Not only does ExpertPlan save employers money,
but it also gives their employees features that are nearly always
missing in the plans offered by big companies.
Because ExpertPlan is Internet-based, employees can check up on their
retirement savings in real time (okay, maybe that isn’t the fun it
used to be), and can transfer money among funds, revise personal
see a contribution summary, and request loans. While their neighbors
at XYX Megacorp have to wait for a once-a-quarter statement, employees
at small companies with an ExpertPlan 401(k) can be online 24/7
funds around, hoping to outfox the markets.
But, because ExpertPlan is an Application Service Provider (ASP),
employees rarely know that what they have is an ExpertPlan 401(k).
Most often, the plan bears the name of the financial services firm
whose advisor sold it to their employer. ExpertPlan does not offer
plans directly, either to companies or to individuals, but rather
it works exclusively through those who sell the plans. Most often
this means a financial advisor connected with a large firm. Legg
Putnam, John Hancock, U.S. Bank, and Guardian, for example, are
and their agents can sell ExpertPlan products.
Cody guessed correctly about the fit between retirement plan
and the Internet. Just a-year-and-a-half after ExpertPlan was founded,
it moved from 900 square feet of incubator space to 7,270 square feet
in the Windsor Corporate Park, and doubled its headcount to nearly
20. Now, after another year-and-a-half, the company’s headcount has
"Things are going very well," says Cody. "We’re growing
and expanding." ExpertPlan now has about 50 customers, 30 of which
were signed up during the past 12 months. Space is growing tight in
the company’s headquarters, though Cody says he is being a bit quiet
about that. Already receiving calls from commercial real estate
he does not want more to come calling. Still, he says, "we’re
starting to burst a little bit."
In a year in which venture capitalists, tech group leaders, and state
development agency spokespeople all said — again and again —
that there is a real crisis in venture funding, ExpertPlan pulled
in a good amount. In late October the firm closed on $4.35 million
in a round led by Liberty Venture Partners, a Philadelphia venture
capital management firm, which invests in Internet, technology, and
health care companies that have demonstrated the potential to become
large and valuable entities. Other venture firms joining the round
included Meridian Venture Partners, Gamma Investors, Milestone Venture
Partners, and NextLevel Venture Partners.
Cody says raising the money was "tough because of the
Still, he acknowledges, ExpertPlan had an easier time than did many
other tech companies. Bottom line: "We were able to get
he says. This latest cash infusion, he says, will be enough to take
the company to profitability.
In another step toward maturity, ExpertPlan hired a
CEO this year. The new senior manager is Tim O’Brien, who was
from Prudential Mutual Funds, where he served as CEO.
This year brought other developments that raise ExpertPlan’s outlook.
The company had had two direct competitors, Emplanet and GoldK, both
of Boston. Emplanet has decided not to service clients’ accounts,
and is now "just pure software," says Cody. "We were
head to head," he says, but now "they’re recommending that
their clients come over to us." That will "almost double our
business," he says. As for GoldK, that company has raised $47
million — nearly 10 times as much as ExpertPlan has raised.
still standing," says Cody, "but they have had lay-offs, and
a management shake-up."
Why is ExpertPlan moving ahead, when so many Internet companies are
already fading from memory? For starters, Cody brought deep experience
and numerous industry contacts to his venture. Then, rather than rent
a loft in Manhattan, he started in an incubator. He also chose to
target a small universe of customers. While going after companies
directly would have cost a fortune in marketing dollars, going after
the financial advisors who serve them was a much more manageable task.
Or, as Cody says, "we don’t need to advertise at the Super
The company, which plans to add about 10 people this year, started
small, and is growing slowly. "We grow only as we need to
says Cody. "We focused on the business, spent prudently, and stuck
to our model."
Cody also chose a deep niche, and one well-suited to the Internet.
The online 401(k) market, by some estimates, will reach $2 trillion
in assets by 2005. And while consumers balked at buying furniture,
furs, and even toys online — sending E-sellers of those items
into bankruptcy — few object to monitoring and tinkering with
their 401(k) plans over the Internet.
ExpertPlan helps financial advisors win business, saves employers
money, and gives employees greater control over their retirement
It is a business that makes sense, and one that has been grown
Says Cody, "we’re happy."
— Kathleen McGinn Spring
Park 400, Suite 100, Cranbury 08512. Winthrop Cody, president.
fax, 609-918-1328. Www.expertplan.com
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