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The Lineup: ExpertPlan.com
The Internet is revolutionizing the financial services
industry, says Winthrop Cody, and he aims to get in on the ground
floor. ExpertPlan.com offers an alternative way for big financial
firms to administer 401(k) plans for small to mid-size companies.
Cody has founded a 10-person company that now occupies 900 square
feet at the Trenton Business and Technology Center. And yes, all in
the firm quit their day jobs eight months ago. The firm moved directly
from the "friends and family" financing stage to venture capital
investment and is closing on a small institutional run. "Over
the next two years we are looking to get $6 million," says Cody.
If the name Winthrop Cody rings a bell, it should. He is a direct
descendant of the first governor of Massachusetts Bay Colony, John
Winthrop, and is also related to an ancestor of Buffalo Bill, as in
Buffalo Bill Cody. The son of the CEO of various machine tool companies,
Cody went to Massachusetts Institute of Technology (Class of 1982)
and has an MBA from the University of Connecticut. Most recently he
was vice president and CIO of the Copeland Companies, the retirement
planning division of CitiGroup. He is married to an environmental
scientist who now teaches high school physics, and they have two daughters.
Cody says he never dreamed of being an entrepreneur. "In 1982
I was in the mode of `get a job in a big company and work for the
rest of my life.’" But when the Internet came along, he saw the
potential. He put up a personal bulletin board 15 years ago and his
first personal website in 1995. The Internet is a natural for retirement
"Traditional services," says Cody, "have high administrative
fees and find it difficult to adequately serve smaller companies.
The Internet allows us to focus on good service at a reasonable cost."
His firm does not sell to consumers, he emphasizes. It partners with
investment houses, stock brokers, and insurance companies to administer
retirement plans more efficiently — which would lower the price
so small businesses can afford them. Big companies will want to partner
with him, Cody believes. "We have experienced people who have
been in the business, but we are not encumbered by a lot of older
processes and can move very nimbly." He brought several of the
staff members with him from the Copeland Companies, the retirement
planning subsidiary of Travelers Group/Citigroup, and James Scott,
chief financial officer, was most recently CFO for KnowledgeWindow.com
and vice president of finance for Telecom Analysis Systems.
Fidelity Investments, has a similar service that is limited to Fidelity
products, and lots of other companies are trying to move into this
business. But Cody thinks he has the all-important head start. "We
started earlier than most and have the experience to pull it off."
— Barbara Fox
ExpertPlan.com LLC, 36 South Broad Street, Winthrop Cody, CEO.
609-655-1770; fax, 609-396-8603. http://www.expertplan.com
After the IPO, then what? One of the exhibitors, Garo
Doranian of AST Stock Plan Inc., hopes to line up as clients some
of these companies that are paying their employees partly with stock
options. His three-year-old firm offers away to outsource the administration
of stock options, which can be a headache for a small firm.
URI Kaufthal is the CEO of AST Stock Plan, which has offices in Manhattan
at 250 Broadway (212-659-2221, http://www.aststockplan.com).
AST Stock Plan is a sister company to American Stock Transfer Trust,
a transfer agent that holds the records of the shares for more than
4,000 public companies.
Theoretically a company can keep all its own records to administer
stock option plans and keep its employees happy, but that could be
both tedious and costly, says Doranian. "You have to know the
compliance issues with the ever-changing rules of IRS, the SEC, and
the FASB (Financial Accounting Standards Board) as to who gets what
shares. Each option becomes available on a vesting schedule that is
difficult to track," he says. To manage this a company will need
to license some software system for $15,000 to $25,000 per year, plus
the cost of labor. AST’s software, in contrast, lets it track thousands
of plans and achieve economies of scale.
"We are like the hub in the wheel of stock plan administration,"
says Doranian, who is a 1996 graduate of California State University
at Fresno. "The spokes are each department. We interact with payroll
to pay out the options. With legal, to keep on top of all securities
issues. With brokers trading the shares. With transfer agents that
our are clients are using — to make sure at the end of the day
that everything in the wheel of stock administration rolls smoothly."
— Barbara Fox
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