They may not have a 401(k) plan, but drivers working through Uber Technologies Inc.’s platform will soon be able to open a retirement account right in the app. And in traditional Silicon Valley style, the ride-hailing company is partnering with another startup to do it.
While fighting a pitched court battle to prevent drivers from being classified as employees, Uber has simultaneously joined forces with Betterment LLC, a robo-adviser valued at $700 million, to offer them IRAs. Rachel Holt, Uber's regional general manager for the U.S. and Canada, said the option will be fee-free for the first year.
Uber, which approached Betterment a few months ago, announced on Wednesday that the option will be available to drivers in Seattle, Boston, Chicago, and New Jersey, with plans to expand to other cities later this year. Drivers who choose the option will avoid one year of IRA charges that range from 0.15 percent to 0.35 percent, depending on the account balance.
The Uber deal may be the beginning of what Betterment said is a new segment for it to tap. The robo-adviser’s co-founder and Chief Executive Officer Jon Stein predicted potential to attract freelance workers elsewhere in the burgeoning “gig” economy.
“I’m excited about where we can take this from here, because it is very much aligned with our long-term mission,” Stein said.