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An advisor’s guide to the benefits of solo 401(k)s
An advisor’s guide to the benefits of solo 401(k)s As you work with self-employed clients, here are five big reasons why a solo 401(k) may be right for them (and your firm). A solo 401(k) might just be the biggest retirement savings growth hack for your self-employed clients — and you can help them navigate it. As more people shift toward freelance work, consulting, and small business ownership, RIAs are increasingly asked about retirement planning by clients who don’t fit the traditional W-2 profile. Enter the solo 401(k): A lesser-known retirement account that just might be the ultimate savings vehicle for self-employed clients of RIAs. However, many advisors overlook the solo 401(k) or assume it’s too complex. In reality, it can be a straightforward, flexible, and powerful option for those who have no full-time employees beyond themselves (and possibly a spouse). The basics: What exactly is a solo 401(k)? A solo 401(k) is a one-participant 401(k) plan for self-employed individuals of owner-only businesses. It works similarly to a standard 401(k)—with employee and employer contribution components—but is designed specifically for businesses that do not have full-time employees other than a spouse. It’s different from SEP IRAs (which only allow employer contributions) and SIMPLE IRAs (with lower contribution limits). For many advisors (and their clients) who are less familiar with solo 401(k)s, two misconceptions commonly get in the way of using one for savings: “Solo 401(k)s are too complicated.” Some solo 401(k) providers (like Betterment Advisor Solutions) offer streamlined setup and modern digital account management. This makes it simple to manage. Once the plan is established, annual maintenance is often minimal—though advisors and participants should be mindful of certain administrative requirements, such as filing Form 5500 once the plan balance exceeds $250,000. “They’re only for high-income earners.” Contribution limits are high (we’ll cover more on that in a minute), but that doesn’t mean a lower-income entrepreneur can’t benefit. Contributions are flexible each year, so clients can scale up or down depending on business performance. Solo 401(k)s are really a simple way for self-employed individuals to save for retirement. And, they offer some added financial benefits that savers can’t get through other plans. Top 5 benefits of solo 401(k)s for your clients As you work with self-employed clients, here are five big reasons why a solo 401(k) may be right for them (and your firm). Benefit 1: solo 401(k)s are tailored for solo entrepreneurs Sole proprietors, consultants, and gig workers have unique needs. They’re juggling business expenses, unpredictable income streams, and personal financial goals. A solo 401(k) allows them to save aggressively in profitable years, and dial back contributions if cash flow tightens. Solo 401(k)s also have the added benefit of allowing spousal contributions. If a spouse is also on the payroll, he or she can contribute just like the primary business owner. This effectively doubles the family’s retirement savings potential and can significantly reduce household taxable income if making pre-tax contributions. What does this mean for advisors? More opportunity. The rise of online platforms, remote work, and freelance marketplaces means self-employment is only becoming more popular. In fact, conservative figures estimate that there are 16 million self-employed Americans. By offering guidance on solo 401(k)s, you can expand your practice to a growing client segment that often has questions about retirement planning but limited employer-sponsored options. Your firm can offer an opportunity they may not have realized they had. Benefit 2: High contribution limits One of the biggest draws of the solo 401(k) is the dual role contribution approach: Employee contribution: In 2025, individuals can contribute up to 100% of compensation or $23,500 (or $31,000 if age 50 or over). Employer contribution: As the business owner, they can also contribute up to 25% of net self-employment income (20% for sole proprietors/partnerships). Total contributions to a participant’s account, not counting catch-up contributions for those age 50 and over, cannot exceed $70,000 for tax year 2025. Combined, dual-role contributions can lead to substantially larger total contributions than are available through SEP IRAs or SIMPLE IRAs. For instance, a SEP IRA lacks the employee deferral option, so having both an employee and employer bucket in a solo 401(k) can help maximize tax-advantaged savings. Benefit 3: Tax advantages The tax benefits are very real when it comes to solo 401(k)s. By helping clients understand these benefits, you can have a significant impact on their tax burden, both now and in retirement. Pre-tax contributions: Similar to a traditional 401(k), clients who want immediate tax relief can fund their solo 401(k) with pre-tax dollars, reducing their current taxable income. This is particularly appealing to self-employed individuals, looking to lower their overall tax burden in years of high income. Roth contributions: Many solo 401(k) providers now allow Roth contributions. This means after-tax money goes in, but withdrawals in retirement are generally tax free. Offering both pre-tax and Roth options gives clients flexibility in managing their present and future tax situations. SECURE 2.0 Automatic Enrollment Tax Credit: Many miss this one, but under the SECURE 2.0 Act, if an eligible solo 401(k) adds an auto-enrollment feature to their plan, they can claim a tax credit of $500 per year for 3 years. Benefit 4: No income restrictions on contributions Unlike Roth IRAs, which have strict income limits, solo 401(k)s do not cap your ability to make Roth contributions based on income. High earners who would be locked out of a Roth IRA can still enjoy the potential for tax-free growth through a Roth solo 401(k). And let’s not forget about catch-up contributions: For clients over 50, an additional $7,500 (as of 2024) can be contributed to the employee deferral portion. This “catch-up” feature allows those who got a late start on saving to accelerate their retirement funding. Benefit 5: Prior year contributions for new plans The SECURE Act 2.0 introduced a key benefit for solo 401(k) plans: Business owners can establish a solo 401(k) by the previous year's tax filing deadline (including extensions). Employer contributions for the prior calendar year can be made up until the business’s tax filing deadline. Example: How prior contributions work If your client sets up a new solo 401(k) in March 2024, it can still count as a 2023 plan. Your client can make 2023 employer contributions until April 15, 2024 (or October 15 if they file an extension). This is a powerful opportunity for clients to catch up on retirement savings they might have overlooked during a busy year. Adding value: The advisor's role in a client’s solo 401(k) Although solo 401(k)s can be self-directed by a client, you have an opportunity to add value by guiding your client to the right plan for their overall retirement needs. Here are four ways your firm can help clients navigate solo 401(k)s: Contribution strategy: Help clients determine whether pre-tax or Roth contributions (or a mix) best suit their goals. Timing contributions strategically—especially near tax deadlines—can optimize tax savings and cash flow. Investment guidance: solo 401(k)s often offer a wide range of investment options. Advisors can provide asset allocation and diversification strategies based on each client’s risk tolerance and timeline. IRS rules and compliance: While solo 401(k)s are relatively straightforward, there are filing requirements (e.g., Form 5500 for account balances above $250,000) and rules about loans from the plan. Advisors can help keep clients on track. Long-term retirement planning: A solo 401(k) should be one part of a holistic retirement strategy. Advisors can integrate Social Security planning, insurance, and estate considerations to round out a client’s financial picture. Tips for getting started: Choosing a solo 401(k) provider When recommending or setting up a plan for your clients, look for a provider that offers straightforward pricing, an intuitive digital experience, and proven knowledge in compliance and recordkeeping. Also, consider the breadth of services a provider offers. Some providers also offer tools for RIAs, like custodial services or portfolio management, which can streamline your overall practice management. Introducing the Betterment solo 401(k) The Betterment solo 401(k) integrates smoothly with our all-in-one custodial platform purpose-built for independent RIAs. Modern, digital-first experience: Simplify plan set-up and ongoing management with a 100% digital process. We eliminate the administrative burden traditionally associated with solo 401(k)s by digitally opening and funding accounts with no paperwork required. Seamless ongoing management: We provide compliance support for your firm with no need to manually track contributions. Cost-effective plans: Minimize costs while maximizing savings potential for your self-employed clients. Give clients access to low-cost investments paired with the high contribution limits of a solo 401(k). Plus, clients can include spouses at no additional cost. Roth solo 401(k) option: Give your clients the flexibility to optimize their taxes by using a traditional solo 401(k) or a Roth, whatever is best for their situation.
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How AI is disrupting software stocks in 2026
How AI is disrupting software stocks in 2026 AI coding tools are driving a wedge between broad tech and software-only funds. Here's what the divergence means for client portfolios. Software has a problem. It’s called AI. For all of the technology’s dazzling displays of prose, picture-generation, and problem solving, code is very much its most fluent language. As of April 2026, Google reported that human-generated code has dwindled to 25%. Tech companies with their own AI products are well-positioned in this environment. They own the tools to automate software engineering and can directly profit from others doing the same. Smaller software companies, however, face a more precarious outlook. The mere prospect of a DIY software future has turned investor sentiment against the Software as a Service (SaaS) businesses, raising predictions of a “SaaSpocalypse” in the process. Why pay for expensive enterprise software when you can build it yourself in-house? To see this trendline in action, look no further than two funds: Invesco QQQ Trust (QQQ) and iShares Expanded Tech-Software Sector ETF (IGV). QQQ is made up of the 100 biggest non-finance companies listed on the Nasdaq stock exchange. Filtering out financial firms means it’s heavily concentrated in broad-based technology companies like Alphabet (Google), Amazon, and Microsoft—all mighty players in the AI investment boom. IGV, meanwhile, primarily holds the software industry, including Salesforce, Adobe, and Intuit. While many of them are racing to integrate AI into their products themselves, they don’t own the underlying technology. These two funds have historically moved in lockstep. As goes software, so goes the broader technology sector. At least until recently. Something snapped late last year, and that correlation broke down. That something was Claude Code, an AI coding tool from Anthropic that went mainstream in late 2025. Its significance for markets lies in what it signaled: AI “agents” could soon handle complex workflows that businesses currently pay SaaS to manage. The investment research firm Citrini added fuel to the fire in February 2026, with the release of“The 2028 Global Intelligence Crisis," a report that imagined a near future where AI agents steal the market share of not just SaaS companies—but major tech and finance firms, too. For all of its alleged shortcomings in sound macroeconomic thinking, the paper went viral and moved markets. Taken all together, software stocks have experienced significant downturns over the last 12 months. With valuations in the software space having reset considerably, there may now be more cushion against further downward price pressure. Many of these businesses are also actively adapting their models—so, it would be premature to count them out. The chart below compares the price-to-earnings ratios currently to those at the beginning of 2025 for a sample of the largest software companies in the world. Stocks like Adobe and Salesforce are trading at a 50% discount now relative to early 2025, based on this valuation metric. More generally, with all of these uncertainties and headwinds out there for sectors like software, why is the market near all-time highs? Some of that resilience may reflect investor momentum, but the more fundamental explanation lies in strong corporate earnings growth. The primary source of investment returns over the long-term is growth in net income—companies' ability to become more profitable. Even as the war in Iran has been going on, analysts have revised their 2026 earnings growth estimates upwards. That's true across the board, with the U.S. as well as firms in Europe, Japan, and emerging markets forecasted to see an acceleration in profit growth. In spite of the headwinds from the conflict in Iran, this earnings backdrop remains a meaningful tailwind for clients holding diversified portfolios with a long-term investment horizon.
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Anthropic's new plugin changes how advisors should think about AI
Anthropic's new plugin changes how advisors should think about AI Anthropic's new Wealth Management plugin does meeting prep, plan drafting, and TLH screens out of the box. The question for advisors has shifted. An analysis: In February 2026, Altruist launched AI tax planning inside Hazel, the feature meant to position it as an AI operating layer for independent advisors. Just 60 days later, Anthropic released 10 ready-to-run agent templates for financial services, including a Wealth Management plugin for Claude that accelerates meeting prep, generates pitches, and assists with portfolio analysis and tax-loss harvesting screens out of the box. Each template is a reference architecture built from three parts: skills (task instructions and domain knowledge), connectors (governed data access), and subagents (specialized pieces of the workflow). The skills are file-based Markdown, customizable, and free to install from GitHub. The announcement was framed as a new tool for advisors. What it actually is, is a useful lens for evaluating everything else in your stack. What Anthropic’s wealth management plugin can do for financial advisors Anthropic's Wealth Management plugin sits inside Claude and connects analytical workflows across an advisor's existing systems. It integrates with market data providers, CRMs, and internal document repositories to help advisors centralize information and automate portions of client prep and portfolio analysis. To understand what changed and what didn't, it helps to think about the advisor tech stack in three layers: Interface—dashboards, forms, alerts, reports, chat. Intelligence—interpreting client data, drafting recommendations, surfacing planning opportunities, prioritizing work. This is the layer vendors have been packaging and selling. It is also the layer foundation models do natively, with a few lines of context. Execution—opening accounts, moving money, placing trades, managing tax lots, rebalancing, harvesting losses at scale, supervising activity, maintaining the auditable record. AI is moving fastest through the first two. The third is different. Execution requires balance sheet, broker-dealer infrastructure, regulatory standing, and engineered systems that act on real client accounts under fiduciary control. No foundation-model release replicates that. It is not a software problem. “The right frame for evaluating your advisor tech stack is not AI versus non-AI. It is analysis versus execution.” A model can identify a tax-loss candidate. A platform with brokerage, custody, and tax-lot awareness can implement tax-aware management at scale. A model can draft a rebalance memo. An execution layer can place the trades. A model can summarize a tax return. It cannot become the tax professional, the custodian, the broker-dealer, or the supervisory record. The strategic question is no longer “will AI replace software?” It is: Which features are becoming AI-native utilities, and which systems still create durable value because they control data, workflow, governance, and execution? Why AI commoditization changes how advisors should evaluate technology The obvious objection is that software providers can package these AI capabilities into polished advisor workflows faster and more efficiently than most individual firms could build on their own. And that’s likely true. It doesn’t undercut the argument, it reinforces it. The intelligence layer is being commoditized whether firms build internally, buy third-party software, or combine both approaches. What’s changing is that the underlying AI capabilities are becoming increasingly portable across platforms and providers. Portability changes how advisors should think about software differentiation. Analytical workflows—summarization, planning drafts, portfolio screens, document review—can now move relatively quickly between tools, plugins, and model providers. What does not move nearly as easily is the infrastructure layer underneath. Custody, brokerage operations, compliance frameworks, supervisory systems, and automated execution capabilities are significantly harder to replicate or replace. Those systems require operational scale, regulatory infrastructure, and years of workflow development. The asymmetry is significant. As AI capabilities continue to spread across the industry, the most durable parts of an advisor tech stack are likely to be the systems responsible for execution—not just analysis. What most firms can realistically build The tools to assemble a basic advisor-AI workflow are now genuinely accessible. A motivated firm can stand up meeting prep, client review packets, document Q&A, draft emails, plan summaries, drift reviews, and tax-loss candidate screens using off-the-shelf plugins and customizable skill files. The first layer isn't that hard to build. Sustaining it is a different problem. The skills that make an AI workflow actually useful—investment philosophy encoded as text, tax-review processes, compliance language, approval rules—drift the moment regulations shift, markets move, or the firm's own process changes. Keeping them current isn't a one-time project. It requires rigorous, ongoing supervision to ensure the AI's outputs consistently align with the firm's fiduciary obligations, shifting regulations, and market dynamics. If and when a firm does not have that person, the workflow can degrade quietly until it stops reflecting how the firm actually operates. This is the same reason durable platforms invest heavily in the infrastructure underneath the AI layer. Execution capabilities—moving assets, managing tax lots, rebalancing at scale, maintaining supervisory records—require operational depth that compounds over time, not a one-time build. The firms best positioned to combine intelligent AI workflows with reliable execution likely aren't assembling it themselves. They're building on platforms that have already done the operational work. The AI layer will keep getting easier to access and cheaper to run. What doesn't get easier is the regulatory infrastructure required to act on what the AI surfaces. That gap is where durable value lives. The takeaway The advisor tech stack isn’t disappearing. It’s being reorganized. Packaged software still matters, and for many firms, buying will be smarter than building. But advisors should be increasingly skeptical of software whose primary value is packaging generic AI workflows inside a polished UI. Those capabilities will likely become cheaper, more customizable, and more portable. Durable value will accrue to systems that do what AI alone cannot: connect trusted data, support compliance, execute transactions, implement portfolio decisions, and power a reliable client experience at scale. Two questions are worth applying to every line item in the stack: Is this tool primarily generating, drafting, summarizing, or formatting information? That layer is commoditizing quickly. Is this platform deeply connected to data, governance, workflows, and execution? That layer is more durable. The pace of change matters. Within a single quarter, capabilities that once looked highly differentiated became accessible enough for motivated firms to assemble themselves. And the next wave of commoditization is likely to happen even faster. The firms best positioned for that shift are the ones building on durable operational infrastructure while treating AI as an accelerant for advisor productivity—not the foundation of the business itself. The most durable advisor technology platforms are likely to be the ones that combine intelligent workflows with the infrastructure required to actually execute on them. The key question for advisors is simple: What in your stack is truly durable, and what is ultimately just a UI layered on top of a foundation model?
