Empower makes money primarily through retirement plan administration fees charged to employers, advisory fees on managed investment accounts, expense ratios on its proprietary mutual funds, and interest earned on cash deposits. The company operates one of the largest retirement plan platforms in the U.S. while also running a wealth management business that grew significantly after its acquisition of Personal Capital in 2020. Each of these revenue streams works differently, and understanding them helps you see what you’re actually paying for.
Retirement Plan Administration Fees
Empower’s biggest business is serving as the recordkeeper for employer-sponsored retirement plans like 401(k)s and 403(b)s. When your employer sets up a retirement plan through Empower, the company charges fees for maintaining the accounts, processing transactions, and handling compliance work. These fees can be structured in several ways: some are charged directly to the employer, some are deducted from participant account balances, and some are baked into the investment options offered inside the plan.
Plan-wide administrative costs cover things like recordkeeping, legal services, and accounting. These are typically allocated across all participant accounts either as a flat per-person charge or as a percentage of assets. Individual participants may also see fees for specific services like taking out a plan loan, processing a qualified domestic relations order (a court-ordered division of retirement assets during a divorce), or using a self-directed brokerage window. Even something as simple as mailing fee disclosures to participants can generate revenue: Empower charges employers $1.50 per mailing per participant for that service.
Because Empower manages plans for millions of participants across thousands of employers, these per-account and per-transaction fees add up to a massive revenue base. You won’t always see these fees on a single line item in your 401(k) statement, but your employer’s plan documents will spell out exactly how they’re allocated.
Advisory and Wealth Management Fees
Empower runs a wealth management arm, formerly known as Personal Capital, that charges percentage-based fees on the assets it manages. If you sign up for their Personal Strategy service, you’ll pay an annual fee that scales down as your balance grows:
- First $1 million: 0.89% per year
- $1 million to $3 million: 0.79%
- $3 million to $5 million: 0.69%
For clients with over $1 million in investments, Empower offers a Private Client tier with even lower rates, dropping to 0.49% on balances above $10 million. The minimum to open a managed account is $100,000.
To put that in dollar terms, if you have $500,000 in a Personal Strategy account, you’d pay roughly $4,450 per year in advisory fees. That covers a dedicated financial advisor, a custom portfolio, tax optimization strategies, and ongoing financial planning. These fees are calculated as a percentage of assets under management, so Empower earns more as your portfolio grows, which at least aligns its incentive with yours.
Proprietary Mutual Fund Expense Ratios
Empower runs its own family of mutual funds, and every one of those funds charges an expense ratio, a small annual percentage that covers the cost of managing the fund. This fee is deducted from the fund’s returns before you see them, so it’s easy to overlook.
Expense ratios on Empower-branded funds vary widely depending on the fund type and share class. Index funds on the institutional side are relatively cheap: the Empower S&P 500 Index Fund Institutional Class charges 0.14% per year, and the Empower Bond Index Fund Institutional Class also charges 0.14%. Actively managed and specialty funds cost more. The Empower Aggressive Profile Fund Investor Class runs 1.14%, and the Empower International Index Fund Institutional Class charges 0.25%.
Investor Class shares, which are the versions individual participants typically access, tend to carry higher expense ratios than Institutional Class shares. For example, the Empower S&P 500 Index Fund costs 0.49% in its Investor Class but only 0.14% in the Institutional Class. If your employer’s 401(k) plan uses Empower funds, check which share class you’re in, because the difference can meaningfully affect your long-term returns.
These expense ratios generate a steady stream of income for Empower. The more money participants keep in Empower-branded funds, the more revenue the company collects.
Free Tools as a Customer Funnel
Empower offers a suite of free financial tools, including a budgeting tracker, retirement planner, net worth calculator, and portfolio analyzer. These tools are genuinely free and don’t cost users anything. But they serve a clear business purpose: they bring millions of people onto the platform, where Empower can introduce them to its paid advisory services.
Once you’ve linked your accounts and started using the dashboard, Empower can show you insights about your portfolio allocation, retirement readiness, and spending patterns. That naturally creates opportunities to suggest its managed account services. The company is transparent about this: it notes that individuals referred to its advisory services are not obligated to sign up, and advisory fees are disclosed upfront. Still, the free tools function as a low-cost acquisition channel that feeds higher-margin advisory relationships.
Interest on Cash Deposits
Empower offers a cash management account called Empower Personal Cash, which holds customer deposits with no fees and no minimum balance. Your money gets swept into partner banks where it’s covered by FDIC insurance up to $250,000 per bank. Empower likely earns revenue through the spread between the interest rate those partner banks pay on swept deposits and the rate Empower passes along to customers. This is the same model used by most cash management platforms and robo-advisors: the partner banks pay for access to deposits, and the platform keeps a portion of that interest.
How These Revenue Streams Work Together
Empower’s business model is built on layers. Retirement plan administration gives it access to millions of working Americans and their employers, generating steady fee income. Proprietary funds placed inside those plans earn expense ratio revenue on top of the administration fees. The free financial tools pull in a broader consumer audience, some of whom convert into advisory clients paying 0.49% to 0.89% annually. And cash accounts generate incremental interest income in the background.
If you’re an Empower customer, the fees you’re paying depend on which services you use. A 401(k) participant whose employer chose Empower might only pay plan administration fees and fund expense ratios, both of which may be partially subsidized by the employer. A wealth management client pays advisory fees on top of any fund costs. And someone who only uses the free dashboard pays nothing directly, though they’re part of the funnel that supports the rest of the business.