BlackRock is taking a minority stake in robo 401(k) plan provider Human Interest.
The companies declined to disclose how much BlackRock is investing in Human Interest or how much of a stake the asset manager is taking in the business.
San Francisco-based Human Interest provides online 401(k) plans for small- and medium-sized businesses, a segment of the market that until recently has been largely ignored by the industry.
"BlackRock has seen Human Interest as the leader in the space where BlackRock has not had much of a presence," said Eric Phillips, Human Interest's senior director of strategic insights, in an interview.
Recent legislation offering companies enhanced tax incentives to offer 401(k) plans has created a more favorable environment for digital 401(k) providers such as Human Interest to build their businesses and accomplish their mission of bridging the so-called retirement coverage gap.
"The majority of Americans work for small businesses and don't have access to a retirement plan today," Mr. Phillips said, adding that the void creates a "huge opportunity."
Anne Ackerley, head of BlackRock's retirement group, lauded Human Interest as a "tech-enabled 401(k) provider" that makes it easy and affordable for small businesses to provide plans to their employees.
"We wanted to help Human Interest make their solution available to a lot more businesses in the United States," she said, adding that 57 million Americans don't have access to a workplace plan.
Human Interest will use the investment from Blackrock to grow its headcount to about 1,000 employees by midyear from 800 employees today, Mr. Phillips said.
The company serves 12,000 employers and a "few hundred thousand" employees with about $2 billion in assets. It's been adding about 1,000 employers a month to its platform, about two-thirds of which have never had a 401(k) before.
The company is looking to reach around one million participants by the end of this year, Mr. Phillips said.