July 2, 2019
About a decade ago, if you wanted help with how to manage your money better, you’d go to a certified wealth advisor. This advisor would then try to persuade you to let them manage as much of your assets as you’d be willing to commit, for growing your portfolio. However, just as one sees the relevance of physical bank branches changing, traditional wealth management is perhaps bound by the same fate. With the rise of Big Data and Artificial Intelligence (AI) along with increased digitization globally, consumer behavior is changing; so is the approach to wealth management and advisory.
In recent years, we’ve seen the rise of a tech-based alternative to conventional wealth advisory - WealthTech which has continued to transform itself with robo-advisors, digital brokerage and micro-investment platforms. According to research by EY, wealth managers with traditional business models are soon expected to disappear from the market. Moreover, the total investable assets in North America are likely to grow to $28.8 trillion by 2021. This, coupled with the minimal cost of AI-backed wealth management services, means that the WealthTech industry in the region is anticipated to grow even further; particularly in the US.
Consider this: according to MEDICI’s database, close to 30% of all WealthTech startups are headquartered in the US. Given that the country is among the biggest hubs for WealthTech startups, this week, MEDICI takes a look at some of the top-funded WealthTech startups in the US:Robinhood, founded in 2013, is a commission-free, mobile-first stock brokerage firm which helps users to buy and sell US-listed stocks, ETFs, options, and cryptocurrencies. The company operates a website and mobile apps for iPhone, Apple Watch, and Android. Recently, Robinhood was named in the 2019 Forbes Fintech 50 startups list. The startup has raised $539 million in total funding. Prosper, founded in 2006, runs a service for personal financial solutions for consumers. It is a mobile app that offers consumers a suite of tools to make better financial decisions. It also provides users the ability to view all their financial accounts in one place, budget and track spending by category, identify questionable charges, and monitor their free credit score, which is updated monthly. The startup has raised $405 million in total funding. Betterment, founded in 2008, is an online investment company which allows users to select how much they want to invest in stock and bond ETFs. It provides a facility to open an account without paying any deposit and charges a minimal management fee. Its automated platform eliminates the typical complexities and time taken by a traditional investment account and also offers a B2B2C platform for RIAs as well as a 401(K) investment. Recently, Betterment was named in the 2019 Forbes FinTech 50 startups list. The startup has raised $275 million in total funding. Personal Capital, founded in 2009, is an online financial advisor and personal wealth management company which provides tools that give advice based on users' finances from registered financial planners. Recently, Personal Capital was named in the 2019 Forbes FinTech 50 startups list. The startup has raised $265 million in total funding. Acorns, founded in 2014, is an investment app that allows people to round up their daily purchases and automatically invest the change into a commission-free diversified portfolio of index funds offered by asset managers. Recently, Acorns was named in the 2019 Forbes FinTech 50 startups list. The startup has raised $207 million in total funding. Addepar, founded in 2009, is a cloud-based wealth management platform that provides investment management advisors with tools for managing complex portfolios. The company provides customizable reporting solutions that enable financial managers to visualize and communicate relevant information to those who need it. Recently, Addepar was named in the 2019 Forbes FinTech 50 startups list. The startup has raised $205.8 million in total funding. TruMid, founded in 2004, is an end-to-end electronic credit trading platform designed to unlock liquidity and make bond and CDS trading easier. It helps users follow the bonds/sectors they are interested in, match them round the clock, estimate a fair bid and finally, trade. The startup has raised $205 million in total funding. Wealthfront, founded in 2008, provides an automated investment management platform that allows investors to create and manage personalized, globally diversified investment portfolios. Users can create an account with a minimum investment of $500. It offers low-cost ETFs which are used to represent each asset class. The startup has raised $204.5 million in total funding. Stash, founded in 2015, is a mobile-based investments platform that helps investors to make investments based on their interests, beliefs, and goals, starting with least $5. Investors can make additional investments whenever they like or make automatic recurring investments by setting up 'Auto-Stash.' Recently, Stash was named in the 2019 Forbes FinTech 50 startups list. The startup has raised $181.3 million in total funding. Plusgrade, founded in 2009, offers a revenue management platform for the global travel industry. It enables users to grow their revenue by improving their merchandising, ancillary revenue, and upselling. The startup has raised $150 million in total funding. Cadre, founded in 2014, is a technology-based real estate investment platform. It provides access and insight into the global alternative investments. The platform seeks a minimum of $100,000 investment from investors per deal and typically has a holding period of 4-7 years. They also provide a managed fund for investors seeking to invest in a distributed portfolio. Recently, Cadre was named in the 2019 Forbes Fintech 50 startups list. The startup has raised $133 million in total funding. Motif, founded in 2010, is an investment platform that allows individuals and investment advisors to invest in stock and bond portfolios. It takes complex, expensive, and opaque financial products and converts them into intuitive, low-cost, transparent, convenient, customizable, values-based investments for users. The startup has raised $126 million in total funding. Wunder Capital, founded in 2013, is an investment company that connects investors with solar projects that needs financing. Wunder also works directly with solar EPCs and developers to provide the right financing solution for their commercial-scale solar projects. The financing is provided either as a solar loan for the business owner, or debt in a third-party ownership vehicle. The startup has raised $116.8 million in total funding. SigFig, founded in 2011, provides an easy way to manage users money. It connects their accounts and accordingly tailors a portfolio based on their goals. It delivers reports and guidance to more than 800,000 investors, tracking over $350 billion. The startup has raised $110 million in total funding.