Capital One bulks up robo advice with United Income buy
Capital One is expanding its automated advice footprint, acquiring the retirement-focused robo advisor United Income after taking at least a 10% stake in the investment platform last year.
The deal follows other wealthtech acquisitions by prominent banks this year, such as those by Goldman Sachs and Northern Trust.
United Income will continue to operate independently under its current management team and plans to expand operations in the near future, according to an email sent to clients by the firm’s CEO Matt Fellowes. Terms of the acquisition were not disclosed.
“After much consideration, Capital One emerged as the far and away best option,” Fellowes said in the emailed message, which was reviewed by Financial Planning.
United Income listed $746 million in assets under management and more than 750 accounts on its latest regulatory filing in August. The Washington, D.C.-based registered investment adviser is a digital platform for households nearing or transitioning into retirement. The technology helps retirement-age savers find the best ways to manage their wealth.
“As one immediate step forward together, we will be expanding our team, with the intent to accelerate our innovation,” Fellowes stated. “However, not much else will change.”
Last August, the bank took at least a 10% stake in the fintech. The lender referred all comment on the deal to United Income.
Elizabeth Kelly, United Income's senior vice president of operations, said in an emailed statement the bank was "impressed with the unique approach United Income has taken within the wealth management space, using a technology-based advisory model to deliver personalized and comprehensive financial planning and wealth management guidance for their customers."
Being within the bank will provide United Income with "resources that will help us scale and continue to innovate and develop accessible digital tools that help Americans plan for their financial future," she added.
The acquisition adds to Capital One’s automated advice portfolio. It already has a hybrid-robo advice offering, Capital One Advisors Managed Portfolios, which it launched in 2016.
Prior to its acquisition, United Income raised $10 million in funding in 2018, according to an SEC filing. Other prominent backers included Morningstar and eBay founder Pierre Omidyar's venture capital firm, according to Crunchbase.
The deal follows two other notable wealthtech grabs by prominent banks this year.
The deal underscores an industry trend combining planning with portfolio management.July 11
The largest insurance company-owned IBD and Alexa von Tobel's startup announced a new setup for the firms roughly three years after the acquisition.May 6
The move by Alexa von Tobel’s startup to drop planning services reveals a deal marked by challenges from the very beginning, experts say.May 8
The deal combines two giants: the leading financial planning provider by market share with the leading TAMP by client assets.March 15
Goldman Sachs reached a $750 million deal to buy the Newport Beach, California-based United Capital, a technology-driven RIA serving mostly high-net-worth individuals and $22 billion in assets under management, according to the firm’s most recent regulatory filings. The firm prominently pushed its Finlife software as a digital holistic financial planning tool.
The purchase provides Goldman a fintech platform to service its own well-heeled clientele and experts say that technology could be paired with Marcus to help keep investable assets on the platform.
Earlier this month, asset manager Northern Trust and independent broker-dealer Ladenburg Thalmann brokered their own robo advisor deal. Northern Trust acquired advisory firm Belvedere Advisors, which included the robo advice platform Emotomy, while Ladenburg purchased a stake in a small automated impact investing startup called Newday Financial Technologies.
Other notable investments in wealthtech include Vestwell, a retirement planning firm, which raised $30 million in a Series B round and Trizic, a white-label wealth management suite that provides automated advice technology to banks, which raised close to $8 million.
Overall wealthtech deals and funding fell in the second quarter of the year, however. Globally, the sector reached 35 deals down from 56 in the first quarter and 53 deals in the year-ago period, according to a recent study by CB Insights. Funding dipped to $421 million down from $768 million in the first quarter.