Altruist CEO Jason Wenk on blockbuster Vanguard deal and his 'life's work'

Fresh off the announcement last week that Vanguard has agreed to buy Altruist for a reported price tag of more than $4 billion, the firm rolled out a new AI-powered financial planning agent.

In the Q&A below, Altruist CEO and founder Jason Wenk explained why he believes "the excitement from advisors will be even higher" than in February, when the wealth management custodian and technology firm's tax-planning tools triggered a Wall Street sell-off. He also opened up about his personal reactions and pushback to critics following a blockbuster deal that could permanently alter clearing and custody.

Altruist and Vanguard have not disclosed the exact terms of the deal, which is subject to regulatory approvals and other conditions tied to its expected close before the end of the year.  But Wenk said he was intent on letting the industry know that he has no plans to exit after the deal goes through. And he predicted that Altruist — a custodian to 6,500 financial advisors roughly eight years after its launch and multiple fundraising rounds — could develop an AI agent focused on cash management within roughly a year's time. 

"I would say we're very keen to help people optimize for the best possible outcomes," Wenk told Financial Planning. "My belief has been pretty much consistent from day one of Altruist, which is, if you can build something that is obviously and objectively better for clients, eventually, that's where all of the assets accrue."

Altruist

For those tuned into the history of the profession and evolution of the industry the deal landed near another milestone: Vanguard, led by CEO Salim Ramji, just celebrated the 50th anniversary of the firm's S&P 500 index-tracking vehicle, now known as the Vanguard 500 Index Fund. A $10,000 investment at the Aug. 31, 1976, launch would have grown to $2.4 million over 50 years. Index vehicles have saved investors about $570 billion in fees through the end of last year, according to Vanguard's estimates. 

For his part, Wenk said that Vanguard founder Jack Bogle's legacy — as well as a possible strategic partnership with Vanguard and more — had been on his mind when he was conceiving Altruist. 

READ MORE: Advisors rethink Roth IRA conversions after the OBBBA 

The below interview has been lightly edited for length and clarity.    

Financial Planning: I appreciate you finding time for this today. Congratulations on the big announcement. What has the last week been like for you?

Jason Wenk: It's been incredible, but it's been emotional. People don't realize how much time and work goes into building a company. And then when you get approached for an acquisition, you start to think through, like, "OK is this something you want to do?" Once you get comfortable with it, it's very private. Only a handful of people know, then you go through months of diligence, right? Then it all kind of culminates to, "OK, now we're ready to tell the world about this," and so it's been incredibly exciting. 

It's been particularly emotional for me because this has been like my life's work. I mean, I've been trying to solve this problem for 25 years. How do you make advice better? How do you make it more affordable? How do you get it in the hands of more people? It's ambitious, and there are no shortcuts. It's got to reach a place where you go, "I can see this actually happening."' 

A big part of that is with the support and reach of Vanguard and the shared alignment. I mean, again, I've been shaping my own company in the image of a lot of the things I learned from them for a long time. To get to lock arms and say, "We are going to make it a lot easier for people to find an independent advisor, get fiduciary advice, and do it in such a way where we're driving best possible outcomes for consumers" — that's as rewarding as anything you could ever imagine doing.

READ MORE: Shook by the Forbes award scandal? Here's how to adjust your marketing 

Going with Vanguard over going public or selling to a PE firm

FP: Vanguard first invested in Altruist in 2020, but who first approached whom about this potential deal, and how long was this in the works?

JW: They came to us. There was no process. I was never looking to sell the business. I wasn't taking bids or anything like that from people. … There was no banker. It was done, I'd say, with an extreme amount of respect. Salim just let me know that they were very happy with the partnership. They've been investors, he said, for over six years. He let me know, "If there was a time that you would ever consider selling the business, we think we would be a really good home, and we think we would honor the mission, and we could help make sure this leaves a really long-term, permanent sort of legacy."

That was roughly five or six months ago. For a short amount of time, it was more like digesting, "Well, would this be the right or best thing?" These things don't get talked about much in our space because there's never been a company that had enough scale to go public that was in the wealthtech kind of space. Historically, the best case scenario for anybody was that a private equity firm would buy them or some strategic [acquirer] would buy them, but no one had ever really built something where you could see it going public and being a pretty big public company. That's what we were staring down, right? 

We knew that we were probably three years or so away from thinking about an S-1 and going public. There were occasional conversations at the board level. I would meet with other founders. I have a number of friends who've taken companies public, and one of the things that made me a little bit nervous about it was, if you continue down that path, if you go public, now all of a sudden you have two different constituents, and you have to kind of think every day about, "Am I working today for my shareholders? Am I working today for my customers?" 

You see that with a lot of companies that are public right now. They make decisions, and you kind of scratch your head and go, "Is that a customer-centric decision, or is that a shareholder-centric decision?" 

When you start a company and you name it Altruist — we've been very vocal about the mission. You could see a world where even if you go public, how long would I be able to exert that level of control? You can't even control if somebody buys you. You could have someone who comes in and offers such a high price. Now you've got a board, and you've got to answer it. So your ability to maintain that focus on the customer for decades is not great if you [go] down the public path. In fact, I'd say almost always you're going to eventually be making tough calls — are you protecting your job and trying to generate some blowout quarter, or are you going to stay steadfastly focused on the customer?

Anyway, a long ramble around the point that when you start to talk to Vanguard, you start to understand that business. Their customers are their shareholders, right? There's no competing priorities. And when you meet their people — I mean, it is 22,000 or so people that, every day, they show up to work and they're working for, "How can we improve the outcomes of our customers?" That's incredibly compelling for me. I love to show up every day and just know that that's what I'm going to work for. 

Altruist is a culmination of 20 years of work. Even if I would have taken it public and had a great IPO, I won't be around to do the work forever. So what happens after I'm gone? And will this thing even be around in 10 or 15, 20 years? Would it fail? It just could go in a different direction, new owners, new executives, whatever. 

As I thought more about that, I realized that there are a lot of things that can happen to a company. If you're fortunate enough to make it, you either need to constantly be recapitalizing your business, or you have to go public, or you have to sell. Those are the three outcomes. Of those, which is the best for the business, where you can feel really confident when you look at your customers and the end clients? I think recapitalizing forever is not a very desirable option. Going public is certainly a possibility, like, there are some positives there, but there's going to be plenty of risk. 

If you sell to the wrong company, that could be the end. If you sell to the right company, it could be the best choice. But we just [had] this, really ideal, like, best-case scenario. If you're really trying to think about the customers and your employees and the industry that you care so much about, this was the best path. 

So that was the decision-making process. It didn't take me that long to do that rubric — like, this isn't rocket science. Now we're at the phase where we've definitively agreed to terms, and now it's just regulatory approvals and then close. But it's definitely an interesting process. 

This is probably why, when you asked, "What was my week like?" — there were a lot of emotions. I probably always knew I was going to have to make some of these decisions. I just didn't expect to have to make them this year.

READ MORE: Maximize tax-free Social Security income with this IRA withdrawal strategy 

Vanguard/Altruist

On misconceptions about competition, exits and repapering

 
FP: There were a lot of reactions on financial advisor LinkedIn, and you were posting and diving into the comments. What were your favorite reactions, and which did you think were the most important to address and push back on?

JW: When I first wrote the letter — which, first of all, I wrote it myself. It wasn't written by AI. It wasn't written by a ghostwriter. My first version was a lot longer, multiple pages, and then the team had to help distill it. You know, "Jason, we can't write a five-page letter. That's not quite what we're looking for. Let's make it like two pages." 

The key things we wanted to make sure we cleared up — the first was the unwavering commitment to independent financial advisors. So some people would go, "Well, Jason, aren't you going to now be pulled into doing all these other things?" I'm not doing anything else other than running Altruist. All Altruist is focused on is supporting independent financial advisors, fiduciary advisors. We're going to continue doing that, and we're not building competing products to advisors. 

We have to start being honest with ourselves. We have a massive shortage of financial advisors looming, where tens of thousands of advisors will retire over the next decade or two. They're selling their businesses left and right to these aggregators. We're not bringing enough new talent into the space. So we need more and more investment into tools to support independent advisors. We need more advisors in the space. 

No one should be, like, scarcity mindset out there going, "Oh my gosh, how am I going to possibly get any clients?" There are so many more people that need help than there are advisors to provide the help. There's a huge need to invest in these independent advisors because it's a massive existing shortcoming that's only going to be exacerbated over the next decade or two. So I want to make sure that was clear to folks. 

The second was around — I get a kick out of people who I've never met, who don't know me, I've never spoken to in my life, and they make a lot of great prognostications on what is going on in my head. I get a little bit of a chuckle when people talk about it as an exit. I'm not exiting anything. I'm staying here, I'm building, and I plan to build as long as my brain and body hold up. So there was never a motivation of exiting the business — that's not what's happening. And so I want to make sure people know my team and I, we are here, we are excited. 

The internal morale is higher than it's ever been. When we recruit people here, we sell the mission really hard, and so what we get is more missionaries than mercenaries, and when these people now see what our opportunity is to make an impact, how it's just 1,000x, basically people are incredibly fired up about what we can do on a go-forward basis. And there's a bunch of other structural things where people have lots of incentives to stay here.

We had a lot of employees that had equity, and that equity doesn't turn to cash at close. The equity turns to cash when their options vest, which for most people is multiple years into the future. So the team here is in place. Anyone who's thinking there's going to be some big brain drain or something of our talent, it's like, "No, the talent will be here and it will grow and we'll continue adding amazing people and I'll be here and I'll be super-motivated." So I want to make sure people understood that. 

So those are two things that I was trying to clear up a little bit. There were hundreds of other little random things that people maybe had questions about, lots of other areas of speculation. I also heard some people say — I don't know where they're getting their facts — things like, "Oh, all the customers will have to repaper." First of all, there's no repapering. We are the advisor custody and technology business. There are no other businesses. No one has to change anything. And there's nothing to sunset. It's like all of the reasons why this made the most sense. It's really great for our current customers, and again, down the road, there will be no future migration or anything like that. I totally understand people have had that, in the past, [when] their custodians [got] bought, and it's very painful for years. That's not the case here. There's not two businesses coming together that do the same thing. It's them acquiring a business unit that's entirely accretive to their other business units and no overlap at all. So I had to clear that up a couple times, too.

READ MORE: 4th SER summit to expand only industry network of its kind 

Responding to concerns about conflicted product distribution

FP: Well, it's a laudable and important goal to expand access to financial advice and a cause that's near and dear to a lot of our audience's hearts. The cynics would say this will also expand distribution of Vanguard products.  How do you see the relationship between Altruist and Vanguard's products moving forward?

JW: I think people have to reach really hard to find cynical takes.But it's been  communicated many times and in our conversations internally with Vanguard. They're really focused on maintaining our independence and maintaining an open architecture platform, and so I think that was, even from their perspective, like, "Hey, what could be misperceived? What can we do to make sure that that's not the case?" 

And a lot of this, if you think about it, comes back to, if you're any fund or asset management company, and you look at all the other custodians, they've all been, I'd say, almost universally making it hard for advisors to choose the best options for their clients. For example, I'd say objectively the best money market mutual fund in the entire industry is Vanguard's. Why is it the best? Because it's the cheapest. You can't even buy it at the other custodians. There's no price tag on it because it's not permissible to purchase. Advisors are being told things like, "If you use some custody platform, you cannot buy that fund." 

Similarly, they have a bunch of other funds, some of the top-ranked bond funds, for example, in the country, which you know, objectively, would be better for a lot of the end clients, and these are '40 Act funds, not ETFs. And, a lot of times, '40 Act mutual funds on the bond side can be really good for customers because they have less daily volatility than the ETF counterparts. So a lot of people prefer using bond mutual funds. But if you want to buy their bond mutual funds, you might get hit with a $40 or $50 transaction fee, because they don't pay, perhaps, a revenue share back. Now these tolls make it hard for any asset manager.  I don't know the details, but I've heard all sorts of rumors around other custodians levying a revenue-sharing requirement. We don't do that. We've never done that at Altruist. You could buy any fund, any ETF. We have the lowest cost structure on fund products as far as transaction fees, and we have no revenue sharing on any ETF products in the entire market. Our entire model marketplace, which supports over 450 different models, comes with every big name you can imagine. It's organized in alphabetical order, so Vanguard's near the last on the list. Altruist happens to be near the front since we start with an "A." 

But there's no preference. We've made it very, very independent so that advisors can choose whatever is the best thing for their clients. Now, what I think will end up happening — Michael Kitces made a really interesting point. He said, "What happens if all of the other asset managers start promoting Altruist, because it turns out it's the only place that doesn't have any preference toward any one asset manager, and that everybody can distribute their products without having to pay a toll?" That toll, if you have to pay it via rev share, you have to charge a higher fee, and it will impact your performance. And if you start lagging on performance, you're going to have a hard time maintaining fund distribution. This is especially true of lower-cost passive investments. The lowest-cost passive investment will almost always have the highest performance because it has the least amount of friction coming out of the NAV. No one wants to be the third- or fourth-best performing mid-cap ETF. You want to be operating at your lowest possible cost structure so you can drive as many assets.

So the most likely outcome here is that the cynics are actually dead wrong, a full 180 from their their cynical view. We're becoming the place that every asset manager is most eager to partner with, because we actually want the clients to have the best possible outcomes. And a lot of this comes back to the ownership structure of Vanguard. What would the incentive be of driving a bunch of excess profits at Altruist? Where would the profits go? They only can go one place, back to the shareholders, back to the fund holders. It goes back to the fund holders in the form of lower costs, right? So we have no real incentive to try to do anything that doesn't make sense for the end client, because all we can do is give the money back to the end client. 

READ MORE: Stay for the 'sunset' or leave for a sale: What to consider 

On Altruist's new financial planning agent

FP: As if there weren't enough going on, the Hazel financial planning agent officially launches tomorrow, when this interview will be published. What should financial advisors know about it? And are you anticipating the same type of reaction that the tax planning agent got earlier this year?

JW: Well, I think the excitement from advisors will be even higher. What public-market investors decide to do with our news is totally out of my control, and it's not ever been our motivation to try to cause a ruckus in capital markets. 

But what we want to do is figure out how [to] get advice into the hands of more people, make it more affordable. We will continue to innovate at custody and related software, but one of the hardest, most challenging things for advisors is the amount of time it takes to build a financial plan and keep the plan up to date and to do it in a really bespoke way for their clients. So we think about the prospect-to-client journey, doing really high-quality planning. It used to take a ton of time to do all the data intake, and then you'd have to take that data and put it into a database. It's effectively a cloud-based database, this financial planning software. You'd then run a simulation or something like that, and you'd have to come back in and make a bunch of tweaks and adjustments and save four or five versions for the client. 

With Hazel's financial planning, what's really cool is that you're not constrained by any predefined settings. For example, if you have a client who, their primary thing they need help with, is paying down debt and establishing a regular savings plan, there are a lot of softwares out there that that's just not what they do. They're not designed for that, and so you'd have to go buy one very specific software for that type of client. And then another client might come in and they are a small business owner and they've got some unique tax consequences of their business, and they're in a specific state. And so maybe you need a tax software plus a financial planning software for that client. Another client might be a retiree or pre-retiree, and they've got to go through their pension and Social Security and their Medicaid [and/or Medicare] and so forth. And, for that, maybe again a totally different set of inputs. 

With Hazel, the inputs are all done almost automatically. You have a conversation like this with somebody; Hazel grabs all of the data from every conversation. Part of what makes the planning so powerful is we have this notion of intelligent client profiles we call "ICP" internally. We released that a few weeks ago, and, when you use ICP, you're like, "This is the richest record of a client or prospect I have ever seen in my life." It is so much better and beyond any CRM record or any record that exists in any custodial database because it has everything in it. Any documents, email attachments, statements or 1099s, any conversations that have happened, all of those things automatically create these really rich profiles. And it's both the demographic and psychographic details. It picks up cues from the meetings, like somebody got clearly anxious when they talked about losing their job and not finding a new one for 13 months, and they never want to be unprepared for that again. It creates these notes and it understands those different aspects, so when it goes to build the plan, it builds the perfect plan, and it does it with almost no work from the advisor. It used to take a bunch of interviews and data collection and data transcription. …  It's just a couple of minutes for the agents to grab all the data, identify the specific profile type that this client fits into, here's the plan that we should build for them, and it's all done inside of this really rich record.

If there's any talking points that you walk through with the client or the prospect and you decide to take action on them, you click on "take action." It pushes it directly to the AI chit. So the record gets updated, the task gets assigned, building the plan super-fast, executing the plan super-fast, customization. There's no need for 10 different planning softwares. It actually integrates our tax agents from earlier this year directly into the financial planning agents. So it's everything in just one place. No need to swivel the chair back and forth across different screens or different tabs. It's pretty cool. This will just be such a massive time saver. And the quality of the plans are just incredibly high, because they're bespoke for each client. 

Every time Hazel builds a plan, it has memory. So it knows how the advisor likes to build plans and just automatically builds them in that way. 

For the impact on the industry, how do we make it very easy, and you no longer have to think about, "Oh, to build a proper plan is going to take me two to four hours" or whatever the time commitment. That will be compressed by probably 90%, and the quality will go up materially because now you won't be pigeonholing each new client into whatever your software says it can do. Even the [user interface] is fully flexible in the front end. It's using generated images, so when you want to create an output for your client, it's bespoke without you having to do mental gymnastics. AI just makes it far more flexible. 

So, we're super excited about that. [The] similarities to tax planning are that we took something that was very complicated and typically reserved for very wealthy clients, and we made it incredibly accessible. Something that was very laborious and took a long, long time is now compressed down to a couple of minutes and a few dollars of compute. So really high-quality planning will become very, very accessible.

READ MORE: This RIA founder built a firm with frustrated private bankers 

On the future of AI cash sorting

FP: That will be very interesting for financial advisors and Wall Street as well. Those two groups aren't always interested in the same things. But one area where there has been a lot of talk is cash assets and a possible AI cash sorting tool that could change how the cash dynamics work in the industry. Is there anything in the works at Altruist that could be something of an AI cash-sorting solution?

JW: The short answer is yes. The slightly longer answer is, I think we're uniquely suited to do this, because you really need to be both a custody and clearing firm and the AI platform. If you're not both, you could have an AI agent that could tell you, "Here's what you should do with your cash." But actually doing it requires that you have the agentic plumbing for the agents to actually take action. So we don't have any immediate, like, "Oh this is coming out in two weeks, stay tuned," type of thing. 

We're very keen to help people optimize for the best possible outcomes. My belief has been pretty much consistent from day one of Altruist, which is, if you can build something that is obviously and objectively better for clients, eventually, that's where all of the assets accrue. 

Some industry pundits say things like, "Well, advisors say they'll never switch their custodian because of that." I'm like, hundreds and hundreds of advisors switch their custodian every year to Altruist, and why are they doing it? Because it's radically better than what they were doing before. I think cash will be one of those interesting frontiers. It's not just a cash sweep. I think maybe that gets the headlines, but it's cash management in general. 

If I took like the smartest person that I know in finance, and their only job was to optimize my cash every day, of course, it would accrue over your lifetime into thousands, tens of thousands, hundreds of thousands, millions. It is going to be incredibly valuable, and yet nobody does that. I mean, maybe some of the single-family offices are doing it, but I mean, even people serving mostly high net worth clients, they're not going to that level of detail. 

If you do that well, it extracts a lot of value for the rent-seekers who just like to have you sit on excess cash. They want you to hold excess margin balances or have non-optimized debt, and there are even a lot of financial planners that, I would say, they know better. But the cost of their time isn't worth it for clients. I'd have to spend so much time doing this for you that I'd have to charge you tens of thousands of dollars, and it might only produce $5,000 in benefits. So the economics are just upside down. 

But with the right AI agents and the right agentic infrastructure, you can actually pull this off. And I think it'll happen inside of 12 months. I think we'll probably be the most obvious leader here because we'll be, to my knowledge, the only people building both agentic APIs at the brokerage custody clearing layer and planning agents that can do a lot of the intelligence work to pull off this notion of the smartest person you've ever met doing this work on your behalf.

READ MORE: The complete guide to starting an RIA 

Reflecting on Day One while preparing for a tough workout

FP: We'll stay tuned for that. You brought up day one at Altruist. You launched this company in 2018. What would you have said if I had told you then that you would sell the firm to Vanguard in a multibillion-dollar deal eight years later?

JW: Well, I probably would have said, "There's no way that that's possible," but not because we wouldn't have been a good, desirable business. I just didn't know then that Vanguard could do this or would do this type of stuff. This is a bit uncharted for them, as far as pulling off a really large acquisition. I think maybe they had done one acquisition at that time, before us. So I wouldn't have thought that. 

But I probably would have been pretty happy. I think this story's been told a bit, but before the company was ever started, I was running my last company, and I was thinking about building Altruist. And I had a friend who was a partner at [the venture capital firm that led Altruist's Series A funding round] Venrock, Nick Beim. I remember going to him and saying, "Hey, I've got this idea for a new company, and here's the rough idea. I think I would do it as a brand new company versus doing it within my existing one. I'm just curious what you think. I mean, would it be something you'd be interested in?" 

And Nick very quickly was like, "I think it would be an amazing idea, and we'd love to work together, and let's start thinking about how we could do this." And before they committed capital to the project, we had to build an investor presentation. So I still had to build the pitch deck and pitch to the partners and then get the approval. In that process, Nick and I spent hundreds of hours together, really kind of building out this vision for what Altruist would be, and, kind of, how do we think about vertical integration? In that process, he asked me, "Hey, if as we're thinking this through, oftentimes when you're building a new product in a highly regulated industry, that requires a lot of trust. It's nice to have a strategic partner investor. Is there any company that you can imagine that would be a really good fit?" 

I mean, immediately, I was like, "Vanguard would be the absolute best strategic partner." I can't think of a more trusted, respected brand in financial services. I'd been a longtime Boglehead-like follower of Jack Bogle. And he's like, "Well, what about a board member? Is there anybody from the industry that you can think of that could be really impactful immediately?'" I go, "Well, he just stepped down as CEO of Vanguard — this guy named Bill McNabb, I've never met him before, but everything I've heard is, this guy would be incredible." 

Nick is like, "We know Bill McNabb. He's on the board of United Healthcare with one of my partners. Maybe [we] could get an introduction.' I'm like, "If you could get me an introduction to Bill McNabb, that'd be like the most amazing thing ever." 

Our flywheel, our mission statement — so many things that we did were built because I had this long-term admiration [for Vanguard]. Eventually, I did get the meeting. Eventually, Bill did join as a board member, and Vanguard invested when we were about 1 year old in 2020.

FP: Let's close out with something more fun. Speaking of LinkedIn comments, Turnqey Labs and 401 Financial CEO Tyrone Ross said I should ask you how you're preparing for the workout that the two of you have planned while disrupting the industry. How brutal will this workout be? 

JW: Have you met Tyrone in person? So I don't need to explain it much. Tyrone is like 6-foot-2, like 4% body fat. He's also just an unbelievably good person, but he is insanely fit. I think he twice qualified for Olympic trials, but he had injuries. Otherwise, he would have been an Olympian. 

I have worked out with Tyrone before. What's funny is, I'd say we have a nice gym here at the office, and the team knows I'm very active in the gym and in general with working out. But nothing can prepare you for a workout with Tyrone Ross. It is the most humbling experience. I don't care how elite you think your level of fitness is. You work out with him, and — he uses this saying sometimes where he talks about athletes — he's like, "Some athletes are born different." Well, Tyrone was born different, and he works incredibly hard. And, so, yeah, I'll make a trip down to San Diego. We'll do a track workout of some variety. His firm 401 comes from [the fact that] he was a world class 400-meter runner. In track, you know that 400 meters is one lap. He is so fast, I fear he could lap me in a one-lap race.