Facet Wealth is a three-year-old registered investment adviser with a
fintech twist that’s tapping into major themes playing out across the
wealth management industry.A focus on all-encompassing financial
planning, subscription-based offerings, and regulation prompting
financial professionals to act in their clients’ best interest are major
drivers. Business Insider spoke with Anders Jones, Facet’s chief
executive officer and co-founder, and Brent Weiss, co-founder and head
of planning, about the firm’s growth plans.Visit BI Prime for more
stories.If an investor assembled a basket of themes shaping the wealth
management industry today and fed them into a blender, they would end up
with a creation that looks a lot like Facet Wealth.To get more news
about WikiFX, you can visit WikiFX news official website.
Facet, a Baltimore-based registered investment adviser with a fintech
twist, uses Facet-branded digital tools to pair clients with certified
financial planners who work remotely from homes around the US.The firm,
founded by a financial planning executive and two venture capitalists,
finds clients primarily by referrals from independent broker-dealers,
hybrid robo-advisers, and traditional RIAs who might pass on them
because their asset base is too small.Its 102 employees and 30 certified
financial planners across 16 states service Facet’s 1,300 clients who
are, on average, 55 years old. Anders Jones, Facet’s chief executive,
told us its client base has been growing by 20% each month since July,
and the average client has $350,000 in investable assets.
That places Facet’s client base in the so-called “mass affluent” set —
well below what might be considered high- or ultra-high-net-worth
clients that wirehouses like UBS are focusing their energy on as they
look to boost adviser productivity.It’s a space where there’s
competition from roboadvisers like Wealthfront, which has an account
minimum of $500, as well as human advisers, though human advice often
have higher account minimums. Personal Capital, for example, says it has
a $100,000 minimum account size for customers to get human financial
advice services. Fees, Netflix-styleFacet charges clients a flat fee to
work with their advisers, leaning on a subscription model, a la Netflix.
Brokerages Charles Schwab and TD Ameritrade have channeled Netflix in
pricing and recommendation products, respectively, rolled out this year.
Depending on how extensive Facet planners’ services are, clients’ flat
fees range from $480 to $5,000 per year.Revenue that comes in from
clients’ subscription fees goes to Facet, while all of its financial
planners are salaried — and planners’ take-home pay is not tied to the
revenue they generate. “I’ve been a big believer that the AUM model does
not make sense,” Jones said in a recent interview, referring to the
wealth management industry’s traditional fee model that ties advisers’
pay to their clients’ total assets under management.
Jones, formerly a founding partner at the firm Argyle Ventures,
started Facet in 2016 with co-founders Brent Weiss, now head of
planning, and executive chairman Patrick McKenna.That year, the Obama
administration’s Department of Labor passed the fiduciary rule — which
stated advisers must act in the best interest of their clients, a rule
that’s been overturned under the Trump administration’s DoL — and Jones
called that an “a-ha moment.”The Securities and Exchange Commission’s
“Reg BI” rule passed earlier this year that states financial
professionals must disclose what fees and costs their clients may incur.
In response, the CFP Board has created a new code of ethics and
standards, which were effective last month, which designated its
planners as fiduciaries. “The future of this industry is about financial
planning,” as opposed to solely offering investment management advice,
Jones said.He likened his firm’s approach most closely to digital wealth
management firm Personal Capital, which offers free online savings
tools and also employs human advisers. Facet does not implement account
minimums, and its clients typically fall into three groups: young
professionals, early- to mid-career families, and pre-retirees. It has
some $100 million in assets under management, with assets under
advisement around $500 million.Expansion plansTo date, Facet has raised
some $37 million after a Series A round led last fall by the private
equity firm Warburg Pincus and an earlier investment from Slow Ventures.
With that funding, it’s been able to expand. After the robo-adviser
Wealthfront in August absorbed team members from financial-planning
start-up Grove, Facet took on Grove’s planning business, members of its
planning team, and their clients who weren’t integrated into Wealthfront
for an undisclosed amount. To be sure, even as new and digital entrants
crowd the wealth management industry and gain market share, legacy
wirehouses (the large, full-service broker-dealer institutions) still
oversee trillions in wealth. Morgan Stanley, UBS, Wells Fargo, and
Merrill Lynch manage a combined $9 trillion in client assets as of their
third-quarter filings; Morgan Stanley is the largest wealth manager in
the US by assets.And as we reported, analysts increasingly believe
scaling up in the wealth management business, which includes
consolidation and gobbling up smaller players, will keep firms
competitive.Brent Weiss, a Facet co-founder and head of planning, told
us in a recent interview that he thinks its subscription model for
mass-affluent clients makes it stand out from firms with more
traditional models.“Our subscription model really becomes a unique
differentiator in that space where we can go to those families and say,
‘Hey, we know you need some help with your financial life plan. Let’s
talk about it for an affordable flat fee,’” he said. “And that creates
great practice in that space.”
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