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Here’s the pitch deck for a wealth tech challenging custodians Fidelity and Charles Schwab that just nabbed $50 million from Insight and Venrock

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  • Fintech for wealth advisors Altruist just raised $50 million from Insight Partners and Venrock.
  • CEO and founder Jason Wenk told Insider how it is challenging incumbents like Fidelity and Schwab.
  • The LA-based startup shared the pitch deck it used to raise the round.
  • See more stories on Insider’s business page.

Jason Wenk started his career at Morgan Stanley in investment research over 20 years ago. Now, he’s running a company that is hoping to broaden access to financial advice for less-wealthy individuals. 

The startup just raised $50 million in Series B funding led by Insight Partners with follow-on participation from Series A investor Venrock. The round brings the Los Angeles-based startup’s total funding to just under $67 million.

Cofounder and CEO Wenk declined to share Altruist’s current valuation. 

Founded in 2018, Altruist is a digital brokerage built for independent financial advisors, intended to be an “all-in-one” platform that unites custodial functions, portfolio accounting, and a client-facing portal. It allows advisors to open accounts, invest, build models, report, trade (including fractional shares), and bill clients through an interface that can advisors time by eliminating mundane operational tasks.

Altruist aims to make personalized financial advice less expensive, more efficient, and more inclusive through the platform, which is designed for registered investment advisors (RIAs), a growing segment of the wealth management industry. 

Many RIAs currently rely on investment management platforms from Fidelity and Charles Schwab for custody and clearing, which together account for 80% of market share among RIAs, Wenk told Insider in an interview. He said that these platforms are often costly and inefficient and do not include functions like performance reporting and client billing, which he says forces advisors to buy different software packages for different tasks. 

He said this friction makes it difficult for independent advisors to take on clients with smaller portfolios, particularly under $100,000, because of the associated cost.

Altruist seeks to remedy this by making its tools easy for advisors to use, Wenk said. He sees expanding access through driving down cost as a core impact of Altruist’s solution.

“These large wealth management firms, they’re definitely pricing out not just the average [investor], but they make reasonably wealthy people feel poor,” Wenk said. “It’s sort of preserving this very upper echelon, right? The 1% of the 1%. So for 20 years, I’ve always just felt like, “why is the best help always so inaccessible?”

Altruists makes revenue through advisory and brokerage fees as well as charging for software as a service, said Wenk. Its SaaS fee to advisors, according to Wenk, is 90% cheaper than the typical software stack they use.

Its advisory revenue comes from its turnkey model portfolios, which are sourced from well-known money managers like Vanguard and BlackRock so RIAs can build custom solutions off of them. It also makes a small portion of its revenue from providing trading functions as a broker-dealer. A spokesperson for Altruist declined to share its assets under custody.

The Altruist team has added 100 new hires in the past year, mostly in engineering and product design, Wenk said. Now, the team employs around 110 people full-time and 20 on a contract basis, and Wenk said it has plans to grow to 200 employees by the end of 2021.

Wenk sees a distinct need for financial advisors who can help clients navigate “life events” like marriage or layoffs. While Wenk said he hopes more individual investors start to use roboadvisors instead of “trading naked puts on Robinhood,” he sees robos only as a starting point for new investors rather than a lasting advisory solution. 

“There are millions of people who need help with their money today,” Wenk said. “Their only options are to kind of figure it out themselves using do-it-yourself tools. And then only after they get rich can they potentially hire an advisor.”

While Wenk says Altruist will use the proceeds from its Series B to “keep doing what we’re doing,” he said the company is particularly focused on how it can more effectively connect people who need help with the advisors on its platform. 

“The financial industry is mostly old white men,” Wenk said. “Our users are far more closely representative to the world at large, which is really kind of a beautiful thing. And then the end customers are all over the map. What’s really cool is that our users can be startup advisors that want to serve a really unique segment of a market that would otherwise never get a chance to have access to financial advice.”

Here is the pitch deck Altruist used to raise its $50 million Series B. The firm redacted financials and other details before providing the deck to Insider.  

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