Morningstar in $52.5 million deal for online financial service HelloWallet

New acquisition functions like Mint.com and works with individuals and retirement plan providers

May 30, 2014 @ 12:15 pm

By Joyce Hanson

Morningstar Inc. announced Thursday it will acquire online financial wellness provider HelloWallet Holdings Inc. in a $52.5 million deal.

Despite the price tag, the transaction will cost Morningstar $39 million because the independent investment research firm already owns a $13.5 million minority stake in HelloWallet, whose website and mobile applications have become popular with retirement plan sponsors.

HelloWallet relies on the same type of account aggregation that online financial planner Mint.com does, said Matt Fellowes, the consumer finance expert and former Brookings Institution scholar behind HelloWallet's founding in 2009.

“We pull in transactional data from 16,000 different financial institutions, including checking accounts, savings loans, health savings accounts, credit cards, mortgages and retirement savings,” Mr. Fellowes said.

HelloWallet's capabilities will provide value for many of Morningstar's clients, including advisers and asset managers, according to Brock Johnson, head of retirement solutions for Morningstar. The deal between the firms made strategic sense because both are independent and grounded in academic research, he said.

(More: Advisers using cash-flow management software — even for wealthy clients)

“It starts at the mission,” Mr. Johnson said. “Morningstar has always wanted to help investors make better decisions, and HelloWallet falls right in line with that mission.”

Morningstar plans to incorporate its investment capabilities, including managed accounts, into HelloWallet, which combines behavioral economics and the psychology of decision-making in its technology, according to Mr. Johnson.

Morningstar provides managed retirement accounts to almost 1 million individuals through its advisory subsidiaries. It initially became a HelloWallet investor in January 2012, with $6.75 million in Series B venture capital funding.

(See also: Best way an adviser can help: Cut up the credit cards)

Unlike Mint.com, HelloWallet goes a step further than simple aggregation to show workers how they may be accumulating debt faster than they are saving toward retirement, Mr. Fellowes said.

“We can tell each specific individual how much they can afford to save for retirement and where to find that money,” he said.

For example, 65% of HelloWallet members have reduced their banking fees after using the application, he said.

HelloWallet's client base of retirement plan sponsors includes Marsh and McLennan, United Technologies and Salesforce.com. Although HelloWallet will become a wholly owned subsidiary of Morningstar, there are no plans to change its branding, Mr. Fellowes said.

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