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.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Behind the scenes at Pershing Insite 2018

What goes on behind the scenes at one of the industry's biggest conferences? Join us for an all-access sneak peek!

Latest news & opinion

Mutual funds feel the pinch of platform fees

No-transaction-fee options are a big hit with investors, but funds wind up paying the costs — and passing them on.

Divorce reduces retirement readiness

The new tax law could increase financial challenges for divorced people, but planning opportunities abound.

Merrill Lynch fined $42 million for misleading customers

In addition to the practice of 'masking' trades, the wirehouse went to extremes to cover up the wrongdoing.

Advisers with billions in AUM leaving Wall Street

Merrill Lynch has seen two teams exit recently, each with more than $4 billion in client assets.

Wells Fargo weighs changes to wealth unit

The move would reflect the bank's effort to cut $4 billion in costs.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print