Facet Wealth Inc., a subscription-based financial planning fintech, announced a $100 million funding round Wednesday that will help the company expand fee-based planning to Americans who don’t have enough money to work with traditional wealth managers.
The Baltimore-based company combines a robo-adviser platform with certified financial planners, filling a gap between increasingly popular digital investment tools and the traditional asset-based planning model.
Facet will use the latest injection of capital to make investments across its technology and product suite to upgrade its client experience, according to CEO and co-founder Anders Jones.
Instead of charging traditional fees based on assets under management, Facet uses an algorithm to estimate a client’s financial services and planning needs. The fee for the average client is approximately $3,000.
“An AUM fee can substantially eat into a person's retirement plans and cost clients hundreds of thousands of dollars in fees over the years,” Jones said in an email, adding that subscription models offer the same caliber of planning, investment advice and allocations. “The subscription model also ensures that the adviser and client are aligned in terms of full transparency and that the relationship is inherently free of conflict.”
Facet manages more than $960 million in client assets, and the vast majority of its 10,000 clients are mass affluent, according to the company's latest Form ADV. The filing also shows the company works with more than 600 high-net-worth individuals, which accounts for almost half of its total assets under management.
The round was led by Durable Capital Partners, with participation by previous investor Warburg Pincus, and newcomers Telesoft Partners and Green Cow Venture Capital.
“Facet is doing something innovative in personal finance,” said Henry Ellenbogen, chief investment officer at Durable. “It stands at the forefront of an era in which people will benefit from the use of new technology that results in personalized financial plans suited for their specific needs.”
Facet, which was founded in 2016 with $60 million in venture capital support, has grown tenfold since 2020, according to a release, raising approximately $165 million in total funding.
The firm currently serves more than 10,000 clients and has over 300 employees in 42 states.
“The AUM-based fee model has been around for decades, and has faced little to no challenge from high-net-worth or ultra-high-net-worth clients,” Jones said. “But the reality is, it is exclusionary for the vast majority of households who work extremely hard to achieve their retirement goals and for whom every dollar counts. It takes time to fix a broken system.”
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