Digital RIA Savvy attracts $11 million in venture capital

A new digital registered investment advisory firm is attracting attention from venture capital investors.

Savvy Wealth, which was founded in 2021 but formally launched in the third quarter of 2022, has secured $11 million in Series A funding led by The House Fund, a venture capital firm backed by University of California Berkeley. That’s in addition to a seed funding round closed February; the company has raised a total of $18 million this year.

The company isn’t a consumer-facing digital advice platform, nor is it a wealth fintech building technology to license out to other advisers, making its position in the market somewhat unique. Instead, Savvy is launching a fairly classic RIA with a set of proprietary technology built entirely in-house, said co-founder and CEO Ritik Malhotra.

“Traditional RIAs bring in technology by picking off-the-shelf tools and cobbling together a tech stack, but a small percentage of RIAs … make it all work together,” Malhotra said. Savvy has built its own software for client onboarding, marketing, compliance and back-office operations, which allows it to create an adviser experience without data hiccups.

The set-up has already helped Savvy recruit five financial advisers from firms like BNY Mellon, Merrill Lynch, Morgan Stanley and independent RIAs. Each adviser has more than 10 years of experience in the industry, and between them managed more than $500 million in client assets.

“Having spent more than two decades in the wealth management industry, I believe technology implementation will be a driver of success for financial advisors in the years to come,” Eric Kirste, one of the advisers, who most recently worked for Wiplfli Financial Advisors, said in a statement.

While Savvy’s adviser have only brought $75 million to the platform so far, Malhotra is confident that more will follow. The firm also plans to bring several more financial advisers to its platform in the upcoming months and roll out a new direct-to-consumer client acquisition model designed to bring on high-net-worth investors.

Unlike other digitally powered RIAs that have launched to cater to smaller investors — such as Facet Wealth, which raised $100 million in January — Savvy is targeting the same clients that most RIAs would consider their core demographic. Investment minimums are $500,000, and the ideal client has between $1 million and $20 million in assets.

“We don’t think other tech-enabled RIAs are competitors. It’s the incumbent RIAs out there … the big banks and wirehouses where a lot of client assets have accumulated over the decades,” Malhotra said.

Savvy’s homemade investment management technology offers more than just model portfolios or an in-house robo and can support any type of portfolio advisers want to offer. Advisers on the platform also have access to alternative investments via partnerships with third parties and can offer financial planning and provide holistic wealth management services such as tax management or estate planning.

Fees begin at 1%, but vary depending on account size and services provided, Malhotra said.

The firm is using Charles Schwab for asset custody and clearing, but the platform was designed to be multicustodial, he added.

“We spent a lot of time before starting the company doing due diligence” on potential custodians, he said. “We wanted to work with a partner that had a robust investment platform and a history of working with RIAs.”

Savvy also decided on Schwab because of its brand recognition among clients — “instantly there’s a lot of trust and safety,” Malhotra said — and the ability to offer bank services to clients.

Additional investors in Savvy include Index Ventures and Thrive Capital, which also participated in the seed round, and new investor Brewer Lane Ventures.

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