Stash to acquire PayGrade, surpasses $3 billion AUM
Stash announced its first acquisition of financial literacy platform PayGrade following an increase in assets under management.
Stash, the online brokerage with over 6 million users, announced its first acquisition Wednesday following a surge in its assets under management to more than $3 billion.
Stash is purchasing PayGrade, a financial literacy platform that provides grade-school teachers with a personal finance curriculum designed around simulated banking and investing. The acquisition comes on the heels of Stash’s recent entrance into the robo-advice space, a fresh $125 million funding round and a boost in AUM.
Terms of the deal were not disclosed, but the acquisition does mark Stash’s entrance into delivering free financial literacy to children at a time when other online brokers, like Fidelity Investments Co., are giving teens access to investing with no account fees or commissions.
Prior to the acquisition announcement, Stash provided its users with education via its built-in financial literacy arm, Stash Learn, which breaks down personal finance and presents it in a way that all customers can understand, said Stash co-founder and CEO Brandon Krieg.
“We also made sure that investments themselves were as accessible as possible by giving the ETFs on our platform new names,” Krieg said. Stash will name Schwab US Dividend Equity ETFs “delicious dividends” or iShares Global Clean Energy ETFs “clean & green,” and Global X Social Media Index ETF “social media mania.”
In its next phase of growth under Stash, PayGrade will expand to include digital tools for parents to teach and reinforce money skills at home, according to the announcement.
“Forty-three states do not require stand-alone personal finance courses in high school, and 80% of people live paycheck to paycheck,” Kreig said. “With PayGrade, Stash will provide teachers, parents and children with interactive tools to learn effective money management skills that will last a lifetime.”
Stash’s first acquisition comes as a wave of young retail investors in the U.S. explore trading for the first time. More than 10 million new brokerage accounts opened in 2020, according the J.D. Power 2021 U.S. Self-Directed Investor Satisfaction study.
As a result, more online brokers are interested in opening up their reach to young investors by attracting them to learn about financial services before they even have a driver’s license. However, this new generation of investors also helped spark the GameStop trading frenzy earlier this year, drawing new attention to the financial literacy threat America has faced for years.
When entering the robo-advice space with the launch of Smart Portfolios in March, Stash made it clear that its micro and diversified investing strategies are the antithesis of day trading, and that the company’s goals are to focus on a business model to attract new and young investors for long-term investing strategies.
“From day one, Stash was built for long-term, diversified investing, not day trading,” said Vinod Raman, vice president of product for investing at Stash. “It’s why we operate with just four trading windows, and do not offer options or margin trading.”
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