IPO dreams die, but Personal Capital gets '$1 billion' price tag from life insurance giant's 401(k) unit that includes a de facto discount from early-bird VC dollars

It seems like more large financial services firms are building full technology stacks to support their AUM based models through engaging & retaining 401K & Rollover dollars: 1) accumulation (robo) 2) services (advisors) 3) decumulation (planning tools) Schwab: Intelligent Portfolios (robo) : Schwab Advisors (services) : Intelligent Income (decumulation) Fidelity: similar to Schwab, but not sure they have decumulation Vanguard: digital advisor : personal advisory services (PAS) : decumulation ? Goldman: Marcus or home built robo : United Capital / Ayco (services) : decumulation ? Empower: personal capital (robo) : services ? : decumulation ? Capital One: bought United Income for decumulation At https://www.newretirement.com/ we're building the decumulation planning technology, but on a completely independent platform and business model.

First off, I would consider Personal Capital the cream of the crop of the last vintage of VC-backed wealth management firms (2010 onward lets say). They used technology better than anyone else to grow their business better than a majority of traditional RIAs. But they still played the same game - gather assets, move them to a designated platform, and bill quarterly fees based on AUM. Simply nothing innovative there - and quite predictably their growth stalled out far short of giving the biggest industry players a run for their money. VCs get a respectable exit I suppose, but Personal Capital won't go down in history the way Schwab did in the 80s. I think this outcome is overall disappointing. Stephen raises good points above that I agree with. Specifically, the last cohort of startups resulted in a bunch of "tuck-in" investments for the industry giants - allowing the giants to fortify their platforms. Motif (Folio FN & Schwab), Learnvest (Northwestern Mutual), Folio FN (Goldman), Honest Dollar (Goldman), Jemstep (Invesco), and now Personal Capital (Power Corp.). Where's the IPO amongst the group? No where. They all got sucked into playing the industry game and couldn't scale big enough to go down in history, or really matter. Stephen's working on an interesting piece of the puzzle. So are others such as Iraklis at Rowboat Advisors. Great engineering work is invaluable to moving things forward. But so is an "Artistic Approach" to re-thinking the industry...and that's what's been missing in FinTech for the past 20 years, but paradoxically that's what VC funding should be used for! An artist can go back and re-examine first principles. Rethink assumptions made that allow for breaking out of the current competitive framework established (and propagated) by the industry giants. Akin to Steve Jobs and the iPhone, Elan and Tesla, Airbnb, etc. We need a visionary with an understanding of Blue Ocean Strategy. Instead, the companies most successful at raising capital have been exercises in engineering efficiency. I'm not sure if that's a result of the entrepreneurs themselves, the difficulty in finding entrepreneurs who can effectively juggle engineering/artistic vision in a highly technical vertical like asset management, or an unwillingness of VCs to take big swings at bat. We'll see. The big breakthrough in Wealth Technology will not come using the standard business model - AUM based fees and custodied assets. It will be a service offered across (an ever growing list of) platforms driven by the REAL needs and wants of consumers. They need planning. They need holistic, competent, timely advice. They want a fiduciary (over a possibly conflicted salesperson). Nowhere do we hear that customers need to house their money on one platform or another - or want to pay fees based on AUM. Here's to the next batch!