The trend in tie-ups between technology companies and legacy financial institutions continued today, with Principal Financial Group’s announced acquisition of digital advice platform RobustWealth. The terms of the deal will be disclosed on the firm’s next quarterly call, according to Tim Dunbar, Principal’s CIO.
Principal is a global insurance and asset management firm with a large footprint in the retirement plan space. It has $670 billion in assets under management, a line-up of almost 50 mutual funds and a dozen ETFs, as well as alternative and specialized investment strategies.
The two companies have been working together since August 2017, with employees of both offices shuttling back and forth between Principal’s headquarters in Des Moines, Iowa and RobustWealth’s offices in Lambertville, N.J., according to executives at both companies. RobustWealth, a private label, B2B digital advice platform with investment tools and onboarding capabilities, “will retain its open architecture philosophy and operate independently under a management committee within Principal,” according to a statement issued by Principal. “RobustWealth will continue to sell their platform to firms outside Principal as part of their growth strategy.”
“This is going to accelerate our broader digital efforts,” Dunbarsaid of the decision to purchase the fintech company. “We really think it’ll help advisors to get closer to their clients, provide customized solutions, and help the advisors to grow.”
“We have to acknowledge people’s needs and wants: there is an unprecedented need for financial advice. And, in today’s fast-paced, always on, digital world, people have a strong desire for personalization, convenience and 24/7 access to their money,” added Dunbar. “The role of the financial advisor—a real person across the table—remains critical. But, we must combine the best of people with the best of technology to meet clients when, where and how they want to be met.”
Both Dunbar and RobustWealth CEO Mike Kerins are confident their months-long commercial partnership showed that the tie-up will be frictionless. “You don’t have the cultural shock that you’d have in a normal acquisition,” added Kerins, who called it a “natural fit.”
The acquisition should create a positive impact for Principal, said Alois Pirker, research director at Aite Group. The buyer is landing a tech company without having to build one from scratch. “The deal is very similar to what TIAA did with MyVest,” he noted. “When firms start to rely on a startup firm more, buying it gives you more certainty that it’ll be around in the way you need them going forward.”
“Digital interfaces are obviously very important for a firm to get right,” Pirker added, noting that he expects to see more pair-ups like these in the future.