Less than a year after raising $169 million, Altruist came in hot with another $152 million in funding at the end of April, bringing the Culver City company’s valuation to $1.9 billion.

This marks the last round of funding Altruist will need for the foreseeable future, according to Chief Executive Jason Wenk, who founded the firm in 2018.

Altruist aims to provide independent registered investment advisers, or RIAs, with the technology to make advisers more efficient, allowing them to serve more clients and therefore minimizing the need for charging higher fees and having higher minimums, Wenk said.

Thus, by improving the infrastructure that leads advisers to charge these fees, Wenk said financial services could be offered to the average American to address the shrinking middle class.

“Instead of trying to bifurcate the (financial advisers) that are good at their jobs and care deeply about their clients, maybe we should enable them with much better technology and a better platform that reduces some of the limitations that have existed in the past,” Wenk said.

Catering to ‘the next-gen adviser’

The wealth management space has continued to see increased merger and acquisition activity, often fueled by private equity – with RIA M&A deals seeing a 10-year compound-annualized-growth-rate of about 10% since 2015, according to a Fidelity Investments report. One reason for this increase, noted both by the report and by Wenk, stems from the number of firms currently under baby boomer leadership looking to “gracefully exit the industry,” according to the report.

Nevertheless, Wenk believes this trend will cool.

“Over the next decade or so, a lot of those acquisition opportunities will go away, and the core that we serve is really what I refer to as ‘the next-gen adviser’ or the ‘modern adviser,’” Wenk said.

Altruist’s goal is still to provide solutions rooted in long-term thinking that can add value to newer, startup firms in addition to more established large firms looking to improve operations.

A newer offering from Altruist is its high-yield cash account which pays a 4% annual percentage yield, Wenk said.

“Whether someone has an extra $500, $5,000 or $5 million in cash, there’s no reason they should leave it at the bank earning 0.01%,” he said. “That’s just easy excess return they could earn by moving it to a platform like Altruist.”

The firm’s ability to offer higher yields on cash stems from a “more efficient support model (which) allows us to have a lower operating expense,” he said.

Wenk also pointed to Altruist’s automated tax management tools to ensure efficiency for clients. A big push for improving its products has been taking advantage of AI’s ability to produce better results for advisers and their clients.

Growth and approach to funds

Wenk expects Altruist to grow about 100% or more this year before growth begins to moderate over the next three to four years. Last year marked the second consecutive year the firm tripled its assets under management.

This growth is a result of both products offered by Altruist as well as the general expansion of the overall RIA segment, Wenk said. Based on the segment’s current trajectory, Wenk said he expects the RIA market
will see $100 billion in annual revenue in 10 years, compared to its current status of about $30 billion.

As for Altruist’s latest round of funding – which was led by GIC, a global investor in Singapore – Wenk said the $152 million infusion puts the firm in a place where it will “never have to raise outside capital again.”

“The company is very well funded and can exist either as a private company as long as we want, or should we decide to go public, we could do that and not have to raise any additional capital,” Wenk said.

When it comes to fundraising, Wenk said his approach is unique in that he tries to raise the smallest amount possible. As an example, he pointed out that if a company’s post money valuation was $2 billion from a $300 million funding round, its dilution would be close to 20%.

“My approach has always been to take the least amount you can … over the course of three different rounds and each round has been at a sequentially higher price point,” he said. “This helps to reduce dilution, which helps reward your employees.”

Currently, Altruist serves 1,000 RIA firms in the U.S. with 4,700 total advisers meaning it has a little bit more than 10% market share.