Tech-advisory Hybrid Facet Wealth announced that it has closed a $100 million Series C funding round, with venture capital firms Durable Capital Partners, Telesoft Partners and Green Cow Venture Capital all coming together for the first time, along with previous investors Warburg Pincus. Huh.
The latest round follows the startup’s Series B funding round in 2020, when it raised $25 million, taking its total funding since inception in 2016 to $165 million.
Industry analysts said the latest funding round is a validation of Face Wealth’s model, which combines financial planning technology with human-based mentoring, which is delivered through its more than 100 employee CFPs. Unlike most traditional advisors, Facet charges a similar subscription-based fee; It is not based on a client’s assets or income, but rather is tied to the level of complexity in the client’s position, said Anders Jones, CEO and co-founder of Facet. Their average client pays $3,000 a year.
“We really see an opportunity to create a new version of financial planning that is much more consumer-focused and also targeted at a market that needs it, which just doesn’t have access to great options,” Jones said. “We really exist for the 40 million families that have too many nuances and complexities in their financial lives to have a DIY website like Robo or something like that, but they don’t have the level of assets to be interesting to a traditional advisor. “
Clients work with a dedicated CFP, and the firm oversees every aspect of their financial lives, from cash flow and loans to changing jobs and starting a family.
While Face Wealth’s original plan was to buy out small, unprofitable clients from RIA firms, Jones says it is no longer part of a customer acquisition strategy. “It was an interesting acquisition channel that made a lot of sense on paper, and was difficult to execute in practice.”
Most of the firm’s growth has come from the segment of the market that does not have a financial advisor. In fact, Jones says that 75% of his 10,000 clients have never worked with an advisor before.
The company has grown from $2.5 million in revenue in 2019 to over $25 million in 2021.
“They were able to build something without any of the legacy issues that so many incumbents face,” said Gavin Spitzner, president of Wealth Consulting Partners. “It’s been very impressive to see how they’ve gone about building out the business, building out their technology stack with what I would call a best practice, very prescribed advisory process, where they have very specific roles. Planning is central to the experience. It is not accidental to the relationship, as it is with multiple functionaries.”
“Right now, advisors offer financial planning as a loss leader in managing your assets; we see financial planning as a force for good,” Jones said.
Jones said the funding will be used to continue its growth and expand Facet’s offering, such as adding tax and estate planning capabilities. They will not only focus on making financial plans, but also on implementing and implementing those plans.
Dennis Gallant, strategic advisor at Eight-Novarica Group, says Facet has done a great job addressing the issue of scale in advising.
“They have gained momentum on many other startups,” he said. “They’ve built a very proprietary process with the intention of creating a hybrid around it. Their planning process, the goal-based approach, the customer experience have all been very, very strong.”
Gallant says their subscription-based pricing has been a difference to the Facet.
“It’s often not cheaper than the AUM-based model, and it encourages the advisor to look at every aspect of your financial life, not just the investment accounts they’re managing,” Jones said. “Industry interests are so deep that it is going to take some time before the impasse is broken, but I think in the next 10 years, you will find that less than 50% of financial planning clients are paying through AUM-based fees “