Tech-Based Custodian Altruist Sells to Vanguard
Altruist, the tech-based custodian founded and run by Jason Wenk, has entered into an agreement to be acquired by financial services and investment giant Vanguard.
If the deal goes through, Altruist will continue to operate as a standalone business under Wenk and gain “greater capacity and long-term support to invest in its advisor technology and custody capabilities, while drawing on Vanguard’s reach and investment expertise,” according to the announcement on Wednesday. The firms expect the deal to close later this year.
The move comes after years of Wenk battling custodial giants Charles Schwab and Fidelity Investments with the ethos of an independent upstart without the baggage of legacy banking. The Culver City, Calif.-based custodian has had a relationship with Vanguard, with the financial giant known for low-cost investment options having been an investor since 2020 and former Vanguard Chairman and CEO Bill McNabb serving on its board since 2021.
“Vanguard shares our conviction in that mission, and their trusted investment expertise and resources will enable us to pursue it with greater speed and reach,” Wenk said in a statement.
Wenk founded Altruist in 2018 after building his own RIA and seeing a need for a better custodial setup. He has since added services and capabilities funded by seed capital from private equity and sovereign wealth funds. The firm does not disclose how many advisors use the platform, but its latest funding round valued it at $1.9 billion.
“As more investors in Vanguard funds choose to work with financial advisors, we see a significant opportunity to build on the strengths of two highly complementary organizations to help advisors serve clients more effectively and help more investors achieve financial security and peace of mind,” Vanguard CEO Salim Ramji said in a statement.
Vanguard manages about $12 trillion in assets globally, making it one of the world’s largest asset managers. It also offers financial advice through digital platforms and human advisors for investors with $5 million or more in qualifying assets, according to the company. Earlier this month, Vanguard rolled out custom model portfolios, allowing financial advisors to use Vanguard’s select existing models, including its Strategic Active/Passive and Fixed-Income portfolios.
Schwab is the largest custodian to RIAs in the U.S. with $5.7 trillion in assets as of June 30. It is followed by Fidelity at about $1.5 trillion in assets.
In a March interview with Wealth Management, Wenk discussed his plans to roll out a new AI agent feature every quarter to bolster Altruist’s offering. The firm had just recently made waves by launching Hazel, an AI-driven tax-planning tool that investors saw as a threat to large legacy players such as Schwab and LPL Financial.
In that interview, Wenk also commented on how Altruist could disrupt the financial services space, similar to how Vanguard did in the mid-1970s by introducing low-cost index funds within an investor-owned model.
“We can drive a 20% to 30% increase in EBITDA just because we eliminate all this operational friction,” he said at the time. “Eventually, the market will tell these advisors that they need to make a change, or it will start having an impact on their ability to grow and retain clients.”
