Capital One bulks up in robo advice with United Income buyout

Register now

Capital One is expanding in automated advice, acquiring the retirement-focused robo-adviser United Income after taking a preferred 10% stake in it last year.

United Income will continue to operate independently under its current management team and plans to expand operations in the near future, according to an email sent to clients by its CEO, Matt Fellowes. (The price of the deal was not disclosed.)

“After much consideration, Capital One emerged as the far and away best option,” Fellowes said in the emailed message, which was reviewed by American Banker. “I am proud to announce that United Income has joined Capital One as we seek to scale our solution to serve millions of households in the years to come.”

United Income listed $746 million in assets under management and more than 750 accounts on its latest regulatory filing in August. The Washington, D.C.-based registered investment adviser operates a digital platform for households nearing or transitioning into retirement. The technology helps retirement-age savers find the best ways to manage their wealth.

“As one immediate step forward together, we will be expanding our team, with the intent to accelerate our innovation,” Fellowes said in the email. “However, not much else will change.”

In August of last year Capital One took at least a 10% stake in the fintech. The McLean, Va., company referred all queries on the deal to United.

Elizabeth Kelly, United Income's senior vice president of operations, said in an emailed statement that the bank was "impressed with the unique approach United Income has taken within the wealth management space, using a technology-based advisory model to deliver personalized and comprehensive financial planning and wealth management guidance for their customers."

Being a part of Capital One will provide United with "resources that will help us scale and continue to innovate and develop accessible digital tools that help Americans plan for their financial future," she added.

The acquisition adds to Capital One’s automated advice portfolio. It already has a hybrid robo-advice offering, Capital One Advisors Managed Portfolios, which it launched in 2016.

Before it was sold, United Income raised $10 million in 2018, according to a Securities and Exchange Commission filing. Other prominent backers included Morningstar and eBay founder Pierre Omidyar's venture capital firm, according to Crunchbase.

United Income's sale to Capital One follows other wealthtech M&A deals this year.

Goldman Sachs agreed to buy United Capital Financial Partners, the parent company of United Capital Financial Advisers, a technology-driven RIA that serves mostly high-net-worth individuals and has $22 billion in assets under management, according to the firm’s most recent regulatory filings. The Newport Beach, Calif., firm prominently pushed its FinLife software as a digital holistic financial planning tool.

With the purchase Goldman gains a fintech platform it can use to serve its own well-heeled clientele, and experts suggested the FinLife software could be paired with Marcus, Goldman's digital bank, to help keep investable assets on the platform.

Earlier this month, the asset manager Northern Trust and the independent broker-dealer Ladenburg Thalmann brokered their own robo-adviser deals. Northern Trust acquired Belvedere Advisors, which included the robo-advice platform Emotomy, while Ladenburg purchased a stake in a small automated impact investing startup called Newday Financial Technologies.

Other notable investments in wealthtech this year include $30 million raised by retirement planning firm Vestwell and funding for Trizic, a white-label digital advice platform developer, which raised close to $8 million.

Overall wealthtech deals and funding fell in the second quarter, however. According to a recent study by CB Insights, there were 35 deals in the sector, versus 56 in the first quarter and 53 in last year's second quarter. Funding also dipped, to $421 million, from $768 million in the first quarter.

For reprint and licensing requests for this article, click here.
M&A Robo advisors Automated investing Decumulation Retirement income Retirement withdrawals Capital One