Durable Capital Partners, a long-only investment firm in Chevy Chase, Maryland focused on private and public early-stage, small-, and mid-cap companies, led a $100 million investment in the fintech firm Facet Wealth. The startup that offers financial planning to investors for a flat fee plans to use the new capital to help it double the number of clients it works with, a group traditionally underserved by wealth managers.
Previous investor Warburg Pincus, and new investors Telesoft Partners and Green Cow Venture Capital also participated in the Series C round of funding for Facet. Terms of the deal announced Wednesday morning were not disclosed.
Anders Jones, co-founder and CEO of Facet, declined to share what his company was valued at after the raise. He told RIA Intel it was “not yet” a $1 billion company but that he was happy with the deal.
“I think it speaks to the company we’re trying to build,” Jones said about raising $100 million. “We’re not a niche wealthtech platform, we’re trying to build a massive brand that serves millions of people.”
Baltimore, Maryland-based Facet has raised a total of $165 million in funding since it was founded in 2016.
“Facet is doing something innovative in personal finance. It stands at the forefront of an era in which people will benefit from the use of new technology that results in personalized financial plans suited for their specific needs and aspirations. With a strong team, we believe Facet is well-positioned for sustainable, long-term success,” Henry Ellenbogen, chief investment officer at Durable, said. Durable manages $13.8 billion in assets, according to its most recent regulatory filing last fall.
In February 2021, Jones said Facet could quadruple in size and have as many as 24,000 clients before 2022. The startup fell short of that estimate as it focused on improving its platform, but it still added thousands of clients and hired more than 50 employees last year. Today, Facet has more than 10,000 clients and over 300 employees across 42 states. Most employees, including about 110 financial advisors, work remotely.
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This year, Jones said he expects Facet will double the number of clients it serves to 20,000 but will only need to hire about five more financial advisors.
A typical advisor works with an average of 75 clients but Facet’s advisors, leveraging the startup’s platform, work with 100 or more. The startup’s goal has always been to enable advisors to sufficiently serve as many as 250 clients, which Jones said is achievable in 2022. Facet’s client retention rate is about 90 percent, Jones said, similar to the industry average.
Seventy-five percent of Facet’s clients have never worked with an advisor before, largely because they don’t have a minimum amount of investable assets required by other wealth managers. Jones considers that evidence of a business tailwind. As many as 40 million people in the U.S. could be prospective clients of Facet and thousands are already willing to pay a flat annual fee between $600 to $15,000, depending on their needs, for a financial plan and ongoing consultation — all done remotely.
“I think we can say that, yes, those people exist, and [Facet] really speaks to them and really fills a need that the industry [does] not,” Jones said.
With the new capital, Facet also plans to improve its client-facing platform, expand the services it offers to include tax and estate planning, and hire as many as another 100 employees.
“We are doing something very different than the rest of the industry. We see an enormous opportunity to help millions, if not tens of missions, of Americans with a different service model and offering. And it’s great to see really smart investors buy into that vision. At some point this kind of becomes a self-fulling prophecy because we have the right people around the table,” Jones said.
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.
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Correction: A previous version of this story reported that Telesoft Partners and Green Cow Venture Capital were previous investors in Facet Wealth, based on a company statement. Telesoft and Green Cow are new investors in Facet.
