This content is from: Wealth Management

Facet Wealth Quadrupled to 6,000 Clients Last Year. Here’s the Plan to Do It Again in 2021.

A marketing engine unfamiliar to wealth managers and the appeal of flat-rate financial planning fees are propelling the startup's growth.

Anders Jones is enjoying his time in the desert outside Palm Springs, Calif. He rented a house there for the winter and has been catching up with friends from San Francisco who did the same. But it’s hardly been a vacation.

Jones is the CEO of Facet Wealth, a startup he co-founded in 2016 that connects investors with financial advisors, and the company is growing at a blistering pace. Facet began 2020 with 1,500 clients and ended the year with 6,000. Based on its trajectory so far,  Jones says the plan is to quadruple in size again this year and have as many as 24,000 clients.

That would be a remarkable achievement by most wealth management standards. The majority of firms struggle to grow at all. From 2015 through 2019, the median RIA went from having 302 clients to 389, a compound annual growth rate (CAGR) of 4.7%, according to Charles Schwab’s 2020 RIA Benchmarking Study.

“The demand is there, and we've got the service model that I think makes sense,” Jones told RIA Intel

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Facet has benefited from chance as well as careful planning. The market turmoil caused by the Covid-19 pandemic spurred more investors to seek out financial planning, including those underserved by the wealth management industry. Unlike most wealth managers, Facet’s clients pay a flat annual fee between $600 to $15,000, depending on their needs, for a financial plan and ongoing consultation — all done remotely. The service is more inclusive as a result and its potential market is any one of the more than 30 million mass affluent households in the U.S. Flat annual rates will be the foremost way financial advisors charge clients in the future, Jones says.

Facet also has a sophisticated and well-funded digital marketing engine, inspired by direct-to-consumer products and services outside finance, that most wealth managers lack. (Although, there are signs more advisory firms are investing in these strategies).

In September, Warburg Pincus, the private equity firm that manages $53 billion in assets, led a group of existing Facet investors in a $25 million Series B round of funding. Facet has raised a total of $62 million in funding.

This year, based on regulatory filings and some napkin math, Facet’s revenue could surpass that of even some of the largest venture-backed wealth management startups like Betterment and Wealthfront, which manage $18 billion and $15 billion, respectively. If Facet only doubled the number of clients it services to about 12,000 and charged each one $2,500 per year, the company would be on track to generate about $30 million in revenue.

Jones declined to share details about Facet’s current or future revenue or say if the company was profitable or not. "We don't make our financials public, but as with any venture-backed startup we are focused on fast growth to take advantage of the enormous opportunity ahead of us, so we are reinvesting all of our dollars towards that," he said.

Last week, Facet added 160 new clients but Jones expects the growth rate will accelerate. He said the company has been hiring more Certified Financial Planners than it immediately needs in anticipation of new clients. 

The startup currently has 240 employees and expects to add at least another 100 this year, across all parts of its business. The company was founded in Baltimore but all employees are working remotely from 33 different states. Jones moved to Florida last year and said he is unsure where the headquarters will be going forward or what it will be like. There is no obvious location for it because employees live all over the place, he said.

Facet’s product and service offering is also evolving. In addition to financial planning, Facet is hiring professionals who can offer clients tax planning and preparation, as well as estate planning. Historically, clients who needed those services had to be referred outside the organization. 

It also has begun hiring more early-career planners (who are still CFP certificant holders) capable of helping clients with less complicated financial lives. Those planners are then mentored by others and will be able to grow professionally with their clients over time. “We believe really deeply that we want them to build a relationship with an advisor that’s their person over time,” Jones said.

Facet’s advisors each work with about 250 clients, who are matched based on their needs and compatibility. 

“We definitely are a high-volume-client firm. That’s how we get our efficiency and we’re able to pass that on to the end client,” Jones said. 

Corrections: A previous version of this story said Facet's advisors work with about 160 clients. Its advisors work with as many as 250 clients. A previous version also said it charges up to $5,000 for its services. It charges up to $15,000.

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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