Fintech innovation has expanded to the wealth management industry and this technology-enabled transformation has led to a new class of companies that are focused on what’s been dubbed as WealthTech. New entrants are focusing on bringing the latest technologies to workflows in portfolio planning, portfolio management, automation, and compliance. Most are marketed to existing wealth management firms to help them adjust to the needs of today’s consumers. Savvy is taking a different approach with its next-generation asset management firm that’s leveraging technology from the ground up to deliver holistic wealth management solutions for both its advisors and their clients. With investments in product and research development, the company estimates that wealth managers can scale their revenue up to 4x by working at Savvy as a result of efficiencies in client servicing and time. The firm is actively recruiting wealth managers and their book of businesses, looking to acquire existing wealth management firms, and forecasts $100M AUM in the next six months.
AlleyWatch caught up with Savvy Wealth Cofounder and CEO Ritik Malhotra to learn more about the how the fragmentation and lack of technology adoption in the wealth management industry led to the inspiration for the business, the company’s strategic expansion and hiring plans, recent round of funding, and much, much more…
Who were your investors and how much did you raise?
Savvy closed on $7.3M in Seed funding co-led by Index Ventures and Thrive Capital. Additional investors in the round include the founders of ICONIQ, Plaid, Instacart, Figma, Opendoor, Flexport, Newfront, and EPIQ, as well as firms such as Jordan Park, A* Capital, Box Group, Operator Partners, GFC, and more
Tell us about the product or service that Savvy Wealth offers.
Savvy is the next-generation wealth management firm that supercharges its wealth managers with enhanced software, sales and marketing automation, and back-office servicing. Our model is to hire wealth managers with books of business and acquire wealth management firms and empower them with our tools and services. We provide immense growth opportunities for our wealth managers by building software that drives automation and efficiency so wealth managers can have greater bandwidth to focus on client services and growing revenue.
What inspired the start of Savvy Wealth?
We noticed that over the past decade, and specifically since the onset of the pandemic, that the wealth management industry was not embracing technology as quickly as the general public was. A massive amount of wealth managers still don’t offer digital communication beyond email and still conduct financial planning manually. We launched Savvy to build a technology-powered wealth management firm where we equip our wealth managers with advanced tools and services to advance their business, broaden their client base, and allow them to spend more time with clients.
How is Savvy Wealth different?
Over the last decade, wealth management has transformed from an asset management business (e.g., managing just a stock portfolio) to a holistic financial planning and execution business. Savvy is positioned to address fragmentation in the industry and help advisors use modernized technology solutions to provide immense scale and growth at every point in the advisor flywheel.
What market does Savvy Wealth target and how big is it?
As a wealth management firm, we target the US wealth management industry, which generates $545B in annual revenue.
What’s your business model?
We hire wealth managers with a book of business and acquire wealth management firms that charge clients a fee for financial planning, ongoing advice, investment management, and more. A portion of that fee goes to the wealth manager and a portion goes to Savvy. We align incentives with all the wealth managers we hire/acquire this way: by helping grow our wealth managers’ business, we increase our revenue.
What are your post-COVID office plans?
We operate in a hybrid office model and currently have an office in Manhattan. We hire both in-person in New York City and remote anywhere in the US. We bring all remote employees to the NYC HQ twice a quarter for five days to build team camaraderie. (This results in approximately 11% time spent in NYC and 89% remote.) Half our team is currently in NYC and half are remote.
We operate in a hybrid office model and currently have an office in Manhattan. We hire both in-person in New York City and remote anywhere in the US. We bring all remote employees to the NYC HQ twice a quarter for five days to build team camaraderie. (This results in approximately 11% time spent in NYC and 89% remote.) Half our team is currently in NYC and half are remote.
What was the funding process like?
We spent a lot of time validating the market and our vision prior to kicking off fundraising which helped us have a clear and compelling pitch. We spoke with investors that were fintech-focused, had built fast-growing companies, or had experience in the wealth management industry and we were very fortunate to have a world-class team of firms and individuals invest in Savvy.
What are the biggest challenges that you faced while raising capital?
Finding the right partners to work with was the biggest challenge and one we spent a lot of time thinking through. We’re very fortunate to have a round co-led by Index Ventures and Thrive Capital, both top-tier firms that have invested in iconic software companies. Mark Goldberg from Index Ventures and Kareem Zaki from Thrive Capital are the two partners that led the deal; they both have extensive experience in investing and building fintech and tech-enabled businesses.
What factors about your business led your investors to write the check?
We’re going after a massive industry that is ripe for technological disruption. The combination of a huge market that has been tough to crack with technology, our unique approach of acquiring wealth managers and supercharging them with software and services, and our past track record of having started, grown, and sold tech companies in the past provided a compelling mix of factors that led them to invest.
What are the milestones you plan to achieve in the next six months?
We plan to:
- Have $100M in AUM through hiring and acquiring wealth managers
- Internally launch our end-to-end digital platform for our wealth managers to run and grow their business.
- Continually help the wealth managers we hire and acquire to grow revenue and improve their operating efficiency.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Continue to focus on proving out product-market fit. The more evidence you can collect (paying customers, waitlist interest, customers using the product, customer feedback, etc.), the closer you’ll be to building something that people want. Raising money will be a natural output of that (if that’s what you want to do).
Continue to focus on proving out product-market fit. The more evidence you can collect (paying customers, waitlist interest, customers using the product, customer feedback, etc.), the closer you’ll be to building something that people want. Raising money will be a natural output of that (if that’s what you want to do).
Where do you see the company going now over the near term?
We expect to rapidly scale the firm and dramatically grow AUM through more wealth manager hires and acquisitions this year as well as grow the team to continually improve our product and technology. We also expect to strengthen our client-facing go-to-market presence later this year to have a compelling digital wealth management solution for high-net-worth individuals.
What’s your favorite outdoor dining restaurant in NYC?
Hard to pick just one! Ivan Ramen is great for ramen, CAVA is a staple for quick bowls, and Patent Pending has some of the best cocktails ever made.
