With their recent $52.5 million acquisition of Hello Wallet, Morningstar is taking a step to get more personal with investors, especially those in DC plans. The total price they will pay includes the $13.5 million stake Morningstar already had. Earlier this year the firm acquired By All Accounts for $28 million, giving advisors the ability to see a client’s entire financial picture, not just what’s in their 401(k) plan or assets that the advisor manages.
Using behavioral finance principles on their 1 million clients, Hello Wallet’s interactive service analyzes a client’s financial information, including income, account balances, credit cards, retirement plans, insurance and investments, and then creates a budget and makes recommendations on how people can, for example, stretch their paycheck and take full advantage of their DC plan. The firm claims that users have increased their deferrals by 38% in 12 months, based on the median user.
When NAPA Net reported the previous acquisition of By All Accounts, we noted that, “the news takes the discussion of account aggregation, advice and portfolio management to a new level given Morningstar’s brand, capital and distribution, especially in the DC market.” Now Morningstar is getting personal and interactive. If they can aggregate data for advisors across all record keepers in combination with their managed account programs, using Hello Wallet to help investors create and manage budgets while aggregating outside accounts — especially other IRAs and DC plans — the combination has the potential to make a significant impact in terms of outcomes as well as new business.
