Vanguard to acquire custodian Altruist

Vanguard will acquire custodian and investment platform Altruist in a bid to expand into the American independent financial adviser market.

The two parties entered into a definitive agreement, the financial terms of which were not disclosed. Outlets such as the Wall Street Journal, however, have reported a price tag of US$4 billion.

Founded in 2018 by Jason Wenk, Altruist has more than 6000 independent financial adviser who use the platform.

Early this year, Altruist launched Hazel, an artificial-intelligence driven tax planning tool that processes and analyses payslips, account statements and meeting notes and other documents to generate a tax plan within minutes.

Vanguard was one of the first backers of the start-up, taking part in a raise that took in US$600 million from investors from the likes of Insight Partners, GIC, Venrock and Salesforce Ventures.

Bill McNabb, who was Vanguard's chief executive until 2017, sits on Altruist's board.

"We've had the benefit of getting to get to know Altruist's people, platform, and potential over the last several years, and what we saw was a mission-aligned organisation building AI-enabled technology around the real needs of advisors and the investors they serve," Vanguard chief executive officer Salim Ramji said.

"As more investors in Vanguard funds choose to work with financial advisors, we see a significant opportunity to build on the strengths of two highly complementary organizations to help advisors serve clients more effectively and help more investors achieve financial security and peace of mind."

Altruist is expected to operate as a standalone business, retaining its leadership, brand, adviser focus and operating model under Vanguard's ownership.

Ramji noted Vanguard will benefit from the ability to get closer to independent advisers and their clients, as well as from direct access to Altruist's innovative technology and adviser platform which will allow the company to better serve its investors.

Wenk commented that Altruist was built on the simple belief that when independent advisers have better technology and lower prices, they can do their best work and bring high-quality advice to more people."

"Vanguard shares our conviction in that mission, and their trusted investment expertise and resources will enable us to pursue it with greater speed and reach. I'm incredibly excited about what this will mean for advisors and their clients, and I look forward to building the future of Altruist together," he added.

Vanguard managed more than US$17 trillion in assets under management at the end of April.