Investing can be helped by artificial intelligence in many ways, and this can be good for investors. It can also good for the investment profession. A company that we have featured here before, Altruist, which was acquired by Vanguard in August, has been involved in AI for a while, and Vanguard did call out the efforts of the firm in that press release announcing the deal.
The announcement caught the world by surprise, but the acquisition did something very important for Vanguard. I ran a piece on my personal blog nine days before the deal was announced about Fidelity Investments, noting that the huge company was tiny in ETFs that it directly managed. The piece was written after a Barron’s cover story piece was written about Vanguard, the “King of ETFs.” In that article was this very interesting graphic:
Vanguard, which has been growing faster than BlackRock in the ETF space, was near the bottom of these four investment titans in terms of total assets but tied at the top for ETF assets.
Vanguard is a unique company that I have known for a very long time. I remain impressed by what its founder, John Bogle, was able to do with his uniqure view about passive investing. Of course, Vanguard, where I am a customer, is a lot more than passive investing too. Its customers love the company, and I am glad for it that it has succeeded in transitioning from mutual funds to ETFs so well. The company, like Fidelity, is not publicly-traded, and it can be difficult to get information about it subsequently. That press release from August did not state the price that Vanguard was paying for Altruist or discuss the impact on Total Assets. The deal still has not closed.
On the Vanguard website is a Q&A that explains the reasons it was interested in Altruist, It noted that it had been an investor in the private company for six years, and that it expected to be able to serve its clients better through the innovative technology of Altruist.
Altruist, based in California, was created in 2018. On its LinkedIn profile, it claims to have worked with over 6000 investment advisors. That profile discussed one product, Hazel, which is its AI engine for wealth managers. The Altruist website gives plenty of information about Hazel AI, discussing the platform that frees advisors from busywork and allows them to do more for the clients. The website allows advisors to get a demo, and it also offers a free trial for two weeks.
A week after the deal with Vanguard was announced, it launched a financial planning agent. The website shares the Hazel pricing, which is $60 month per seat for the Hazel Platform, $160 month for the Tax Planning Agent and $300 month for the Financial Planning Agent.
Ahead of the merger announcement, Barron’s called Hazel “the AI tool that rocked markets” in February. The article pointed out that Altruist competes with Schwab in the RIA custody sector. Through its ETF advance, Vanguard has been working with RIAs closely. The Altruist purchase will elevate the ability to do RIA custody. A month later, Adams Street, a private markets firm, mentioned its investment in Altruist as it discussed AI and the next era of wealth management.
According to the Hazel website, more than 1500 advisors are actively using Hazel. Advisors have a chance to learn more and to give it a free trial. It appears that Altruist has a strong offering that will be more widely prevalent after the Vanguard deal closes. Hazel AI is an example of AI helping the investment management industry.
