Northwestern Mutual Scoops Up Fintech Startup LearnVest

Consumer demand for quicker, simpler, and more affordable money management advice is increasingly pushing the financial industry’s big incumbents to adapt and evolve, oftentimes by snapping up startups that have already built sought-after technology.

The latest example is yesterday’s announcement that Milwaukee-based Northwestern Mutual is buying New York-based financial technology startup LearnVest.

“There’s been a gap between what consumers want and what the financial industry has been able to offer,” Northwestern Mutual CEO John Schlifske said in a press release. “Northwestern Mutual will fill that gap by redefining how financial security is delivered.”

Terms of the deal weren’t disclosed, but reports by Bloomberg and Fortune pegged the price north of $250 million, citing anonymous sources familiar with the transaction.

LearnVest launched in 2009, originally focusing on helping women manage their finances. It later expanded to offer women and men access to free online resources for money management and a paid option to work with a LearnVest financial planner. The company markets itself as a combination of technology and human expertise that is more efficient and affordable than what traditional financial planning firms offer. Its flagship program charges a $299 setup fee, plus $19 per month for continued access to a financial planner.

The deal is primarily a technology play for Northwestern Mutual, which sells insurance and wealth management services to 4.3 million clients and manages nearly $90 billion in assets. Its 16,000 advisors will soon add LearnVest’s software to their toolbox, which ideally will free up more time to work with clients and will make it easier to access the advisors, Schlifske told the Wall Street Journal.

Northwestern Mutual could’ve built similar software in-house, but the 158-year-old company “wouldn’t have done it as fast or as well,” Schlifske told Bloomberg.

LearnVest will keep its brand and operate as an independent subsidiary of Northwestern Mutual. LearnVest founder and CEO Alexa von Tobel will retain her position, the companies said in the press release.

The sale allows LearnVest to push its software more quickly to a lot more people. It already has 1.5 million users, but only about 35,000 of them are using paid services. That includes 10,000 people paying for the direct-to-consumer program, and more than 25,000 receiving services through LearnVest’s employer-sponsored program.

The deal also gives LearnVest more resources to invest in its technology and grow its staff, which currently includes 150 employees in New York and Arizona.

The marriage of the two companies follows last year’s $28 million investment in LearnVest that was led by Northwestern Mutual’s private equity arm. LearnVest said it raised nearly $75 million from investors before its acquisition.

Northwestern Mutual has also invested in Betterment, a LearnVest competitor of sorts that offers automated investment advice.

But fintech startups looking for an exit shouldn’t get their hopes up about Northwestern Mutual. This was its first acquisition under Schlifske, who told Forbes his company is unlikely to go on a startup shopping spree.

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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