Empower Retirement To Acquire Personal Capital for Up to $1 Billion
The FinTech personal finance and investment tracking platform Personal Capital has just announced a big exit. This week, the company revealed that it is being acquired by retirement plan recordkeeper Empower Retirement. This acquisition will cost Empower up to $1 billion, with $825 million coming at closing and a contingency bonus of up to $175 million for planned growth. Incidentally, Personal Capital celebrated that presumed final dollar figure when announcing the news on Twitter, including the hashtag #unicorn in their post. Following the deal’s closing — which is expected to take place later this year — the acquired company will officially be known as “Personal Capital, an Empower Company” with current Personal Capital CEO Jay Shah serving as President of the brand.
Personal Capital is a FinTech platform that also boasts wealth management services. Although they may be best known for their suite of free financial tools that allow users to easily monitor their net worth, balances, and investments, the company also offers a high-yield digital banking platform, which it launched last year. Currently Personal Capital has a reported 2.5 million users and tracks more than $771 billion of household assets.
In a press release about the purchase of Personal Capital, Empower’s President and CEO Edmund F. Murphy III said of the deal, “Empower and Personal Capital are joining forces to take the next step forward in the evolution of an integrated platform to deliver personalized advice, financial wellness and comprehensive financial planning to millions of individual investors and retirement plan participants.” He continued, “The acquisition of Personal Capital and the integration of their tools and capabilities into the Empower offering is designed to create a best-of-breed platform — powered by digital and human advice — to help individuals achieve their financial goals.
Empower’s purchase of Personal Capital also continues a string of FinTech acquisitions seen so far this year. Perhaps the most notable of these was the announcement that Intuit would be buying Credit Karma for the price of $7.1 billion. Meanwhile other recent purchases include Visa nabbing Plaid for $5.3 billion, Mastercard following suit with their planned acquisition of Finicity for $825 million (with another $160 million in earn-out potential), and SoFi buying fellow FinTech Galileo for $1.2 billion.
With one foot in the FinTech app world and the other in the wealth management space, Personal Capital has always had an interest business model. Now, under the Empower roof, that model could get even more intriguing. However, responding to one Twitter user who asked about the company’s fiduciary responsibilities post-acquisition, Personal Capital stated, “This pending ownership change will not affect your relationship with your financial advisor team, our investment approach for your assets, where your investments are held, access to your dashboard features, or your management fees.” That said, for free users who don’t utilize the company’s wealth management services, it’s unclear whether the tools they currently enjoy may become exclusive to Empower clients. Presumably the outlook on that front will become more evident in the coming months as this deal nears completion.