Empower to acquire robo-adviser Personal Capital for nearly $1B

Empower Retirement, a subsidiary of Canada-based financial company Great-West Lifeco, will acquire robo-adviser Personal Capital for $825M on closing and up to $175 million for planned growth. Empower administers $656B in assets for more than 9.7 million retirement plan participants and is the second-largest retirement plan recordkeeper in the U.S. by total participants. Personal Capital, which is based in Redwood Shores, California, is an 11-year-old digital wealth management firm that offers a suite of digital investment and banking services complemented by human advice. 

Personal Capital used its free personal finance dashboard as a customer acquisition vehicle for investment offerings and financial advisory services delivered by human advisers. Last month, The FR reported on the company’s launch of a feature called The Financial Roadmap, which uses customer data to suggest the most relevant financial planning priorities for customers.

Why should we care?

With its new acquisition, Empower can build what CEO Edmund F. Murphy III calls a “best of breed” digital and human financial platform, improving its digital client experience and expanding retail advice and wealth management capabilities. Empower is the latest incumbent to acquire a robo-adviser, as independent robos compete aggressively in a crowded field led by Betterment and Wealthfront, each with more than $20B in AUM. Personal Capital, which has $12B in AUM, sported gross revenue and AUM growth of around 60% from 2015 to 2019. Personal Capital may be getting ahead of a wave of consolidation in the industry as some robo firms become too expensive to buy. Empower says it will keep Personal Capital operating as a separate entity (“Personal Capital, an Empower Company”). Time will tell if Personal Capital will continue to operate as a separate brand, as industry giants have traditionally moved to integrate the capabilities of acquired entities into their core offerings.