What You Need to Know
- “When an insurance company purchases a wealthtech firm, there is often a culture clash,” says T3 head Joel Bruckenstein.
- Principal acquired the digital wealth management platform only three years ago, in 2018.
- The shutdown is a "missed opportunity for Principal," Bruckenstein says.
Fintech experts reacted with little surprise to news that Principal Financial is planning to shut down RobustWealth in September despite the fact that Principal only acquired the digital wealth management platform three years ago and RobustWealth showed signs of promise.
“Principal has acquired full ownership of RobustWealth to better integrate its technology, capabilities, and talent into the organization to drive value across the organization through innovation and the evolution of our digital advice and automated investment technologies,” a Principal spokeswoman said on Thursday.
“As part of the transition, we’re no longer selling or supporting the advisor technology platform and are working closely with our clients impacted as we manage the wind-down,” she said.
Former RobustWealth user Vincent Barbera, a certified financial planner who is co-founder and a managing partner of Newbridge Wealth Management in Berwyn, Pennsylvania, told ThinkAdvisor he received an email from Principal about its decision to shut down RobustWealth.
He wasn’t surprised by the news either, he said on Thursday. “Once they were purchased by Principal, I knew it was only a matter of time before they were shut down. If there was a surprise, it was that Robust lasted as long as they did” after the acquisition.
“Nothing surprises me anymore — when it comes to the marriage of wealthtech and insurance firms, even less so,” Joel Bruckenstein, head of Technology Tools for Today (T3), told ThinkAdvisor on Thursday.
“I think it is a shame. I thought RobustWealth had a great deal of potential [that] was never realized,” Bruckenstein said. But he added: “When an insurance company purchases a wealthtech firm, there is often a culture clash.”
The former owners of RobustWealth probably “thought they would get a cash infusion and continue to build the business,” he speculated. “It is possible that the acquirer had different ideas. Perhaps those ideas did not pan out.”
However, the planned shutdown is a “shame for the advisors who were early adopters of RobustWealth, and it is a missed opportunity for Principal,” he said.
“I wish it had turned out differently for all involved.”
In a tweet earlier this week, Craig Iskowitz, CEO and founder of Ezra Group, called this “Another example of an insurance company spending money trying to be innovative but being unable to leverage good tech & a good team — selling to advisors is not as easy as it looks.”
In a long Twitter thread, Michael Kitces, head of planning strategy at Buckingham Wealth Partners and co-founder of XY Planning Network and AdvicePay, pointed out that the RobustWealth acquisition by Principal in 2018 was “one of multiple asset managers acquisitions of ‘robo-advisor-for-advisors’ platforms, along w/ WisdomTree buying AdvisorEngine, after Invesco acquiring JemStep, after Blackrock [acquiring] FutureAdvisor.”