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Startup Money-Managers Banking on the ‘Mass Affluent’

It’s easy to understand why banking is often described as “ripe for disruption.” The industry is slow, complicated and known for hidden fees, fine print and rules that seemingly favor Wall Street at the expense of Main Street. While payments companies and Bitcoin-related businesses try to improve financial services, a new breed of wealth management platforms aims to simplify investing for the masses.

There’s some evidence to suggest that wealth management startups are gaining traction. Wealthfront, a company whose software decides how to invest a person’s money based on variables like risk appetite and retirement goals, went from zero to $1.2 billion in assets under management in just two and a half years.

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Addepar. The brainchild of Palantir co-founder Joe Lonsdale and Palantir financial analyst Jason Mirra, Addepar was founded in 2009 to create wealth management software for professional financial advisors. The product didn’t really take off until 2012, and now advisors with more than $100 billion in assets under management are using Addepar to manage client accounts. Much like data analytics company Palantir, Addepar brings together data from disparate sources and accounts and finds patterns and useful connections, which financial advisors can then use when they put together client portfolios.

Mike Volpi commented on this article.
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Differentiation is a challenge for startups that use computers to pick securities for investors, since they all follow the same basic plan.