Morningstar Inc. announced Thursday it will acquire online financial wellness provider HelloWallet Holdings Inc. in a $52.5 million deal.
Despite the price tag, the transaction will cost Morningstar $39 million because the independent investment research firm already owns a $13.5 million minority stake in HelloWallet, whose website and mobile applications have become popular with retirement plan sponsors.
HelloWallet's capabilities will provide value for many of Morningstar's clients, according to Brock Johnson, head of retirement solutions for Morningstar. The deal between the firms made strategic sense because both are independent and grounded in academic research, he said.
“It starts at the mission,” Mr. Johnson said. “Morningstar has always wanted to help investors make better decisions, and HelloWallet falls right in line with that mission.”
Morningstar plans to incorporate its investment capabilities, including managed accounts, into HelloWallet, which combines behavioral economics and the psychology of decision-making in its technology, according to Mr. Johnson.
Morningstar provides managed retirement accounts to almost 1 million individuals through its advisory subsidiaries. It initially became a HelloWallet investor in January 2012, with $6.75 million in Series B venture capital funding.
HelloWallet's client base of retirement plan sponsors includes Marsh & McLennan, United Technologies and Salesforce.com.
HelloWallet relies on account aggregation, said Matt Fellowes, founder and CEO of HelloWallet.
“We pull in transactional data from 16,000 different financial institutions, including checking accounts, savings loans, health savings accounts, credit cards, mortgages and retirement savings,” Mr. Fellowes said.
HelloWallet's aggregation helps show plan participants how they might be accumulating debt faster than they are saving toward retirement, Mr. Fellowes said.
“We can tell each specific individual how much they can afford to save for retirement and where to find that money,” he said.
For example, 65% of HelloWallet members have reduced their banking fees after using the application, he said.
Although HelloWallet will become a wholly owned subsidiary of Morningstar, there are no plans to change its branding, Mr. Fellowes said.
