Morningstar, Inc. to Acquire HelloWallet Holdings, Inc., Leading Provider of Online Financial Wellness

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1 June 2014
Chicago, United States

Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, has entered into a definitive agreement to acquire HelloWallet Holdings, Inc., a leading provider of online financial wellness, for $52.5 million. When the transaction is completed in the coming days, Morningstar will pay $39.0 million because it currently has a minority stake in the company valued at $13.5 million.  Morningstar, through its advisory subsidiaries, is the largest provider of managed retirement accounts by participants served, with almost 1 million individuals enrolled. This acquisition will bring together HelloWallet’s comprehensive financial wellness expertise with Morningstar’s independent, research-based retirement advice to create a holistic retirement savings and advice offering.  HelloWallet was founded in 2009 by Dr. Matt Fellowes, a consumer finance expert and former Brookings Institution scholar. In January 2012, Morningstar became a HelloWallet investor with $6.75 million in Series B funding. HelloWallet has a loyal and committed client base of retirement plan sponsors, such as Marsh and McLennan, United Technologies, and Salesforce.com, as well as key relationships with leading retirement plan providers. HelloWallet combines behavioral economics and the psychology of decision-making with sophisticated technology to provide personalized, unbiased financial guidance to more than 1 million U.S. workers and their families through their employer benefit plans. HelloWallet has about 50 employees in Washington, D.C., and Fellowes will remain with the firm in a leadership role.  Brock Johnson, head of retirement solutions for Morningstar, said, "There is a strong mission and cultural alignment between Morningstar and HelloWallet. Both firms are independent, entrepreneurial, and grounded in academic research. We want to bring together HelloWallet’s expertise in behavioral and consumer research and analytics with Morningstar’s investment management capabilities to create the first holistic solution for the retirement market. HelloWallet’s done a tremendous job—its unique approach to financial wellness has changed the way employers view benefits programs and the way employees manage their daily finances. Working together, HelloWallet and Morningstar have an opportunity to significantly improve the financial and retirement outcomes of workers.” Johnson added, "While we expect this acquisition to benefit our retirement clients and the participants they serve, HelloWallet’s capabilities could provide value for many of Morningstar’s clients, including advisors and asset managers."  “Holistic advice is becoming a ‘must have’ capability, as employers increasingly look for integrated solutions across their retirement and healthcare programs. Today’s routine financial choices are directly linked to tomorrow’s long-term retirement, health, and savings decisions,” Fellowes, founder and CEO of HelloWallet, said. “We want to help people make the best decisions with their paychecks so they can actually have money to invest for their futures. We’re thrilled to become part of Morningstar, where we will be able to continue to grow our business and offer a total financial wellness and retirement planning solution for employers and their workers.” Through HelloWallet’s website and mobile applications, employees input their goals and priorities and add their financial information, including income, bank accounts, credit cards, retirement plans, insurance, and investments. HelloWallet creates budgets and analyzes trends in financial behavior to recommend how members can prioritize financial decisions, identify ways to stretch their paychecks, and make the most of their benefits, such as 401(k) plans, health savings accounts, flexible spending accounts, and insurance. HelloWallet also automatically alerts members when they need to make changes.  The majority of participants who use HelloWallet make quantifiable changes in how much they save, use available benefits, and pay off debt. During the last 12 months, the median HelloWallet member increased savings deferrals by 38 percent. HelloWallet has also found that its members pay off debt two times faster after receiving the company’s proprietary, personalized financial guidance.