Sequoia Bets on AI Startup to Ease Wealth Advisors’ Grunt Work

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(Bloomberg) -- Many companies are trying to replace wealth advisors with artificial intelligence, but Mark Swan’s bet is that humans are here to stay.

It’s the busy work, from meeting minutes to account openings, that’s ripe to be automated, he argues. So the former Revolut executive built a startup, Nevis, that’s attracted $40 million in funding from the likes of Sequoia Capital to use AI to streamline a wealth advisor’s operational workload.  

“Robo will not replace the advisor. AI will not replace the advisor,” said Swan, 27, Nevis’ co-founder and chief executive officer. “I fully will die on that hill.”

It’s a bet that investors like Sequoia, Iconiq and Ribbit Capital are also willing to take. The three firms were among those participating in a recently closed $35 million Series A round for Nevis at a $200 million valuation. The funding is on top of a previous $5 million seed round by Sequoia’s Luciana Lixandru, who joined the board following the Series A. 

“In this era of AI, there was this opportunity to give these wealth managers and advisors time back to deal with what was most important, which was the relationships that they had with clients,” said Seth Pierrepont, general partner at Iconiq, a multifamily office and investment firm. 

Advisor Shortage

Swan, a Scottish native, met his co-founders while at Revolut, the British fintech firm recently valued at $75 billion. He teamed up with colleagues Ivan Chalov and Philipp Burda to start Nevis at the end of last year. Swan said he named the company after Ben Nevis, the highest mountain in Scotland and a symbol of something enduring. 

The trio are tackling a looming crisis facing the U.S. wealth-management industry. By 2034, it will face a shortage of 100,000 advisors at current productivity levels, McKinsey predicts. Demand for such advice is increasing as Americans are wealthier than ever before, but retirements currently outpace recruitment, McKinsey said in a February report.

Swan wants to solve the supply bottleneck by increasing productivity and expanding an advisor’s capacity without adding extra headcount.

“Some people naively think wealth management is just about performance,” he said. “It’s actually more about service, and that client is going to the advisor because they are helping them navigate the most important parts of their life.” 

Nevis’ current software capabilities include generating meeting summaries, creating follow-up tasks and drafting personalized emails for advisors in seconds. By early next year, it plans to expand into more operational functions like opening custody accounts. 

RIA Focused

So far, it’s targeting the U.S.-based registered investment advisor market and has signed up about 10 clients, including United Capital Financial Advisors, Apollon Wealth Management and GC Wealth. It charges an annual fee based on assets under management. While its customers currently oversee $50 billion in assets, Swan expects that to climb to $100 billion early next year. 

Nevis will have to compete with a growing number of wealth-management startups promising AI for estate planning or other roles. There’s also the challenge of consumer adoption in an industry better known for traditional clunky systems than cutting-edge tools.

Iconiq’s Pierrepont and Swan both compare the disruption in wealth management to what’s happening in legal tech. Startups like Harvey, which last month raised $150 million at an $8 billion valuation, are using AI to make lawyers more efficient, with other legal tech firms chasing equally lofty valuations. Wealth tech may be just behind them. 

“You’re just going to see this rapid, rapid growth,” Swan said. “I look at legal as 18 months or 24 months ahead of us, and I think what Harvey has achieved in the legal space is what we will achieve in the wealth space.”