Family offices have been around since the 1800s, but they have never been more numerous than in recent years. According to a 2019 Global Family Office Report from UBS and Campden Wealth, 68% of the 360 family offices surveyed were founded in 2000 or later.
Their rise is due to many factors, including the tech startups that are hitting new centi-millionaires and billionaires every year, as well as the increasingly complex choices that people face with so much moolah. Think about household administration, legal matters, managing trusts and estates, personal investments, charitable businesses.
Still, family offices tend to cater to people with investable assets of $ 1 billion or more, according to KPMG. Even multi-family offices, where resources are shared with other families, more typically target people with at least $ 20 million to invest. This high bar means that there are still a lot of people with a lot of resources who need to be held by the hand.
Enter Harness Wealth, a three-year New York-based company founded by David Snider and Katie Prentke English to serve the needs of people with increasingly complex financial situations, especially as a result of liquidity events. Both understand as well as anyone how personal interests can suddenly change – and how difficult they can be when working full time.
Snider began his education as a partner at Bain & Company and later as a partner at Bain Capital before becoming the first employee of real estate company Compass and being promoted to COO and CFO after the increase of 25 million dollars of the Series A company in 2013. That small company has grown, of course, and now, less than four months after its IPO in late March, Compass has a market cap of nearly $ 27 billion.
Indeed, over the years, Snider, who joined Bain as an Executive in Residence after 4.5 years at Compass, began to see a great opportunity to bring together the often siled businesses of tax planning, estate planning. and investment planning, especially because “It touched me personally. Despite all of these good things on my resume, every six months I found something that I could or should have done differently with my equity.
Prentke English is also like many of the clients Harness Wealth speaks to today. After spending over six years with American Express, she spent two years as CMO of London-based online investment manager Nutmeg. She left the role to start Harness after being introduced to Snider by a mutual friend; in the meantime, Nutmeg has just been acquired by JPMorgan Chase.
While there is no shortage of wealth managers these people can turn to, Harness says it does more than match people with the right independent registered investment advisers, is a key part of its business and part of the secret sauce of its tech platform, he says. He also helps his clients, depending on their needs, to connect with a team of professionals across a range of verticals, much like the access an individual might have if they had a family office.
As for how Harness makes money, he shares his earnings with the platform’s advisers. Snider says the percentage varies, although it is an “ongoing revenue sharing to ensure alignment with our customers.” In other words, he adds, “We only succeed if they are successful in the long term with the advisors on our platform,” as opposed to if Harness were just collecting an upfront lead generation fee. directing new clients to average financial planners or tax lawyers. .
Ultimately, the company believes it can replace many of the DIY services available in the market, like Personal Capital and Mint. Part of that trust is rooted in Snider’s experience with Compass, which in its early days although he could navigate real estate agents, but “found that if people wanted better data insight and better user interface, they also wanted that coupled with someone who had had many customers who looked like them, ”Snider says.
He adds that Prentke English teamed up with him after discovering that Nutmeg, too, “was facing the limits of a non-human solution.”
Investors think the thesis makes sense, certainly. Harness just closed with $ 15 million in Series A funding led by Jackson Square Ventures, a round that brings the company’s total funding to $ 19 million. (New and existing investors include Bain Capital; Torch Capital; Activant; GingerBread Capital; FJ Labs; i2BF Ventures; First Minute Capital; Liquid2 Ventures; Alleycorp, Marc Benioff; Compass founder Ori Allon; and Paul Edgerley, who is the former co-head of Bain Capital Private Equity.
As to what Harness Wealth is doing with this new capital, some of it, interestingly, will be used to develop its own captive line of business called Harness Tax. As Snider explains, more and more of his clients are finding that tax planning is one of their biggest concerns, given everything that is happening on the IPO front, with PSPCs, with the job. remotely, and also with cryptocurrencies, in which more people are investing money but around which the tax code is catching up.
This makes sense, given that tax planning can be urgent and often dictate the overall financial planning strategy. At the same time, it’s fair to wonder if some of Harness Wealth’s advisor partners will be barred from working with the outfit if she thinks her partner is becoming a rival.
Snider insists Harness Wealth – which currently employs 22 people and is not yet profitable – does not have such designs. “Our goal is only to help people where we can add value, and we saw an opportunity to look at the tax side.”
Harness has a “very large population of people who may not understand their tax obligations” due to the crypto boom in particular, he explains, adding, “We want to make sure we are at the forefront. “and ready to help when needed. .