Family offices have existed since the 1800s, however they’ve by no means been so manifold as lately. According to a 2019 Global Family Office Report by UBS and Campden Wealth, 68% of the 360 family offices surveyed have been based in 2000 or later.
Their rise owes to quite a few elements, together with the tech startups that mint new centi-millionaires and billionaires every year, together with the more and more complicated decisions that folks with a lot moolah encounter. Think family administration, authorized issues, belief and property administration, private investments, charitable ventures.
Still, family offices have a tendency to cater to individuals with investable property of $1 billion or more, in accordance to KPMG. Even multi-family offices, the place sources are shared with different households, are extra usually focusing on individuals with not less than $20 million to make investments. That excessive bar means there are nonetheless rather a lot of individuals with rather a lot of sources who want hand-holding.
Enter Harness Wealth, a three-year-old, New York-based outfit that was based by David Snider and Katie Prentke English to cater to people with more and more complicated monetary footage, together with following liquidity occasions. The two perceive in addition to anybody how one’s vested pursuits can abruptly change — and the way onerous these might be to handle when working full-time.
Snider obtained his begin out of college as an affiliate with Bain & Company and later as an affiliate with Bain Capital earlier than turning into the first enterprise rent at Compass and getting promoted to COO and CFO after the actual property firm’s $25 million Series A increase in 2013. Compass grew, of course, and now, lower than 4 months after its late-March IPO, it boasts a market cap of almost $27 billion.
Indeed, over the years, Snider, who rejoined Bain as an executive-in-residence after 4.5 years with Compass, spied a possibility to convey collectively typically siloed companies like tax and property and funding planning, together with it as a result of “it resonated with me personally. Despite all these great things on my resume, every six months I found something I could or should have been doing differently with my equity.”
Prentke English additionally has a lot in widespread with the shoppers Harness Wealth is focusing on. After spending greater than six years at American Express, she spent two years as the CMO of London-based online funding supervisor Nutmeg. She left the function to begin Harness after being launched to Snider by a mutual buddy; in the meantime, Nutmeg was simply acquired by JPMorgan Chase.
While there isn’t a scarcity of wealth managers to whom such people can flip, Harness says it does excess of pair individuals with the proper impartial registered funding advisors — which is a key half of its enterprise and half of the secret sauce of its tech platform, it says. It additionally helps its prospects, relying on their wants, join with a group of professionals throughout an array of verticals — not in contrast to the entry a person may need in the event that they have been to have a family workplace.
As for a way Harness makes cash, it collects half of the payment that advisers on the platform cost for his or her providers. Snider says the share varies, although it’s an “ongoing revenue share to ensure alignment with our clients.” In different phrases, he provides, “We only do well if they find long-term success with the advisers on our platform,” versus if Harness merely collected a lead era payment at the outset.
Ultimately, the firm thinks it might probably substitute rather a lot of the do-it-yourself providers out there in the market, like Personal Capital and Mint, and it suggests it’s making headway, with a ballooning base of prospects that embrace workers of Coinbase, UiPath, Paypal, Snowflake, Doordash, and Amazon, in addition to companions at enterprise companies.
That confidence is rooted partially in Snider’s expertise with Compass, which, in its earlier days, although it may navigate round actual property brokers however “found that while people wanted better data insights and a better UX, they also wanted that coupled with someone who’d had many clients who looked like them,” says Snider. Prentke English joined forces with him after discovering that Nutmeg, too, was “running into the limitations of a non-human-powered solution,” he says.
Investors assume the thesis is sensible, evidently. Harness simply closed on $15 million in Series A funding led by Jackson Square Ventures, a spherical that brings the firm’s complete funding to $19 million.
As for what Harness Wealth does with that contemporary capital, half of it, curiously, can be used to develop its personal captive enterprise line referred to as Harness Tax. As Snider explains it, extra of its shoppers are discovering that tax planning is amongst their greatest issues, given all that’s taking place on the IPO entrance, with SPACs, with distant work, and in addition with cryptocurrencies, into which extra individuals are pouring cash however round which the tax code has been taking part in catch-up.
It is sensible, on condition that tax planning might be time-sensitive and infrequently dictate the total monetary planning technique. At the similar time, it’s truthful to ponder whether some of Harness Wealth’s adviser companions can be turned off from working with the outfit if it thinks its companion is evolving right into a rival.
Snider insists that Harness Wealth — which at the moment employs 22 individuals and is not-yet worthwhile — has no such designs. “Our goal is only to help people where we can add value, and we saw an opportunity to lean in on tax side.” Harness has a “a very large population of people who may not understand their tax liabilities” as a result of of the crypto growth specifically, he explains, including, “We want to make sure we’re front and center” and prepared to assist as wanted.
Others of Harness Wealth’s new and present buyers embrace 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’s the former co-head of Bain Capital Private Equity.