NextCapital Group has won a sizable new capital investment led by AllianceBernstein (AB), Manulife and Route 66 Ventures.
NextCapital’s existing shareholders include Transamerica Ventures, Russell Investments, FinTech Collective, Kelvingrove, and Vermont Seed Capital Fund—all committed to development on automated portfolio management technologies.
The firm is not shy about what it plans to do with the money—hoping as it does to “someday replace traditional target-date funds (TDF) with inexpensive managed accounts.” The goal of the venture investment is to “shake up the $700 billion TDF market and bring managed account advice to anyone with a defined contribution plan.” Most recently the firm brought to market an upgraded 401(k) digital advice platform to offer participants more personalization and simplicity.
In a 2014 interview with PLANADVISER, executives with NextCapital suggested their pending technologies would allow their asset management businesses to deliver personalized, professionally managed, institutional-caliber 401(k) portfolios “at about half the cost of traditional managed account arrangements.” According to NextCapital Group, these digital managed accounts will automatically collect individual investors’ demographic data to create and regularly rebalance highly customized portfolios that take the place of TDFs or traditional managed accounts on the DC plan’s investment menu.
“Large financial institutions will win the big shift to scalable personal advice,” John Patterson, Chief Executive Officer of NextCapital, said more recently. “This infusion of new capital will accelerate our partners’ entrance into the digital advice marketplace—both inside the 401(k) plan and out.”
Tim Ramza, chief innovation officer for Manulife and John Hancock Financial Services, explains the decision to invest with NextCapital this way: “NextCapital aligns with Manulife’s strategy of investing in innovative technologies that enable us to effectively meet a broader range of customer needs, and ensure that we are a leader of the financial services industry of the future.”
More information is available on the firm’s website, www.nextcapital.com.