Associated PressSummary List Placement
UBS is leading a new round of funding for a student loan repayment startup that the firm had used through its workplace wealth business, a move that highlights Wall Street muscling in on the growing number of employers looking to have a hand in their employees' personal finances.
FutureFuel.io, a New York-based financial-technology startup that operates a set of tools companies provide to their employees looking to effectively manage and repay their student loan debt, said Wednesday that it raised $10 million from investors led by the Swiss firm in a Series A1 round of funding.
Salesforce Ventures, Fiserv, Aflac Ventures, and Rethink Impact, a venture capital firm that invests in women-led businesses, are among the investors participating in the round, which brings the startup's total funding to $26 million.
The fresh funding signals Wall Street's efforts to capitalize on the swath of companies providing options to employees for managing their personal finances, as sprawling firms like UBS, Bank of America, and Morgan Stanley look to introduce themselves early on to people who may eventually qualify for lucrative investment advice and wealth services.
"Our goal is, effectively, to be able to deliver advice to every level of employee at a company, whether they're an executive to a broad-based employee," Michael Barry, head of workplace wealth solutions within UBS's global wealth management business, told Insider by phone, referring to his unit's goals in reaching clients at all levels with services as varied as equity compensation advice or more basic financial wellness tools.
Zurich-headquartered UBS is among the most powerful wealth managers, handling some $3 trillion in clients' global invested assets as of December 31. Ralph Hamers, its new chief executive who started in November, joined UBS from ING and is seen in the industry as having an eye for marking staid businesses with digital updates.Wall Street wants in on 'financial wellness'
Aiming to provide other companies' employees with student debt repayment tools by way of FutureFuel is one part of UBS's workplace wealth business. Financial wellness has become a broad banner for services like student loan debt management, traditional workplace benefits, financial literacy, and access to financial advisors and coaches.
UBS meanwhile says it provides solutions for financial wellness, stock, and retirement plans, and consulting services to 10,000 clients with some 2 million participants through the business, led by Barry. He joined the firm in 2008 from Fidelity, where he was head of product for its stock plan services business.
"Everything we do is guiding the individual on the next steps. They can then take that information and do it in a self-directed way somewhere else, outside of UBS; they can go back to their financial advisor they may have. Or, they can continue to implement some of those suggestions or plan with UBS," Barry said. "And that's when they transition, if you will, from a financial wellness participant to a broader client."
Generally, other large wealth businesses share that thinking. Morgan Stanley in 2019 acquired a stock-plan administration provider that counts large startups as clients, housing that under a wider workplace-oriented umbrella of services like retirement and financial wellness tools.
Laurel Taylor, FutureFuel.io's founder and chief executive who previously held a leadership position in Google's large customer sales division, told Insider in an interview that the platform has helped users save on average between $15,000 and $36,000 through a mix of tools that employees can use to help with federal repayment plan enrollment and manage those plans.
In addition to UBS, Fiserv and Salesforce are also among FutureFuel.io's corporate clients. A spokesperson declined to specify how many corporate clients or total users it has overall.To go beyond a buzzword, some say more research is needed
Companies are widely expected to continue offering various forms of financial wellness plans to employees that aim to help them manage their personal finances; they are seen as a tool for attracting new talent.
Still, while they are on the rise, there is no extensive body of research into financial wellness programs and whether they improve employees' long-term financial lives.
A June 2019 paper in the Journal of Workplace Behavioral Health examining employers' motivations and experiences around these programs found "early adopters appear to be motivated primarily by a desire to help employees," and that more research is needed to determine whether they make for stronger work performance and financial outcomes.
And, importantly, the paper's authors found a company paying its employees poorly under negative work conditions could offset any value in employee financial wellness perks for lower-wage employees.
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