Morgan Stanley sells student loan benefits provider to Vestwell

Morgan Stanley is selling Gradifi Solutions, a student loan benefits provider, to workplace savings fintech Vestwell.

ETrade Financial acquired Gradifi from First Republic Bank for $30 million in 2019, less than three months before Morgan Stanley bought ETrade for $13 billion. Terms of the transaction to Vestwell were not disclosed, but the deal includes all Gradifi’s technology, clients and team members.

The deal expands Vestwell, which began as a digital record keeper that financial advisors can use to create and manage 401(k)s for business-owning clients, into a broader provider of workplace benefits. With an estimated 43.5 million individuals in the U.S. carrying federal student loan debt, Vestwell has a new way to make itself valuable to employers, said founder and CEO Aaron Schumm.

“Bringing Gradifi Solutions into Vestwell accelerates our product roadmap initiative alongside a top-tier client base,” Schumm said in a statement. “Through this acquisition, Vestwell is realizing its vision of enabling all savings in the workplace and beyond, with more offerings coming soon.”

Since founding in 2016, Vestwell has raised more than $112 million in funding, according to Crunchbase. The company says it supports more than 1 million savers, nearly 30,000 small businesses and $27 billion in assets.

In addition to working with financial advisors, Vestwell powers several states’ savings programs and provides record-keeping services to financial institutions, including Morgan Stanley.

“We’ve partnered with Vestwell for white label record keeping, and we’re thrilled to extend that relationship through their acquisition of Gradifi,” said Brian McDonald, head of Morgan Stanley at Work, the firm’s workplace benefits business. “We look forward to bringing our clients and participants a more robust and comprehensive education savings offering as part of this deal.”

Gradifi is Vestwell’s second acquisition. In 2021, it acquired Sumday, a subsidiary of BNY Mellon that managed state auto-IRA and college savings plans.

[More: J.P. Morgan partners with Vestwell to expand 401(k) business]

Better stress-test your clients’ portfolios before it’s too late!

Leave a Reply

Your email address will not be published. Required fields are marked *