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Hi, fintech fam! 💜

Last night, I attended a creator economy event and met a long-time reader who’s been with us since our WTFintech? days (IYKYK).

Moments like these, meeting face-to-face, truly highlight how far we’ve come as a platform and community over the past three years.

It’s a powerful reminder of how much I enjoy connecting with you in person.

There’s nothing more impactful than women coming together to drive significant change.

That’s why I’m excited to announce the Fintech Is Femme Creator Summit on September 9 in New York City.

This event is our opportunity to unite and discuss building businesses, managing finances, and thriving through the power of content.

Secure your spot here before early bird tickets are gone!

Looking forward to seeing you in person soon.

But first, let’s dive into today’s story.

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INNOVATION

From Wall Street to Wealth Tech: One Woman’s 10-Year Overnight Success Story

In the next few years, women will control a large chunk of the $30 trillion in financial assets baby boomers hold.

At the same time, Gen Y and Gen Z, making up 47% of the US population, are inheriting wealth every year.

These younger generations care deeply about their experiences with money and how their money reflects their values. 62% of them think financial advisors should show a clear commitment to social equality and diversity.

Ten years ago, a pioneering female financial advisor saw this trend coming. Determined to redefine investing and fix the system from within, she dove into fintech entrepreneurship.

She recognized the shift early on, stuck to her beliefs, and now proves that it can take a while for the rest of the industry to catch up with visionary innovators.

This is her story. 

Margaret Hartigan started her professional journey as a financial advisor in the Global Wealth Management Group at Merrill Lynch.

She was based in San Francisco, and her career took off during the aftermath of the dot-com bubble. Despite this rapid and unsustainable growth period, Hartigan persevered in her role and established herself as a top-quintile financial advisor.

By the end of 2007, she decided to drive across the country and move to New York, which meant she got to have a front-row seat to the 2008 financial crisis.

She was still working on Wall Street at Merrill Lynch when Bank of America acquired it. “My deferred compensation went to less than a Levain Cookie,” she recalled.

Corporate greed played a significant role in the global financial crisis of 2008.

Greed by financial institution managers led to easy subprime loans with little to no credit checks or down payments.

Greed by homeowners led to purchases of houses they couldn’t afford, resulting in mass defaults. 

Despite the tragedy of the Great Recession, clients of financial institutions or wealth managers did not expect emotions or human elements to be part of their relationship with money. They wanted someone who could ensure the growth of their portfolio.

In recent years, more investors have become interested in leveraging their finances to create social good. Hartigan is a humanities major who works as a financial advisor, so she understands this shift in investor behavior, but most financial advisors don’t factor human behavior into their practices.

She realized clients needed more financial literacy, regardless of their net worth.

This was primarily due to outdated and complex systems on the back end of banks’ and advisors’ platforms, making it difficult to modernize their work with clients and personalize the experience to be more educational and engaging.

A “one size fits all” approach was the norm – what made one person rich would make someone else rich, too (that doesn't work).

And finally, a growing number of younger and more diverse clients were inheriting wealth, while the aging advisors needed help managing and serving them.

Hartigan was determined to find a new model to serve all three stakeholders: clients, advisors/ bankers, and institutions.

Eventually, she felt a calling to create this new model.

“So, perhaps a bit naively, I departed from a highly successful practice in 2012 and decided I was going to fix this,” she recalled.

Tapping Into Wealth Tech

With more than a decade of experience as a financial advisor, Hartigan felt uniquely equipped to create a hyper-personalized “Apple-like experience on the front end, allowing people to see themselves in their finances,” she said.

This would help demystify the process and reduce shame and anxiety about money.

In the same way, Apple made computer technology easy and accessible to the masses, Hartigan would design an engaging digital investment and wealth planning platform with a mission to enhance financial literacy, deepen financial inclusion, and humanize finance for all.

She called it Marstone and, in 2013, launched an enterprise-ready fintech solution to integrate into financial institutions to efficiently and affordably reach, acquire, and retain clients who seek straightforward information and engagement around their finances.

Her decision to build a business-to-business-to-consumer (B2B2C) model instead of a direct-to-consumer was bold – particularly during a time in Silicon Valley when fintech companies like Robinhood were also in development, which gamified and threw digital confetti to entice everyday trading – very sexy – and attracted plenty of venture capital investment.

But, Hartigan’s strategic move to go B2B2C was an intentional approach to get to the root of the problem within the financial system.

“Believe it or not, these banks and major insurance companies operate essentially as fintech companies,” she explained. “Many of them rely on highly complex backend services that aren’t easily adaptable.”

So Hartigan developed Marstone to solve this complexity, making it cost-effective for these large financial institutions to serve a wider demographic of investors by integrating directly into the custodian.

The custodian handles the backend solutions; whenever you purchase a stock or bond, it’s executed somewhere, and there’s a record keeper.

Major firms like JP Morgan handle this in-house, but most institutions outsource this function.

“Custodians are like large energy grids such as ConEd,” Hartigan elaborated. “They’re critical and highly commoditized infrastructure that serves thousands of financial institutions by integrating with banking cores and custodial platforms.”

Hartigan solved a direct pain point that avoided the headache of rebuilding the entire financial infrastructure. It was practical, cheaper, and effective. 

It’s a common observation I see in female founders. Instead of applying bandages to solutions, they dive deeper and create solutions that solve the root causes of issues.

It’s not as sexy, and while research indicates women outperform men with a higher return on investment in their start-up ideas, they receive less funding because, in this case, their products aren’t as flashy or attention-grabbing.

Hartigan faced this harsh reality tenfold.

When she pursued venture capital funding, Hartigan would meet with investors, highlighting the convergence of trends and the enormous opportunity at hand.

“Most people don’t know how to manage their money,” she explained. “Large firms require a minimum of $250000 to engage with clients, and most individuals require financial assistance before reaching that threshold. There’s a more cost-effective and simpler approach to address this.”

“Investors would lean in,” she continued. “And there’s this significant wealth transfer underway.”

Hartigan would outline her strategy for integrating with a custodian—why rebuild the infrastructure when you can lay the groundwork for existing systems to operate more effectively?

Unfortunately, due to the lack of subject matter expertise in wealth management among the venture community, Hartigan’s B2B approach was not as attractive at the time as the direct-to-consumer robo-advisors.

However, Hartigan pushed forward, continuing her mission. A decade later, she’s at the forefront of innovating this space.

As the culture around finances and money changed, society began seeing the great wealth transfer unfold. Eventually, investors caught on and began pouring money into these platforms.

Wealth tech companies brought in $1.7 billion in venture capital funding across 164 deals in the fourth quarter of 2022, according to CB Insights. That makes wealth tech the third hottest fintech subsector behind payments ($3.4 billion) and banking ($1.8 billion).

The confluence of trends Hartigan predicted ten years ago has come to fruition. 

What was deemed super unsexy before is the desire of most VCs today – B2B software as a service (SaaS) – which grabbed 44% of funding in the first quarter of 2023, surpassing B2C fintech, which held a 34% share, according to Dealroom.co.

This trend has prompted investors to encourage founders to recalibrate their market strategies, prioritizing B2B models to increase their chances of securing funding.

Today, Marstone partners with some of the largest institutions in the world, including Plaid, BlackRock, Interactive Brokers, and Apex Clearing.

In January 2024, Marstone raised an $8 million Series B financing round.

“The marketplace is finally ready,” she said.

In her journey as a 10-year-old overnight success, as she calls it, Hartigan realizes – looking back – that innovation is enjoyable – it’s groovy and sexy, and people love to talk about it.

“But it takes a long time for the marketplace to adopt innovation.”

Plus, there will always be unspoken norms, like the tendency of some venture capitalists to define individuals by what they are not.

In Hartigan's case, it was: "You’re not a tech person, a banker, a man, or a first-time founder.”

Still, she succeeded not because of these systemic barriers but despite them.

She knew that change was coming, and while she thought a B2B approach would be a no-brainer for investors, she’s learned that sometimes, the obvious path isn’t apparent.

But she persisted.

“The path is never straight, but always forward – lean into your community,” she said.

For early-stage founders reading this, look to individuals like Hartigan, who have traversed this path.

“You won’t receive the benefit of the doubt,” Hartigan said. “It doesn’t matter if I’ve achieved success previously. My background doesn’t matter; I’m a woman, and the established patterns make navigating uncharted territories challenging.”

You’ll find the goalposts constantly shifting.

“So, at the very least, set clear boundaries and expectations that align with your values and the needs of your company,” she said.

Changing the system depends on it.

_{WTF ELSE?}

• July 2024: Top five new fintech launches of the month

• Mool launches AI-led financial advisor to enhance financial management

• German wealthtech Bunch lands $15.5M Series A 

• Fintechs lead the way in digital fintech inclusion: FACE Report 

• BMO Survey: More than a third of Americans using AI to manage finances

• Stripe, Klarna attract investment in sign of payment sector's recovery

• Why financial inclusion is the key to a thriving digital economy

• Fintech startup Female Invest raises $11.2M, plots US growth

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_{I WANT IT, I GOT IT}

• 📚 Today’s Read: I’m grabbing my copy of Women Who Run with the Wolves as my current read. I need a reminder of the powerful force within me — consider this incredible work a must-read for all women.

• 👀 Today’s Watch: I enjoyed a movie night in Bryant Park, watching Funny Face, a classic film with Audrey Hepburn. If you're in the city, don't miss the park's free movie nights every Monday. Just bring a blanket and some snacks for a fantastic evening.

•  📞 Today’s Answer The Call: Join us this Thursday, August 1, at 7 PM ET as we, the diverse leaders of Web3 and Decentralized Finance (DeFi), come together to support Madame Kamala Harris on a Zoom call. It's time to roll up our sleeves and stand united. Sign up now.

_FINTUNES

🎵 Remi Wolf - Soup

A top recommendation from a Fintech Is Femme bestie, this song was released just two weeks ago and is a must-add to your playlist. I can always rely on my friends for excellent artist suggestions.

_{LET’S STAY CONNECTED ALL WEEK}

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That’s all for now! See you Thursday!

Love,

Nicole 💜