As with any investment, your capital is at risk.
Baillie Gifford invested in the digital custodian, Altruist, during their February 2025 financing round. We share our investment case, below.
Investment advisors have one of the most difficult jobs on Wall Street. They require the skills of a c-suite executive to lead a team, win new business, and optimize operations – all while their business lurches with equity volatility.
And on top of that, they must be well versed in the market and answer any investment question clients have: what will happen to interest rates? Is the market too expensive? Should I buy Nvidia?
With all these challenges, advisors require tools that make life easier, faster, and free of unforced errors. That’s where Altruist comes in.
For years, advisors had a difficult choice. They could build their team within a major bank, simplifying investments and business, but sacrificing independence and giving up 40-60 per cent of their revenue to the bank.
Or they could breakaway and retain much more revenue share and independence, but require putting on a business hat to manage a suite of service providers (banks, custodians, asset managers) and build out a software stack (client reporting, portfolio management, accounting, CRM, HR, etc).
How Altruist helps advisors
Altruist is one of a few fintech companies enabling small, breakaway advisors. They are unique in providing a full-suite solution, including a single integrated back-office service, complete with brand new 21st-century digital custodian infrastructure. Most competing solutions today don’t include the infrastructure.
By combining software and infrastructure, Altruist can get processes done faster, with fewer errors. For example, Tax Loss Harvesting is a key value advisors can bring to clients. Historically, advisors had to download an Excel spreadsheet from the custodian, handpick lots to sell, and re-enter tax lots and new purchases into separate trading software by hand.
With Altruist, this is seamlessly integrated into their portfolio management software. Altruist also helps simplify other frequent processes like onboarding new clients and setting up new accounts, requiring less time, headcount, and handholding than performed on legacy infrastructure.
A turnkey digital advisor platform has never been a simple option, because 75 per cent of industry assets are custodied with three platforms founded between 1939 and 1975 (Pershing, Schwab, Fidelity), with legacy systems that require special software and headcount to do anything.
Signs of traction
Altruist spent the first five years of its existence building out their infrastructure and technology. They brought on their first accounts in 2022, and have subsequently onboarded tens of billions of custody assets under management (AUM) over three years.
They are just in the beginning of their growth journey. Peers Schwab and Fidelity have $4tn under custody each, and Pershing has almost $3tn. Altruist is working towards growing assets over $500bn.
This growth is powered by product. New customers love Altruist’s offering, and existing customers are quickly increasing Altruist's share of custodied assets after signing up.
How Altruist makes money
Altruist primarily generates revenue by earning a net interest margin on cash accounts, plus earning income from securities lending.
This is a very high-quality revenue stream. Customers are sticky. Wealth management typically has a 98 per cent retention rate, and Altruist has seen a 99 per cent retention rate over its short life. And absent any business changes, assets are expected to grow 3-5 per cent above inflation, driven by market compounding.
Additional income is possible from several sources.
First, Altruist can build out referral revenue over time. Peers like Fidelity help bring advisors new clients in exchange for a 25bps referral fee, paid in perpetuity.
Second, Altruist can eventually charge more for functions like direct indexing, premium asset management software, and premium subscriptions in exchange for better software and higher cash yields.
Why Altruist is a high growth opportunity
Let’s start by considering the total addressable market (TAM):
- First, the size of US wealth is expected to grow from $168tn to $215tn by 2030.
- Second, wealth management is expected to grow a little faster than US wealth, from $64tn to $86tn, driven by performance of equities vs. non-financial assets.
- Third, independent advisors are expected to continue taking share of assets from large banks, growing to $20tr of the $86tr wealth market.
Altruist’s largest growth opportunity is to win share of small breakaway advisors with less than $100mm of AUM. This category is expected to grow AUM to $2tn by 2030. Altruist is a preferred option among these advisors, and firms like Fidelity won’t even onboard them. We expect Altruist can take a large share of the $2tn TAM.
Over time, we anticipate Altruist’s reputation will allow them to take some custody share within small advisors, with a 2030 TAM of $8tn. The $2tn of breakaway advisors TAM, and the $8tn of small advisor TAM has plenty of room for Altruist to take around $500bn of market share by 2030.
Management is guiding towards a similar number. If we assume they can charge 40bps on assets, this generates around $2bn of revenue and ignores future revenue potential described above.
Charles Schwab trades at around 7x revenue (as of 11 July 2025), partly because net income margins are so high, near 30 per cent. At 7x revenue, this implies a $14bn market cap for Altruist.
Compared to Altruist’s recent $1.9bn Series F financing round, there is room for meaningful upside.
Risk factors
This communication was produced and approved in July 2025 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking.
The views expressed should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.
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