YieldStreet’s WealthFlex acquisition to help automate IRA-based investments

Alternative investment platform YieldStreet is expanding its toolkit for customers through the acquisition of IRA platform WealthFlex, the company announced Monday.

YieldStreet founders Milind Mehere (left) and Michael Weisz (right)

Founder and CEO Milind Mehere told Bank Innovation that the acquisition will allow YieldStreet customers to seamlessly invest through IRAs. Terms of the deal were not disclosed.

“We’ve always been committed to letting people invest with their IRAs, but the problem is the industry is so manual,” he said. “Our rationale [for the acquisition] going forward would be that if we can automate some of these things, then we can encourage more of our users to invest through their IRAs.”

Founded in 2015 and based in New York, YieldStreet’s digital platform offers accredited investors access to high-yield alternative asset classes typically available to institutional investors. Categories offered include commercial and residential real estate, litigation finance, marine finance, commercial and consumer finance, as well as art finance. WealthFlex is YieldStreet’s second acquisition; in April, it acquired Athena Art Finance for $170 million.

See also: Chase launches digital investment solution to compete with robo-advisers

YieldStreet previously offered investments via IRAs through partnerships, but it’s now able to deliver this capability in-house through the integration of the WealthFlex platform. A key objective will be to remove friction and ultimately make tax-efficient investments more accessible to clients.

“The $27.1 trillion retirement market is currently underutilized and lacking diversification,” said Michael Weisz, founder and president of YieldStreet, in a statement. “YieldStreet acquired WealthFlex to give investors greater flexibility to invest their retirement portfolios beyond traditional products.” The company plans to explore originating investments that are designed to be most efficient for IRA investors, he added.

WealthFlex, a five-year-old company based in Bellevue, Washington, offered its clients capabilities to set up self-directed IRAs. Prior to the acquisition, WealthFlex was one of a handful of partner companies through which YieldStreet customers could invest through IRAs.

Since its establishment, YieldStreet has funded more than $1 billion in investments. It has focused on short-term investments with durations of three to four years, but with the IRA option, customers can take advantage of longer-term investments, noted Mehere.

Target returns from YieldStreet’s investment offerings, according to the company, are between 8% and 15% after fees. YieldStreet, on average, collects a 1-2% management fee on all offerings from investors annually. The company also offers a savings account product called YieldStreet Wallet, which is open to non-accredited investors.

YieldStreet has so far raised $78 million in equity and $100 million in debt financing, including a $62 million Series B round in February led by Edison Partners.

Bank Innovation Ignite, which will take place on March 2-3 in Seattle, is a must-attend industry event for professionals overseeing financial technologies, product experiences and services. This is an exclusive, invitation-only event for executives eager to learn about the latest innovations. Request your invitation.