Mike Ivancie , CMO at UpMarket

1 . Misalignment with target market financial realities The fundamental flaw in Swell ’ s strategy was its focus on a demographic that lacked sufficient investable assets . Millennials , burdened with student debt and facing challenging economic conditions , simply didn ’ t have the capital to sustain a platform of Swell ’ s scale . With an average account size of just US $ 2,333 , the economics were unsustainable given the 0.75 % management fee . 2 . Overestimation of impact investing appeal While socially responsible investing was gaining traction at the time , Swell overestimated its appeal to younger investors ; and their ability to invest at all . Impact investing remains more of a luxury for the wealthy rather than a primary strategy for those building wealth . 3 . Performance and product issues Many impact investments underperform financially or fail to deliver tangible social benefits to make up for that underperformance . Often Swell and similar roboadvisors , were just offering repackaged versions of existing non-ESG investments like index funds , with simple inclusion / exclusion rules . Which makes social impact measurement difficult or impossible , while also leading to potential underperformance when compared with a broad index like the S & P 500 . 4 . The fading allure of social impact investing Contrary to initial expectations , the trend toward social impact investing has not maintained its

It is all well and good to look closely at the tech giants and their success stories , but deep diving into the biggest FinTech failures can give a lot of helpful insight .

Mike Ivancie , CMO at UpMarket

momentum , particularly in recent years . More recently , the initial enthusiasm for ESG and DEI initiatives has waned , with investors becoming more skeptical about the real-world impact and financial performance of these strategies . This shift in sentiment has made it increasingly difficult for platforms like Swell to attract and retain investors , especially among younger demographics who are more focused on building wealth than potentially sacrificing returns for social impact . 5 . High customer acquisition Costs and low LTV Despite efforts to reduce marketing expenses , Swell ’ s customer acquisition costs remained high , ranging from US $ 150 to US $ 350 per client . These costs , combined with low average account sizes , made profitability an uphill battle . The payback period was too long . Ultimately , Swell had fantastic marketing and a great brand but their model was doomed . When the company was shuttered , Swell had only US $ 33 million in invested assets despite raising over US $ 30 million from Pacific Life .

If anything , this case study shows how difficult it is to grow a challenger financial brand and that the segment of customers you target may be the most important choice of all .

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