Compoundly’s Offerings and Target Market

• According to its LinkedIn profile, "Compoundly empowers everyday investors to control their financial future by delivering a suite of sophisticated, objective, and customized financial tools."
• Specifically, Compoundly aims to help individual retail investors in identifying and reducing investment fees charged by their financial advisors and/or money managers. In addition, the company targets retirement account holders by identifying and reducing fees associated with retirement accounts.
• The company is based in New York and aims to serve customers in the United States.

Financial Planning and Advice Market

• The "Financial Planning and Advice" market, also known as "Financial Planning and Investment Advice" market is composed of companies that offer financial planning, financial advice, and wealth management products and services.
• According to IBISWorld, the main activities in this market are fee-based financial investment advice services and financial planning services. In addition, the key services in this market are personal financial planning and advice services and personal investment management services.
• One of the main drivers of this industry is the aging US population. An increase in the share of the US population that has reached or is approaching retirement age is directly linked with an increase in the demand for retirement planning services, thus adding to the industry's revenue growth.
• Data from IBISWorld indicates that the size of the financial planning and advice market in the US is $57.2 billion in 2020.
• The definition, activities, and main services in the financial planning and advice market as well as a review of the target customers, service offerings, and value proposition of Compoundly indicates that the company operates in the US financial planning and advice market.

Compoundly’s Total Addressable Market (TAM)

• Total addressable market (TAM), also known as total available market, is the total market demand for a product or service. In other words, it is "the maximum amount of revenue a business can possibly generate by selling their product or service in a specific market."
• Hence, the total addressable market (TAM) or the total available market for Compoundly is the overall revenue opportunity it has if it achieved 100% market share in the financial planning and advice market.
• This means that Compoundly's TAM would be equal to the size of the US financial planning and advice market i.e., $57.2 billion.

Compoundly’s Serviceable Addressable Market (SAM)

• Serviceable Available Market (SAM) is the segment of the TAM that is targeted by a company's products and/or services within its geographical reach.
• Compoundly's products and/or services mainly target:
• Individual retail investors in the US who use the services of financial advisors and/or money managers
• Americans who have retirement accounts (e.g., 401(k), 403(b), etc.)

• According to Statista, merely 29% of Americans, aged 18 and over, reported working with a financial advisor in 2020, up from 17% in 2019 as per CNBC.
• There are 255.37 million adults in the US as of 2020.
• Hence, Compoundly's SAM is 74.06 million Americans who use the services of a financial advisor (i.e, 29% x 255.37 million = 74.06 million).

• According to Pension Rights, nearly 43% of the total 139 million American employees reported participating in a retirement savings plan (including 401(k), 403(b), 457, etc.) in 2019.
• This indicates that 43% of the 139 million workers i.e., 59.77 million Americans are participating in retirement savings plans.
• While nearly 73% of Americans that are investing in retirement savings plans are not fully aware of their 401(k) fee, Compoundly's SAM would include Americans that are aware of the fee charged as well, since the company also helps reduce the investment fees.
• Hence, Compoundly's SAM is 59.77 million Americans that are participating in retirement savings plans.

• Compoundly's total SAM would be the sum of Americans who use the services of a financial advisor and Americans that are participating in retirement savings plans i.e., 74.06 million + 59.77 million = 133.83 million Americans.

Compoundly’s SOM

• SOM refers to Share of Market/Serviceable Obtainable Market, and is an "estimate of the portion of revenue within a specific product segment that a company is able to capture." In other words, it represents the size of the "actual customer base or the realistic percentage" of SAM that a business can capture.
• SOM can be calculated by dividing a company's revenue from last year by the industry's SAM from last year. The figure obtained represents the market share of the company from last year. This figure is then multiplied by the industry's SAM for the current year to obtain the SOM.
• However, being a private company founded in 2019, Compoundly's revenue could not be found. The company does not have a profile on company databases such as Owler, ZoomInfo, etc. In addition, no press mentions on the company's financials could be found. Compoundly's website indicates that it is currently in Beta mode, and hence, it is likely that the company has not generated any revenue yet, making it impossible to calculate the SOM.

Research Notes