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Corporation
INTERNET | Internet Software & Services / Asset & Financial Management & Trading
wealthfront.com

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Founded Year

2011

Stage

Series G | Alive

Total Raised

$204.5M

Valuation

$0000 

Last Raised

$75M | 4 yrs ago

Mosaic Score

+40 points in the past 30 days

What is a Mosaic Score?
The Mosaic Score is an algorithm that measures the overall financial health and market potential of private companies.

About Wealthfront

Wealthfront is a robo-advisor offering the combination of financial planning, investment management and banking-related services exclusively through software. Anyone with $500 can open a Wealthfront investment account which offers access to the company's unique PassivePlus investment strategy and comprehensive automated financial planning service.

Wealthfront Headquarter Location

261 Hamilton Ave

Palo Alto, California, 94301,

United States

844-995-8437

Latest Wealthfront News

Robo-advisors are growing in popularity. Can they really replace a human financial advisor?

Jan 16, 2022

January 16, 2022 - Advertisement - Robo-advisors automate investments by using algorithms to prepare portfolios for users. They may soon be managing more than $1 trillion of Americans’ wealth. Services began to appear around 2008, around the advent of the iPhone and an ascending digital culture. They can be superior to human financial advisors in some respects, especially for people who are new to investing, who do not have a lot of money or a complicated financial life. - Advertisement - - Advertisement - Not too long ago, that notion might have smothered the sci-fi craze — “Star Wars” cyborg C-3PO in a power suit — on Wall Street. But robots, or so-called “robo-advisors,” could soon manage Americans’ wealth of more than $1 trillion. - Advertisement - These are not actually tangible robots; They are algorithms that companies have developed to automate digital investments. Plug a few details (age, savings goal, risk comfort) into a computer or phone app and the algorithm assembles and manages a personalized investment portfolio just for you. More from Personal Finance: New York’s eviction ban ends on Saturday. What tenants need to know divorced? You Can Receive Social Security Benefits From an Ex-spouse But is a robo-advisor right for all investors? Are humans better equipped for the task of wealth management and financial planning? “It’s appropriate for some people and not for others,” said Ivory Johnson, a certified financial planner and founder of Delancey Wealth Management in Washington, DC, of ​​robo-advisors. “If you play golf, it’s a different golf club. “Sometimes I use my 7-Iron and sometimes I don’t — it just depends on where I am.” ‘They are everywhere’ Robo-advisors for the everyday investor started popping up around 2008, the year the iPhone made its public debut. More than a decade later, robo-advisors were managing nearly $785 billion, according to Backend Benchmarking, which specializes in researching digital advisors. Dozens of firms have created their own models to capitalize on the popularity and a growing digital culture. These include independent shops such as Betterment, Personal Capital and Wealthfront; traditional Wall Street brokerages such as Fidelity Investments, Merrill Lynch and Morgan Stanley; And they prefer financial engines that cater to 401(k) plan investors. Established players who have historically focused on an old, affluent client base can also leverage technology to court a new class of young investors who have made digital investments through online stock trading apps like Robinhood and assets like cryptocurrencies. Has shown enthusiasm for the financial sector. , “They are everywhere now,” said David Goldstone, research and analysis manager for Backend Benchmarking, of robo-advisors. “Just about every major bank and discount broker has launched one in the past decade.” Who is a good candidate? According to industry experts, robots are particularly suitable for new investors who haven’t built up a lot of wealth yet, and who want to outsource money management for a low cost to a professional. For one, robo-advisors offer a low barrier to entry due to low or non-existent account minimums. Acorns, Fidelity Go, Betterment and Elevest, a robo service for women, let customers sign up for their basic digital service without any upfront funding. Minimums range from a few dollars to as much as $3,000 at Merrill Edge Guided Investing, Sigfig, SoFi, Vanguard Group, and Wealthfront. Meanwhile, traditional firms manage funds for clients with investments of at least $250,000, Goldstone said. It’s probably not surprising that the average robo user falls short. For example, about 90% of Wealthfront’s 470,000 customers are under the age of 40, said company spokeswoman Ellie Stolnitz. Their average balance is around $60,000. I think it attracts people who want to get away with managing their portfolios. Dan Agno Vice President of Behavioral Finance and Investing at Betterment That demographic trend is also a function of greater digital affinity among Millennials and Generation Z, who have largely grown up as digital natives and may be more attracted to the robo service as a result. ,[Our users] want to be able to manage money the same way they manage other things, like [online food delivery via] DoorDash,” Stolnitz said. According to Dan Egan, the firm’s vice president of behavioral finance and investments, the average user of Betterment is under 40, with accounts ranging from $55,000 to $60,000. But age and money aren’t the only factors in play, he said. The company has clients with multimillion-dollar portfolios dating back to the 60s and 70s; The oldest user is over 90. “I think it attracts people who want to do away with managing their portfolios,” Egan said. The fee for that management is generally much lower than for a traditional financial advisor who charges 1% annually on client assets. Goldstone said the typical robo charges 0.25% to 0.35% annually for its mentoring service — about a quarter of the cost. In dollar terms, this means that an investor with $100,000 would pay the typical human $1,000 per year and the average robo $250 for their services. (Of course, not all human advisors charge a 1% fee. Some have moved to a monthly subscription fee or one-time consultation fee, for example.) Some robo-advisors, such as Charles Schwab and Sophie, charge no mentoring fee; Others like Fidelity and Sigfig only charge balances over $10,000. Investing in portfolios — often low-cost index mutual funds or exchange-traded funds — incur an additional fee. Some companies invest clients in their name-brand funds, which increase their revenue through fund fees. They may also charge for higher account minimums or tiered service levels. “If you don’t have a lot of money, you’re in your 20s and 30s, portfolios are great,” said William Whitt, strategic advisor at Eight-Novarica Group, a consulting firm. trade offs Using a purely digital service can have trade-offs. While digital services do a good job of automating critical investment functions (fund options, stock-bond-cash mixes, and regular portfolio rebalancing, for example), human advisors use algorithms to talk clients through situations on demand. Regrets the relative inefficiency of the programmes. They may include the rationale behind a specific strategy recommendation, or a handshake in challenging times such as a job loss or a crashing stock market. Financial planners also believe they are better suited to proactively and delve into the needs of certain clients beyond money management – ​​whether tax, estate or business planning, which can prove too complex or subtle for online questionnaires. is, for example. “We do much more than just invest,” said Johnson at Delancey Wealth Management. Johnson said helping a client select stock options, purchase long-term care or liability insurance, or set up a business as an LLC or any other type of entity are likely outside the purview of a digital advisor. Automating client psychology is also a challenge. Whit said online questionnaire robo-advisors can’t check answers and body language to determine the best portfolio for a client. Even determining what makes a customer happy – in short, the purpose behind their money – may be outside the realm of robots, according to some experts. “Financial advisors can ask follow-up questions to fill in a picture and understand,” Whit said. Securities and Exchange Commission, which conducted a recent review of robo-advising services, also questioned whether they have always recommended a suitable portfolio considering the stated risk tolerance of clients. (The agency did not name the specific firms it investigated.) Of course, not all human advisors are necessarily performing these tasks appropriately. Few people can fully manage client investments without estimating goals or other complex financial-planning details — and in this case, clients may get more value out of a robo-advising relationship. “I think there are values ​​human beings provide,” said Brian Walsh, SoFi’s senior manager of financial planning. “But on the investment side, I think robos have a huge advantage in being cost-efficient.” Development Robo platforms have also evolved to take some criticism into account and to cater to a wider pool of investors. For one, many have expanded to offer more complex levels of “goal-based” planning; They may gather investment and savings recommendations based on short- and long-term goals such as saving for a home, vacation, college fund or retirement. Many now offer a “hybrid” offering that provides access to a one-time conversation with a financial planner or an ongoing relationship with a human advisor. For example, Charles Schwab’s premium service charges a $300 upfront fee for a plan consultation and a $30 monthly subscription fee for access to human advice, which complements its digital investment management. Also at Wealthfront – which considers it “a failure of our product if you have to call us” – users are able to call a hotline to speak with accountants, CFPs and financial analysts if they have any questions, So said Stollnitz. Ultimately, whether a robot or a human manages your money comes down to what an investor wants from the relationship. “I think robo-advisors are good — it gives investors more options,” Johnson said. “I would hate a world where people can only invest in one way.” Disclosure: NBCUniversal and Comcast Ventures are investors chestnut , ,

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Expert Collections containing Wealthfront

Expert Collections are analyst-curated lists that highlight the companies you need to know in the most important technology spaces.

Wealthfront is included in 6 Expert Collections, including Banking.

B

Banking

710 items

W

Wealth Tech

1,150 items

A category of financial technology that is digitizing & streamlining the delivery of wealth management. Included: Startups that offer technology-enabled tools for active and passive wealth management for retail investors and advisors.

2

2018 Fintech 250

998 items

T

Tech IPO Pipeline

282 items

Track and capture company information and workflow.

C

Conference Exhibitors

5,302 items

F

Fintech

7,256 items

US-based companies

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