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Wealthfront

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Wealthfront Inc.
FormerlykaChing (2008–2010)
IndustryPersonal finance, Stock exchanges, Finance
Founded2008; 16 years ago (2008)
Redwood City, California
Founders
Key people
AUM$27 billion (2022)[1]
Number of employees
238 [2]
Websitewww.wealthfront.com Edit this at Wikidata

Wealthfront Inc. is an automated investment service firm based in Palo Alto, California,[3][4][5][6] founded by Andy Rachleff and Dan Carroll in 2008.[7][8] As of 2022, Wealthfront had $27 billion AUM across 470,000 accounts.[1]

History

Wealthfront was founded by Benchmark co-founder Andy Rachleff and Dan Carroll in 2008 as kaChing, a mutual fund analysis company, before pivoting into wealth management.[9][7][5][10] Rachleff was the firm's founding CEO.[10] In December 2012, the firm started tax-loss harvesting for accounts of more than $100,000.[11][12]

The company started 2013 with $97 million in assets under management and grew by 450% in one year.[8] In 2013, Wealthfront introduced "direct indexing", a tax-loss harvesting platform that purchases the individual securities of an investment portfolio.[13] Between January 2014 and October 2016, Adam Nash was Wealthfront's CEO.[4] Founder Andy Rachleff retook the role in 2016.[14]

In 2016, Wealthfront launched a partnership with the state of Nevada to launch a 529 tax-advantaged college savings plan. In the previous year, Nevada passed approval on a new tax credit for employers who provide fund matching to employees participating in 529 savings programs.[15] Andy Rachleff is currently the executive chairman and chief executive officer. In January 2018, Wealthfront launched homeownership planning tool for Path.[16][17] In January 2020, Wealthfront was listed in Business Insider's Top 10 Best Robo Advisors in 2020.[18]

In January 2022, UBS agreed to acquire Wealthfront for $1.4 billion.[19] The acquisition was mutually terminated in September 2022 with both companies not providing a reason.[20][21] UBS announced that it would instead invest in a $69.7 million note convertible into Wealthfront shares, valuing the latter at its acquisition price.[21]

Cash account

In February 2019, Wealthfront introduced a cash account, a high interest savings account.[22] The cash account has an interest rate that tracks the federal funds rate, is FDIC insured up to $3 million, and has an account minimum of $1. Wealthfront is able to offer the $3 million FDIC insurance because it deposits its clients' cash account funds in a network of partner banks including Citibank, HSBC, and Wells Fargo.[23][24]

In June 2020, Wealthfront added checking features to this account including direct deposit, bill pay, and ATM access.[25]

The cash account was originally available only to clients with an existing investment account. In August 2020, Wealthfront made the cash account generally available.[26]

Fee structure

Wealthfront charges an advisory fee of 0.25% on funds it invests for its clients. Only investment accounts are charged this fee (cash accounts are not). Wealthfront periodically offers a fee waiver of $5,000 if clients sign-up from affiliate links. Additionally, clients can earn a $5,000 fee waiver for new client referrals; the new client must start using the service, and the fee waiver will be eliminated if the new client leaves the service. Both the referrer and the referee receive the $5,000 fee waiver.

Wealthfront's investment account minimum is $500.[27][28]

Finances

The company has received funding from Benchmark Capital, DAG Ventures, Index Ventures, Social Capital and individuals, including Marc Andreessen and Jeff Jordan.[10] In April 2014, Wealthfront raised $35 million in a funding round led by Index Ventures, Ribbit Capital and Benchmark Capital.[29] The funding round brought the firm's total funding to $65.5 million.[30]

See also

References

  1. ^ a b "UBS and Wealthfront Agree to Kill Merger Agreement". Sovereign Wealth Fund Institute. 2022-09-03.
  2. ^ https://craft.co/wealthfront
  3. ^ Leena Rao (2014-01-13). "Automated Investment Services Company Wealthfront Now Manages Over $538M In Assets, Up 450 Percent Over The Past Year". Retrieved 2014-08-22.
  4. ^ a b Brooke Southall (2014-01-30). "Andy Rachleff is out as CEO of Wealthfront as former LinkedIn star takes his place". Retrieved 2014-08-22.
  5. ^ a b Saitto, Serena (25 March 2014). "Wealthfront Said to Be Raising $30 Million Led by Index". Bloomberg News. Bloomberg L.P. Retrieved 22 August 2014.
  6. ^ "The 2014 CNBC Disruptor 50 List". CNBC. 17 June 2014. Retrieved 2014-08-22.
  7. ^ a b Eric Savitz (2012-03-01). "WealthFront: Asset Manager Targets Valley's Nouveau Riche". Forbes. Retrieved 2014-08-22.
  8. ^ a b Leena Rao (2014-04-02). "Automated Investment Service Wealthfront Raises $35M From Index, Ribbit Capital". Retrieved 2014-08-22.
  9. ^ Jason Kincaid (2009-12-15). "kaChing Raises $7.5 Million To Turn Mutual Funds On Their Heads". Retrieved 2015-03-19.
  10. ^ a b c Tom Taulli (2012-02-07). "Interview: Wealthfront CEO and Founder Andy Rachleff". Retrieved 2014-08-22.
  11. ^ Marcus Wohlsen (2012-10-09). "Now Tech Plebes Can Dodge Taxes Like a Former Governor". Wired. Retrieved 2014-08-22.
  12. ^ Kim-Mai Cutler (2012-10-09). "Financial Planning Startup Wealthfront Woos Silicon Valley Workers With A Once-Secret Investment Trick". Retrieved 2014-08-22.
  13. ^ Wommack, Sanders (19 December 2014). "Wealthfront's high-net-worth cat leaps out of the bag -- keeping it one robo 'pivot' ahead of Schwab". RIA Biz. Retrieved 27 January 2015.
  14. ^ "Exclusive: Wealthfront's Founder Reclaims CEO Role as Current Chief Steps Down". Fortune. Retrieved 2020-05-10.
  15. ^ Andrea Davis (2016-06-03). "Wealthfront leads robo expansion into college savings plans". Retrieved 2016-07-14.
  16. ^ Neal, Ryan W. (29 January 2018). "Wealthfront app to help millennials with this lofty goal". www.investmentnews.com. Retrieved 2018-05-17.
  17. ^ "Wealthfront Launches Homeownership Planning Tool - Finovate". Finovate. 2018-01-30. Retrieved 2018-05-17.
  18. ^ Meola, Andrew. "Top robo advisors in 2020: Performance reviews, returns, and comparisons". Business Insider. Retrieved 2020-03-17.
  19. ^ "UBS buys Wealthfront in $1.4 bln deal to widen U.S. reach". Financial Post. 2022-01-26. Retrieved 2022-01-26.
  20. ^ Balezou, Myriam (2022-09-05). "UBS Growth Plans in US Dented After Wealthfront Deal Fails". Bloomberg News.
  21. ^ a b Snel, Ross (2022-09-02). "UBS Planned to Buy Robo-Advisor Wealthfront. Now the Deal's off". Barron's.
  22. ^ "Introducing the Wealthfront Cash Account". Wealthfront Blog. 2019-02-14. Retrieved 2021-02-16.
  23. ^ "Enjoy high-interest checking with no account fees | Wealthfront". www.wealthfront.com. Retrieved 2021-02-16.
  24. ^ "Wealthfront's Cash Account: What It is & How to Use It". www.moneyunder30.com. Retrieved 2021-02-16.
  25. ^ "The Wealthfront Cash Account Now Comes With Checking Features". Wealthfront Blog. 2020-06-29. Retrieved 2021-02-16.
  26. ^ "Start Earning 2.24% APY on Your Cash Today". Wealthfront Blog. 2019-03-19. Retrieved 2021-02-16.
  27. ^ Carey, Theresa W. "Wealthfront Review". Investopedia. Retrieved 2021-02-15.
  28. ^ "Referrals: What's the Wealthfront Invite Program?". Wealthfront Support. Retrieved 2021-02-15.
  29. ^ "Funding Roundup: Wealthfront Raises $35 Million, Reports 450% Growth". Daily News. 2014-04-04. Retrieved 2014-08-22.
  30. ^ Gabrielle Karol (2014-06-13). "High-Tech Investing Startup for Millennials Hits $1 Billion in Assets". Retrieved 2014-08-22.
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