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Wealthfront gets new CEO who promptly sells to UBS, making Betterment CEO's day as last robo-advisor standing; but an insider claims the '$1.4-billion cash deal' may be less 'eye-popping' than it appears

The Palo Alto, Calif., robo-startup's original mission was to disrupt wirehouses, technically and culturally, but now it's one with a wirehouse, its best remaining option

Author Lisa Shidler January 31, 2022 at 9:26 PM
no description available
David Fortunato: It was clear from the start that we shared the same values and culture.

Lawrence F

Lawrence F

February 1, 2022 — 3:56 AM
In terms of Wealthfront, this story seems odd. Can you imagine Rachleff saying any of these things? His hurbis wouldn't allow it. What happened to his insistence on not being part of the establishment? Maybe this is great for Betterment? Will they get all of their clients? Probably, but they haven't exactly had any sort of their own breakthrough product or feature in years.
Brian Murphy

Brian Murphy

February 1, 2022 — 5:26 AM
First & foremost, congratulations on an amenable exit for the team at Wealthfront - whether it's for $1.4B or $700MM+ earnouts. They worked hard and cleared a path that perhaps others can take clues from. My takeaways are as follows - a) as much as Wealthfront & Betterment like to put themselves outside the establishment - they are, in fact, just a lower cost technological implementation of the wirehouse model - a) Retail client gives us their money to manage (having to move it to our platform). b) We profile them by asking them questions that they originally came to us to answer (ie. risk tolerance, etc.) c) We put them in pre-defined model portfolios based on their risk tolerance and bill continually on an AUM basis. d) We attempt to sell them higher margin in-house products to goose our margins. e) We offer "solutions" for the latest memes (ESG, digital currencies, etc.) as they arise. f) Talk about "holistic" solutions - do little to address really address them. The opportunity remains for a complete rethinking of digital advice/management, but you've gotta start with understanding what the "aspiring affluent" want and need...and it's not just a technology-enabled account management service. Investments are just one piece of the puzzle for a populace that is juggling student loans, tight budgets, possible home purchase, kids education expenses, retirement, longevity concerns, etc. Wealthfront, Betterment and other robo-advisors just never dug deep enough to get to the holy grail for this underserved group.

Related Moves

UBS bets its 'wealth' future on ex-Schwabbie Naureen Hassan, a corporate digital A-lister, who analysts give a fighting chance to transcend PaineWebber's ossified culture

Still a $2-billion cash-flow cow, the Swiss bank's 6,000-broker, US-based wirehouse is milking aging broker relationships with aging investors but needs a new kind of human presence, empathy, mindset and smarts to draw in Gen Z.

July 16, 2022 at 1:35 AM

Wealthfront cedes to four years of investors clamoring for crypto by taking on expensive third-party vendor that Betterment rules out

The Redwood City, Calif., robo-advisor turned a hard 'no' into a soft 'yes' by dealing with Grayscale and its 200 basis-point-plus fees, which its robo rival in NYC -- also without a crypto path -- finds ludicrous.

August 14, 2021 at 2:20 AM

Wealthfront's unlikely tapping of Sheila Bair and Tom Curry signals likely push to gain a bank charter, analysts say

The Redwood City robo-advisor's addition of two renowned former chief banking regulators brings legitimacy and guidance that could lead to a margin-fattening bank charter and help solve the robo-advisor's problem of high client acquisition costs.

December 31, 2020 at 4:37 AM

Oisín's Bits: Wealthfront drops old mission statement, declares war on institutions and emphasizes banking future • Seeking Utah charter, Edward Jones may become largest bank in US by branch count • After Advent chief leaves, Black Diamond head steps up

Andy Rachleff cans the old 'democratizing' mission statement at his robo; The 14,200 one-man Ed Jones branches may become branch banks; Steve Leivent consolidates power at SS&C.

July 3, 2020 at 1:12 AM

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Portfolio Management System
Top Executive: Andy Rachleff

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