Wealthfront cash accounts help platform explode to $20 billion in assets

Robo-adviser says assets have doubled in past eight months

Sep 9, 2019 @ 3:00 pm

By Ryan W. Neal

New products, including high-yielding savings accounts, have helped Wealthfront double its assets to $20 billion in the past eight months, the robo-adviser said Monday.

Wealthfront doesn't disclose how that $20 billion is divided between assets invested in brokerage accounts versus deposits in the new high-interest cash accounts the digital adviser launched in February.

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But the firm's most recently filed Form ADV, dated August 13, reports it has $11.4 billion in assets under management. It would seem the new cash accounts have brought in at least $8 billion more, but Wealthfront senior communications associate Shay Vyas would not confirm that.

Mr. Vyas disputed the AUM figure in the Form ADV, saying the firm has grown since it last updated it, but did not did not provide an updated figure. However, he did attribute the spike in growth to new products included the high-interest cash accounts and new financial planning tools.

"When we launch products that strike a nerve with our clients, we see an acceleration in overall growth, and we're seeing the same with the launch of cash as evident by our nearly 100% growth rate over the past eight months," Mr. Vyas wrote in an email.

Wealthfront said it achieved the growth primarily by word-of-mouth referrals and with no paid advertising.

Wealthfront's cash accounts offer 2.32% annual yield and are insured by the Federal Deposit Insurance Corporation for up to $1 million.

Fintech expert Lex Sokolin says he isn't surprised by Wealthfront's growth. The mobile experience offered by the direct-to-consumer digital startups like Wealthfront is resonating with clients, he said.

"Also, it's easier to give people money in guaranteed interest than to take it away for management," Mr. Sokolin added. "That interest rate is the cost of customer acquisition. Banks don't like going this high because it spoils the whole industry, but for fintechs it is just another growth hack."

Cash management accounts are increasingly popular among digital companies. Betterment rolled out a high-yield savings platform and a checking account, complete with a Visa debit card, in July.

Even traditional registered investment advisers are getting in the game. Carson Group is partnering with a third-party technology vendor to allow its advisers to offer accounts to clients that mimic checking and savings accounts.

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