Wealthfront, Betterment, SoFi expand offerings

Top robo-advisers, Wealthfront, Betterment and Social Finance Inc. have made announcements this month to expand product offerings outside of automated investing. 

Each new offering represents another way for these digital platforms to unify banking, savings and investment functions through a single app, which has become a differentiator in the competitive robo-advice market.

Wealthfront, for one, announced Tuesday the first iteration of “Self-Driving Money,” a software that automates a user’s direct deposit in their Wealthfront Cash Account to ensure that bills are paid and savings are instantly routed into the proper Wealthfront Investment Account based on pre-set savings goals. 

“It takes just a few taps to organize your cash into categories and build an automated plan to route your paycheck,” the Wealthfront team wrote in a blog post detailing how users can leverage the new software. Wealthfront manages $25 billion in client assets, according to a company spokesperson. 

The software addresses financial education issues that have come up this Financial Literacy Month, and more wealthtechs are realizing that they need to use their technologies to encourage retail investors to save first, before allocating assets to investments. 

Wealthfront is betting on that sentiment and anticipates that its new software will, in turn, increase the efficiency and value of the company's investment service by giving clients more time in the market, according to the announcement.

For example, a client no longer needs to wait up to three business days for their money to reach their investment account, according to the announcement. Instead, their savings are now invested instantly and automatically from the Wealthfront Cash Account.

Direct competitor Betterment announced earlier this month that its retail platform launched a no-fee, FDIC-insured joint checking product for married and unmarried couples, families, roommates, and other groups who are looking to make shared recurring expenses easier to manage. 

Betterment's push to expand across multiple business lines could be prompting the robo-adviser toward new gains. The robo-adviser announced last Friday that during the first quarter under the leadership of new CEO Sarah Levy, the company added 56,000 new clients to the platform, bolstering account openings 116% year over year. Betterment’s total assets under management now clock in at $29 billion.

Expanding well outside of digital advice, SoFi has launched an auto loan refinancing service, partnering up with auto fintech startups to execute. 

Independent wealthtechs are continuing to make incremental product expansions to make their robo-advice platforms more competitive with incumbent banks, said David Goldstone, head of research for Backend Benchmarking.

“Betterment now offering joint checking accounts allows them to become the primary banking institution for more households,” Goldstone said. “SoFi has been ambitiously rolling out new products and features over the past two years leading up to the company going public through a SPAC.”

SoFi announced it’s going public in January with a blank-check company that values the upstart at around $8.7 billion. In March, SoFi announced it is acquiring a bank. The addition of auto loans is an incremental step towards becoming a full-service consumer finance platform.

“SoFi has raised significant capital to fund its expansion of products with the ambition of becoming a major player in the consumer finance space," Goldstone said.

For incumbents, counteracting the appeal of such wealthtech insurgents may mean replicating their digital capabilities, partnering via APIs, or, in some cases, buying them out, said William Trout, Javelin Strategy’s head of wealth management. 

“In the short term, banks must leverage built-in strategic advantages, including their customer base and associated analytics, to rethink the way they approach their customers,” Trout wrote in a Javelin Strategy report. “They must track customers’ digital footprints to better understand their needs while using APIs to bring new sources of data and capabilities in-house.”

It’s not even mid-year yet and the robo-advice sector has already seen a lot of change. Goldman Sachs’ Marcus Invest and Stash’s Smart Portfolios entered the playing field. Betterment announced its acquisition of Wealthsimple Inc.’s U.S. book of business, while M1 Finance raised another $75 million in funding — and got caught up in a Twitter spat with Wealthfront.