Wealthfront takes another step to becoming a digital bank

Wealthfront is moving closer to becoming a full-fledged digital bank and achieving CEO Andy Rachleff’s long-standing dream of offering clients a one-stop destination for all cash management needs, or what he calls, “self-driving money.” 

In an email to customers, Mr. Rachleff said Wealthfront Cash Accounts will soon offer account numbers, routing numbers and a debit card to investment clients. This allows customers to use Wealthfront to automatically direct deposit paychecks, pay bills, take out cash at ATMs, make purchases and initiate peer-to-peer money transfers.

Wealthfront launched Cash Accounts in February 2019 to offer high-yield savings account for uninvested cash. With the new features, Mr. Rachleff is hoping Wealthfront becomes an all-in-one banking hub.

This is just the beginning, Mr. Rachleff said.

“These features are an important first step towards our ultimate goal — to optimize and automate your entire financial life,” he wrote in the email.

The idea is after a paycheck gets deposited, Wealthfront automatically pays bills, tops off emergency funds and invests the rest in the most appropriate accounts per someone’s lifestyle and goals.

“Our team is hard at work on this, and you’ll see more later this year,” Mr. Rachleff wrote.

Though Wealthfront Cash launched with a 2.24% interest rate, recent moves by the Federal Reserve have forced the company to lower rates to 0.26%, according to its website. In the email, Mr. Rachleff called the Fed’s actions “disappointing.”

Wealthfront isn’t the only firm to cut its savings account interest rates, but its rate is lower than several other “high-yield” accounts from digital providers. For example, Marcus by Goldman Sachs currently offers 1.7% interest, according to its website.

Wealthfront’s focus on cash management comes as global markets continue sinking in response to the spreading COVID-19 outbreak. Passive investing strategies, which robo-advisers like Wealthfront deploy, are taking a hit, steering traditional advisers to lean towards active management strategies for a solution.

Wealthfront did not immediately respond to a request for comment.