Wealthfront Inc. is an automated investment service firm based in

Palo Alto Palo Alto (; Spanish for "tall stick") is a charter city in the northwestern corner of Santa Clara County, California, United States, in the San Francisco Bay Area, named after a coastal redwood tree known as El Palo Alto. The city was estab ...

California California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...

, founded by Andy Rachleff and Dan Carroll in 2008. As of September 2019, Wealthfront had $21 billion

AUM ''Om'' (or ''Aum'') (; sa, ॐ, ओम्, Ōṃ, translit-std=IAST) is a sacred sound, syllable, mantra, or an invocation in Hinduism. ''Om'' is the prime symbol of Hinduism.Krishna Sivaraman (2008), ''Hindu Spirituality Vedas Through Ved ...

across 400,000 accounts.

History

Wealthfront was founded by

Benchmark Benchmark may refer to: Business and economics * Benchmarking, evaluating performance within organizations * Benchmark price * Benchmark (crude oil), oil-specific practices Science and technology * Benchmark (surveying), a point of known elevati ...

co-founder Andy Rachleff and Dan Carroll in 2008 as kaChing, a

mutual fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV i ...

analysis company, before pivoting into

wealth management Wealth management (WM) or wealth management advisory (WMA) is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from affluent to high-net-worth (HNW) and ultra-high- ...

. Rachleff was the firm's founding

CEO A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...

. In December 2012, the firm started tax-loss harvesting for accounts of more than $100,000. The company started 2013 with $97 million in assets under management and grew by 450% in one year. In 2013, Wealthfront introduced "direct indexing", a tax-loss harvesting platform that purchases the individual securities of an investment portfolio. Between January 2014 and October 2016, Adam Nash was Wealthfront's CEO. Founder Andy Rachleff retook the role in 2016. 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. Andy Rachleff is currently the executive chairman and

chief executive officer A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...

. In January 2018, Wealthfront launched homeownership planning tool for Path. In January 2020, Wealthfront was listed in

Business Insider ''Insider'', previously named ''Business Insider'' (''BI''), is an American financial and business news website founded in 2007. Since 2015, a majority stake in ''Business Insider''s parent company Insider Inc. has been owned by the German publ ...

's Top 10 Best Robo Advisors in 2020. In January 2022,

UBS UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...

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

Cash account

In February 2019, Wealthfront introduced a cash account, a high interest savings account. The cash account has an interest rate that tracks the

federal funds rate In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis. Reserve balances a ...

, is

FDIC The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures credi ...

insured up to $1 million, and has an account minimum of $1. Wealthfront is able to offer the $1 million FDIC insurance because it deposits its clients' cash account funds in a network of partner banks including

Citibank Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...

HSBC HSBC Holdings plc is a British multinational universal bank and financial services holding company. It is the largest bank in Europe by total assets ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 tri ...

, and

Wells Fargo Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...

. In June 2020, Wealthfront added checking features to this account including direct deposit, bill pay, and ATM access. The cash account was originally available only to clients with an existing investment account. In August 2020, Wealthfront made the cash account generally available.

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.

Finances

The company has received funding from

Benchmark Capital Benchmark is a venture capital firm based in San Francisco that provides seed money to startups. History The firm's most successful investment was a 1997 investment of $6.7 million in eBay for 22.1% of the company. In 2011, it invested $12 mill ...

DAG Ventures DAG Ventures is an American venture capital firm based in Palo Alto, California. DAG Ventures works with startups in providing early stage and growth stage funding. Since its founding in 2004, by Tom Goodrich and John Cadeddu, the firm has backed ...

Index Ventures Index Ventures is a European venture capital firm with dual headquarters in San Francisco and London, investing in technology-enabled companies with a focus on e-commerce, fintech, mobility, gaming, infrastructure/ AI, and security. Since its f ...

The Social+Capital Partnership Social Capital, formerly known as Social+Capital Partnership, is a venture capital firm based in Palo Alto, California. The firm specializes in technology startups, providing seed funding, venture capital, and private equity. The firm has "stood ...

and individuals, including

Marc Andreessen Marc Lowell Andreessen ( ; born July 9, 1971) is an American entrepreneur, investor, and software engineer. He is the co-author of Mosaic, the first widely used web browser; co-founder of Netscape; and co-founder and general partner of Silicon ...

and Jeff Jordan. In April 2014, Wealthfront raised $35 million in a funding round led by

, Ribbit Capital and Benchmark Capital. The funding round brought the firm's total funding to $65.5 million.

References

External links