The robo-advisor is betting that millennials don't want human interaction in their financial lives and modeling itself after success stories like Netflix.
The terms"wealth management" and"viral sensation" are rarely used in the same sentence. Andy Rachleff, co-founder of the robo-advisor Wealthfront, is betting his retirement years he can change that.
Wealthfront is at once a tech startup and a financial company. Its sleek mobile app is designed to lure customers by promising an easy, low-cost way to invest in the market using popular investments like exchange traded funds. Originally designed for long-term savings goals, the the firm has ambitious plans to take on more bank-like functions, such as the interest-paying cash account it introduced in March and a debit card it plans for later this year.
Roughly 90 percent of these customers are under the age of 45. Young people are largely ignored by traditional brokers, who usually want hefty account balances, and they are"desperate for something," Rachleff said. Rachleff also became a trustee at the University of Pennsylvania, where he went to college and now chairs the endowment board. His experience with the endowment kindled the idea for what would become Wealthfront. Extremely wealthy people and big investors like endowments pay money managers big fees to generate returns using sophisticated models. Those managers demand high minimum investments, far beyond the reach of ordinary people.
The team of designers for the most part, does not have a finance background. Instead, they spend their days thinking up ways to be more like easy-to-use consumer apps like Instagram and Google Maps. There's plenty of competition as Silicon Valley's flourishing fintech industry tries to take on traditional Wall Street. Fellow robo-advisor Betterment is Wealthfront's most notable competitor, but Betterment has added human advisors to its offering in recent years.
Their staying power has yet to be tested, however. Apart from some temporary volatility, the stock market has been in a prolonged bull market. Robo advisors haven't had to shepherd investors through a calamity like the financial crisis. UBS senior equity research analyst Brennan Hawken said the start-up robos might be an attractive place for young people to begin investing, but that could change.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Two under-the-radar retail buys as the group breaks out, according to expertsThe retail sector is rallying, but two Street watchers says there are more gains ahead. Oppenheimer's Ari Wald likes Columbia Sportswear, while Point View Wealth Management's John Petrides says Hanesbrands is the name to own.
Read more »
Exclusive: Goldman's China-backed fund bucks trade tensions to buy U.S. firmGoldman Sachs Group Inc invested money from China's sovereign wealth fund i...
Read more »
Apple launches Netflix for news, with Los Angeles Times, Wall Street Journal participatingBreaking: The Los Angeles Times is joining a new paid subscription news service created by Apple that offers customers who pay a monthly fee access to articles from a selection of publications, many of which are otherwise behind paywalls.
Read more »
Innoviz, Ouster raise millions for self-driving lidar sensorsSelf-driving technology continues to attract robust investment, as two tech star...
Read more »
Most Americans Still Afraid To Ride In Self-Driving CarsNearly three in four Americans remain afraid of self-driving vehicles, according to a new AAA survey.
Read more »
Daimler buys Torc Robotics stake for self-driving trucksDaimler Trucks has agreed to buy a majority stake in self-driving truck software...
Read more »
Honda, Hino to join SoftBank, Toyota's self-driving car service ventureHonda Motor and Japanese truck maker Hino Motors to join SoftBank and Toyota's self-driving car service venture
Read more »
Apple's new products are a game changer for customers, but not Wall Street, Jim Cramer saysJim Cramer explains why the analysts are wrong about Apple's new products and why investors should be buying the stock.
Read more »
Apple's announcements are a game changer for customers, but not Wall Street, Jim Cramer saysJim Cramer explains why the analysts are wrong about Apple's new products and why investors should buy the stock.
Read more »