Wealthfront is a new and wildly popular investing service, especially among Millenials.
Sign up for an account, and you’re asked a few questions to determine your investing profile. Wealthfront’s software then picks a mixture of stocks, bonds, low-cost mutual funds, and other assets. Then, simply fill out the online application, fund your account, and you’re on your way.
No phone call. No mail. No hassle. no problem.
As of June 2014 Wealthfront had grown to over $1B in AUM (yes, that’s a “B” as in Billions) and as of Sep 2014 had grown 800 percent in the previous 15 months. That’s still small fish in a pool of big “T”s (as in Trillions, like Schwab’s $2.3T AUM). However, the firm reached $1B twice as fast as Schwab.
“We’re 100 percent focused on Gen Y. They don’t care about having a phone number—they like an automated solution, they want it inexpensive, and they love passive index investing.” – Adam Nash, President & CEO, Wealthfront
So what gives with this service? Is this where financial consulting is headed? Can all of the knowledge and savvy that RIAs provide be summed up into a handful of questions about risk aversion and investible assets?
Or perhaps this is just the tip of the iceberg and it’s just the first of many new services that will continue to crop up in the financial industry that seems to shift tectonically as the quarters fly by.
We’ll keep our eyes peeled on this one and see how things go in the next year.