News, Vision & Voice for the Advisory Community
The Redwood City robo-advisor's addition of two renowned former chief banking regulators brings legitimacy and guidance that could lead to a margin-fattening bank charter and help solve the robo-advisor's problem of high client acquisition costs.
December 31, 2020 — 4:37 AM by Oisin Breen
Brooke's Note: Maybe someday we'll talk about Wealthfront as a great bank that got off to two false starts. First, it was founded in 2008 as KaChing with RIAs built in. See: Can Silicon Valley rewire the RIA business? eBay investors think KaChing is the answer. Then, a few years later, it relaunched as Wealthfront to do what we know as robo-advising to tread water for a decade. Finally, founders realized they'd been overthinking the model all along and threw in with pop-up web banks in February of 2019. They got as many bank assets in a few months as they had gathered in the previous few years in wealth management. See: Wealthfront adds staggering $1 billion to its robo-bank in 'less than a month', but critics say it's treading the line, again, on possible conflicts of interest. It then rewrote its mission statement this past summer to reflect the sudden awakening. Now, Wealthfront is applying what might be considered its core competency -- thinking big when small -- to banking by bringing aboard the most buttoned-up people in that industry. It's presumed to signal a move that justifies such talent. That move may be a charter application, for starters, to toss out the freeloading outsourcers. Wealthfront previously discarded Apex in clearing and custody for an in-house option.