Who is Wealthfront owned by? UBS Jumps Head First Into Robo Advisors

Who is Wealthfront owned by? UBS Jumps Head First Into Robo Advisors. On January 26th, 2022, UBS announced its agreement to purchase Wealthfront for $1.4 billion to reach young investors who prefer a digital platform for wealth management.

Wealthfront has $27 billion AUM and more than 470,000 clients in the US. Through services such as lending, financial planning, and automated investing.

The Swiss bank tops the list of wealth managers with an impressive $3.2 trillion in AUM. Since Ralph Hamers took the helm of UBS in late 2020, the firm has tried to digitize through AI and other facilities to establish relationships with more Gen Z and millennial clients.

The Basel offices of Swiss Bank Corporation c.1920

As of 2020, robo advisory has become a $600 billion industry. Largely aided by its rapid growth during the COVID-19 pandemic. According to Charles Schwab, 50% of investors in 2020 were millennials, 22% were Gen X, and 16% were Gen Z. As a result, UBS can complement its traditional financial advisory with a robo advisory to grow its customer base and prepare for the future. 

What is Robo Advisory?

Chances are, you already know a robo advisor. While robo advisors can vary, they generally provide automated investing based on the account holder’s rules and risk appetite. They start with a basic questionnaire about investment goals, age, timeframe, etc. Then, an algorithm builds your portfolio based on these criteria. Most robo advisors charge a fixed monthly fee or percentage of assets ranging from 0.25% to 0.50%. Ellevest, for example, charges as little as $1 a month for its essential tier.

The Rise of Robo Advisory

The idea of robo advisors has evolved over the past decade. From simple investing services for the layman to extensive financial services such as cash accounts, financial advice, lending, and retirement services.

Furthermore, robo advisors use extensively researched portfolio solutions and theories. To deliver products free of human emotion with a deep understanding of data. Traditional financial advisors such as Vanguard and Schwab also entered the market for robo advisory. With the former having the largest market share and offering hybrid services. In a 2016 report by Deloitte, the total AUM of robo advisors is projected to reach $16 trillion by 2025. While this figure is optimistic, it indicates growing trust in robo advisors. Thus, the recent Wealthfront acquisition is a massive step towards robo advisory’s rapid expansion.

Who is Wealthfront owned by? UBS Jumps Head First Into Robo Advisors

Written by Martin Min