Wealthfront Finally Launches, Aimed at Silicon Valley’s “Richie Rich” Newbies
Wealthfront, the Silicon Valley start-up with more than $10 million in its own kitty, finally officially launched its long-planned Online Financial Advisor product today, with a focus on attracting techies interested in more easily managing their money.
The Palo Alto, Calif.-based company, which started off as a social investing site called kaChing, shifted over to the new plan just over a year ago. Its aim now is to try to solve the thorny problem of delivering actionable and easy-to-use tools for making investments online, for those who have some money but little time or expertise.
A lot of companies offer similar tools, of course, including big ones such as Fidelity and Schwab, as well as bigger money-management firms. But Wealthfront’s CEO Andy Rachleff and founder Dan Carroll are promising lower fees and more accurate determination of risk via all kinds of online bells and whistles (see below).
Wealthfront is not charging advisory fees on a customer’s first $25,000 under management, with a fee of 0.25% on assets exceeding that.
Wealthfront is backed by DAG Ventures and well-known investors, including Marc Andreessen and Jeff Jordan.
Here’s a video Wealthfront posted about the service, as well as its official press release:
Wealthfront Unveils Automated Online Financial Advisor Service for Silicon Valley and High-Tech Hubs
Highly Sophisticated Investing Advice Finally Made Available through Simple and Low Cost Web Service
PALO ALTO, Calif., December 1, 2011 — The ability for the savvy tech community to easily access high quality, affordable financial advice is now available with the launch of the Wealthfront Online Financial Advisor. Before Wealthfront, sophisticated investment advice was available only to the wealthy, by expensive financial advisors who often can’t relate to today’s tech-savvy generation who want sound financial advice, made easy and convenient. Wealthfront’s Online Financial Advisor appeals to investors from booming tech communities who favor doing everything online, and are looking for ways to have their new wealth managed for far lower fees.
At the core of Wealthfront’s web service is the industry-standard Modern Portfolio Theory (MPT). Until now, the widely adopted investing model has been kept out of consumers’ reach, and was only accessible via expensive financial advisors. Wealthfront automates the application of this intricate investment model, putting the power of MPT directly into the hands of investors online. Moreover, Wealthfront’s pricing structure trumps all traditional financial advisor models. The online service makes it possible to receive a sophisticated, meticulously managed investment plan at a price that is 75% lower than traditional financial advisors. There are no advisory fees on a customer’s first $25,000 under management, and only a fee of 0.25% on assets exceeding $25,000.
“This is exactly what most people in the technology industry need. It’s the kind of advice you’d get if you had Goldman Sachs manage your money and it does away with the hidden fees we in tech despise,” said Piaw Na, a long time, former employee of Google and popular blogger on the topic of investing. “What’s more, the recommendation on the investment mix is provided with a full explanation of what was picked and why, making the whole experience a massive and much needed shift that is especially appealing now.”
Wealthfront’s high quality investing advice is powered by its Precision-Investing Platform™, the breakthrough software behind the service. The Platform uniquely assesses a customer’s true risk tolerance, recommends an optimized portfolio of carefully selected Exchange Traded Funds (ETFs) spanning six asset classes, and monitors and periodically rebalances the investment mix to maintain a customer’s desired risk tolerance.
Wealthfront is backed by Silicon Valley luminaries including DAG Ventures and individual investors including Marc Andreessen, Jeff Jordan, former OpenTable CEO and President of PayPal now at venture firm Andreessen Horowitz, and partners from Benchmark Capital, Index Ventures and Kleiner Perkins Caufield & Byers.
“The financial advisor world has long recognized that one day the Internet and software would pose a credible threat to their hold on the sub $5 million category of individual investors,” said Paul Pfleiderer, C.O.G. Miller Distinguished Professor of Finance at Stanford Graduate School of Business, and Wealthfront advisor. “Wealthfront has made accessible what historically had been out of reach or prohibitively costly for a large class of investors. By using a simple, yet powerful engine for accurately assessing risk and return in the MPT context, Wealthfront has established a new standard for quality financial advisement on the web.”
“With the biggest names in venture capital and the brightest minds in software development, we’re ushering in a financial advisor service that’s capable of precisely managing a customer’s investments from $5,000 to tens of millions with a pricing approach unheard of in the financial services industry,” said Andy Rachleff, CEO of Wealthfront. “Wealthfront emerges at a time when many tech companies are enjoying record earnings, initial public offerings, and strong acquisitions. This creates masses of people in tech looking to invest for the first time and who want to manage their finances in the same manner they’ve organized every other aspect of their lives, online.”
“The promise of the Internet is to disrupt incumbent providers, enabling new companies to provide high quality services at substantial savings through the innovative use of software,” said Jeff Jordan, Wealthfront board member, former CEO OpenTable and President of PayPal and now General Partner at Andreessen Horowitz. “Wealthfront embodies this promise, democratizing access to high quality financial advice. I believe this will appeal strongly to a generation that has grown up with the Net and use it to manage all facets of their life.”
For more information on Wealthfront Online Financial Advisor, or to create a free account, visit www.wealthfront.com.