Congrats to the shareholders of Wealthfront as UBS acquires Wealthfront for $1.4B. Wealthfront has been one of the two industry-defining robo-advisors (the other one was Betterment). I can say that WealthFront built the best robo-advice product in the world.
The industry-leading, consumer-facing, web-based product that Wealthfront built is ideal for a massive segment of customers who opted for digital investment management. Even though the direction of its product development meandered for the last two years, its robo-advice tech is still the best-in-class.
I believe the $1.4B that UBS is paying for is primarily for the tech product, much more than for the $27B book of tech-savvy early-adopters. There was no way the UBS tech team would've built such an investment management product on their own even after five years of slogging it out!
Any acquisitions of other robo advisors in the US in the near term might not fetch the same acquisition pricing because other robo advisors do not have a similar "product premium" that Wealthfront enjoyed. Well done, Andy Rachleff and team.
That said, the original mission of Wealthfront (before it tried to integrate banking services to its product, thus losing focus) remains semi-complete. I think Wealthfront under its new UBS owners (and under new management in the coming years) will fail to do justice to the mission.
This acquisition creates room for the emergence of a new firm sometime in future to take up from where Wealthfront has traversed so far. I hope QuietGrowth is that firm!
UBS continues its efforts in digital wealth management -- It invested in SigFig in 2016. It closed its own robo advisor SmartWealth in 2018. It is running Sigfig-powered UBS Advice Advantage. Now the acquisition of Wealthfront.
With so many acquisitions of leading VC-backed robo advisors by big banks and financial institutions taking place in the US and UK, the terms "independent robo advisor" or "standalone robo adviser" might be used increasingly to differentiate!
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