April 1, 2016
APIs are powering lot of new things in the FinTech landscape. Online automated investment advisor Wealthfront has launched version 3.0 of its platform where APIs are used directly to integrate accounts with other platforms. The new platform includes a dashboard with detailed graphs representing the assets and liabilities in customers’ portfolio, software/API integrations with services including Venmo and Lending Club and investment research by using AI technology.
Using linked accounts and API, Wealthfront will be able to analyze a user’s financial status and give solutions to users in financial dilemma. Wealthfront mainly targets the millennial generation as 60% of Wealthfront’s investors are under the age of 35. Nash, Founder of Wealthfront wants users to use the service to not only manage the money they invest but also evaluate their holdings across all finance-related services. The company was born with the idea of offering friendly pricing. It does not charge fees on the first $10,000 and charges only 0.25% annually on assets in excess of $10,000. There are no trading commissions, no account maintenance fees and no additional monthly fees.
Wealthfront 1.0’s service was simple with best practices like automated diversification, rebalancing, dividend reinvestment and tax-loss harvesting. In December 2013, Wealthfront 2.0 was launched where the company added innovative services like direct indexing platform, single-stock diversification service, and automated tax-minimized brokerage transfers. The new Wealthfront 3.0 platform applies artificial intelligence to all financial services. Over the next two months, Wealthfront clients will begin to see these features roll out progressively across mobile and Web experiences. The company strongly believes that artificial intelligence is the only way to bring high quality and low-cost financial advice to the millions and millions of people who don’t meet the high minimums of the traditional industry.
The banks are more cynical about the robo-advisory platform. According to banks, higher net worth and sophisticated investors prefer face-to-face than online investment advisory. The most challenging task for robo-advisory firms is designing the point of differentiation among the players as there are a number of players entering this sector and reputed advisory firms like Fidelity and Charles Schwab are designing their own automated investment platform. The competition in online investment space is gearing as Wealthfront’s tough competitor Betterment has raised $100M in funding to enhance its recently launched line of business and has added number of features like account aggregation, retirement guide, etc.
Founded by Andy Rachleff and Dan Carroll in 2008, Wealthfront is the largest and fastest-growing online financial advisor in the industry. Rachleff is the Executive Chairman of Wealthfront and Adam Nash is its Chief Executive Officer. Based in Silicon Valley, Wealthfront was the first to reach $1 billion in assets under management (AUM), and they did it in just two and a half years. At present, they manage around $3 billion AUM. The company has received funding from Benchmark Capital, DAG Ventures, Index Ventures, the Social+Capital Partnership and individuals, including Marc Andreessen, Ben Horowitz and Jeff Jordan.