May 26, 2022

StrategisChhr

Skillful Business Crafters

UBS acquires Wealthfront | Financial Planning

UBS has agreed to acquire Wealthfront, one of the pioneer automated wealth management startups, for $1.4 billion in an all-cash deal.

Wealthfront, which was founded as kaChing in 2008 in Palo Alto, California, has more than $27 billion in assets under management across 470,000 clients. The company’s primary client base is millennial and Gen Z investors.

In November, the company was reportedly seeking a $1.5 billion valuation.

Adding Wealthfront’s technology and client base will significantly boost UBS’s ability to grow in the U.S., particularly among affluent clients, according to Ralph Hamers, group CEO of UBS.

“Wealthfront complements our core business in the U.S., providing wealth management to high net worth and ultra high net worth investors through trusted relationships with financial advisors, and will enhance our long-term ambition to deliver a scalable, digital-led wealth management solution to affluent investors,” Hamers said in a statement.

The bank plans to make Wealthfront the foundation of a new digital offering that will also include access to human financial advisors, something the robo-advisor has steadfastly avoided in favor of remaining a purely digital solution. UBS also plans to use Wealthfront to expand its Workplace Wealth Solutions business, which provides employees of UBS’s corporate clients with financial education, retirement programs and equity plan participation.

In an email to clients, which Wealthfront also posted on its blog, CEO David Fortunato said current Wealthfront clients won’t experience any immediate change to their service, but will eventually incorporate UBS’s products and services.

“Rest assured that nothing will change with your account or the cost of our service,” Fortunato wrote in the message. “We will continue delivering great products and features to you, now at a much faster pace. And you’ll get access to even more research and insights that can empower you as an investor.”

Fortunato was Wealthfront’s inaugural chief technology officer and was named president in 2019. According to LinkedIn, Fortunato replaced Wealthfront co-founder Andy Rachleff as CEO in March 2021, but made no public announcement of the change. Rachleff’s LinkedIn profile indicates he is now executive chairman.

Wealthfront and UBS declined additional comment.

The transaction is expected to close in the second half of 2022. Wealthfront will become a wholly owned subsidiary and operate within UBS Global Wealth Management Americas.

UBS Investment Bank is serving as financial advisor to UBS, and Sullivan & Cromwell is acting as legal counsel. Qatalyst Partners is serving as Wealthfront’s exclusive financial advisor and Fenwick & West is acting as legal counsel.


https://www.financial-planning.com/news/ubs-acquires-wealthfront