In one of the first big fintech acquisitions of the year, Wealthfront has agreed to be acquired by global investment bank and financial services company UBS. Valued at $1.4 billion, the all-cash deal represents a premium of at least 2x on Wealthfront’s most recent private market valuations, and underscores UBS’s determination to attract younger, high net worth American investors.
In a blog post at the Wealthfront website, company CEO David Fortunato called the acquisition a “strategic partnership” that will enable Wealthfront to offer new services and give its customers access to “UBS’s industry-leading investing insights and research.” Fortunato praised UBS’s new CEO Ralph Hamers, who was appointed to the top spot in the fall of 2020, as a “digital native” who has put the digitization of the Swiss-based multinational firm at the top of his agenda. Fortunato noted that Wealthfront will continue to operate as a standalone business under its own brand after the acquisition.
“Rest assured that nothing will change with your account or the cost of our service,” Fortunato wrote to the company’s customers. “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.”
Founded in 2008 – and making its Finovate debut as kaChing a year later – Wealthfront has grown into a leading online automated investing platform with $27 billion under management and more than 470,000 clients in the U.S. Earlier this month, the company announced a trio of updates to its Smart Beta service, a feature of the company’s U.S. Direct Indexing offering that helps investors optimize their allocations to individual stocks. Last fall, Wealthfront unveiled its Socially Responsible Portfolio, which leverages Modern Portfolio Theory to give investors the ability to put their money where their values are while still earning returns comparable to those available in its Classic Portfolio.
“Adding Wealthfront’s capabilities and client base to our global investment ecosystem will significantly boost our ability to grow our business in the U.S.” UBS’s Hamers said in a statement. “Wealthfront compliments 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.”