Wealthfront Acquires Financial Planning Startup Grove

Wealthtech firm Wealthfront made its first acquisition today. The California-based company has purchased Grove for an undisclosed amount. Grove is a four year old virtual financial planning and advice company with $4 million in assets under management and is headquartered in California.

Not included in Wealthfront’s purchase are the clients behind Grove’s accounts, which number close to 500. Grove has entered into a strategic agreement with Facet Wealth to offer financial planning to these clients, who will be able to transition to Facet Wealth starting tomorrow. With Facet, clients will receive three check-ins per year, a dedicated financial planner, investment recommendations, and a strategy session for $780 per year plus a set-up fee of $560. Additionally, Facet anticipates that some of Grove’s CFPs and planning employees will transition over to its team.

Wealthfront is making the purchase to bolster its Self-Driving Money vision. Under the new initiative, Wealthfront takes control of the user’s finances by allocating their paycheck once it is deposited into their account. The tool will ensure all bills are paid, deposit the appropriate amount into each savings account, and contribute to the best investments to help the user attain their goals.

Grove Cofounder and CEO Chris Hutchins said, “We’ve always appreciated the role technology and automation can play in scaling quality financial advice. We are dedicated to the vision of Self-Driving Money as we believe it will have a huge impact on how people manage their finances.”

This is Wealthfront’s first reveal of its Self-Driving Money plans. The launch depicts a departure from the high-touch model competitors such as Betterment and Personal Capital have added to their offerings. It shows that, in an era of customer service revolution in fintech, Wealthfront is sticking with its robo roots. If Wealthfront serves as a place where consumers deposit their paycheck, they can gain a better foothold to compete with traditional banks.

Wealthfront debuted as KaChing at FinovateSpring 2009. The company pivoted as Wealthfront in 2015. Last year, Wealthfront unveiled a host of new offerings, including a freemium model, homeownership planning tool, and an integration with TurboTax that leverages user’s data to offer a more personalized experience.

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Wealthfront’s New Freemium Model

Wealthtech innovator Wealthfront unveiled this week its plans to launch a freemium version of its online roboadvisory service. The California-based company will open its Path financial planning tool for free to U.S. users.

Users new to Wealthfront can sync their existing financial accounts with Path, an automated financial planning solution launched in 2017, that offers an interactive experience for users to explore different scenarios that may help them reach their goals. By syncing their own accounts with Path, users can gain a better understanding of their current wealth management habits and create a personalized retirement plan for the future. Wealthfront will allow freemium users to sync not only traditional bank account information but also brokerage account and home value data. As is the case with most freemium services, Wealthfront’s goal with the new offering is to transition clients of the free service to its managed plans.

In an interview with Reuters, Wealthfront Co-founder and Chief Strategy Officer Dan Carroll said, “We don’t believe that financial advice should be for the ultra wealthy and it should be behind the paywall.” The company’s management fees are on the low end of the industry, however. Wealthfront charges a transparent advisory fee of 0.25% and a fund fee that ranges from 0.07% to 0.16%. “We were gratified when we looked at the data, that clients that engage with the engine do save more,” Carroll added.

The freemium service is slated to launch by the end of this year.

Wealthfront stands a little taller now in comparison to competitor Betterment, which is still limited to paid, managed plans. To its benefit, however, Betterment offers optional access to licensed financial experts who provide a human touch to an otherwise strictly algorithmic investing approach. Personal Capital, which offers both a freemium model and access to a team of financial advisors, remains a step above both.

Wealthfront debuted as KaChing at FinovateSpring 2009. The company started 2018 with a capital raise of $75 million and the launch of its home ownership planning tool. Earlier this week, Wealthfront announced it teamed up with Intuit to leverage data from account holders’ TurboTax returns to create a smoother onboarding experience for new clients and offer more personalized services to existing clients, based on their detailed tax return data.

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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

Lending Club and Wealthfront Score Intuit Consumer Data

What do you get when you combine Intuit, Lending Club, and Wealthfront? We’re about to find out, thanks to Intuit’s announcement today that it is making user data available to third party providers.

California-based Intuit partnered with P2P lending company Lending Club and roboadvisor Wealthfront this week. These partnerships are fueled by Intuit-owned Turbox, leveraging the more than 80,000 data fields on the TurboTax return, including income, employment, housing, etc. With one click, TurboTax users can save time during LendingClub’s loan application process by importing their data. Similarly, shared TurboTax and Wealthfront clients can open an account much faster and receive more personalized financial advice based on their tax return data.

Lending Club noted the capability will do more than just speed up the application process. Cole Gillespie, Vice President and Head of Business Development at LendingClub, said that the TurboTax data will “unlock the access to credit for customers that ordinarily we might not be able to serve… this partnership is a step in leveraging alternative data sources to help us increase the speed and access to credit.”

Andy Rachleff, CEO of Wealthfront said that partnering with a company like Intuit is “a dream come true.” He explained, “They don’t just pay lip service to caring about the client. They constantly challenge themselves to provide more value. Integrating with TurboTax data that customers agree to provide will allow Wealthfront to continue to raise the bar on what it means to deliver accessible, convenient, and deeply personalized financial planning. We can’t wait to do more together.”

Intuit is also leveraging the data to pre-fill applications within PFM platform, Mint; financial recommendations site, Turbo; and existing external Intuit partners. By combining household data to give lenders a view of shared household income, credit score, and debt, Intuit offers a fuller picture of total borrowing and savings power. The company estimates pre-qualification leveraging TurboTax data generates a conversion rate of up to 9x in offer performance.

“With more than 25 million users and rich insights into their financial profile, Mint and Turbo are uniquely positioned to deliver value to both consumers and strategic partners,” said Varun Krishna, VP of product management for Intuit’s Consumer Division. “Using machine learning, we are able to provide consumers a comprehensive view of their finances and highlight relevant opportunities to save time and money and generate unique value to our partners.”

Best known for its Quickbooks accounting software, Intuit most recently demoed at FinovateFall 2009. The company has 20 locations across 9 countries and employs 9,000 people. Founded in 1983, Intuit went public 10 years later and today has a market capitalization of $54.6 billion.

Founded in 2006, Lending Club demoed at FinovateSpring 2009 and at the inaugural Finovate in 2007. Earlier this summer, the company appointed Ronnie Momen as Chief Lending Officer. Lending Club went public in 2015 and today the company’s market capitalization sits at $1.54 billion.

Wealthfront debuted as KaChing at FinovateSpring 2009. The company began 2018 by landing $75 million in funding, bringing its total raised to $205 million. A few weeks later, the company launched a home ownership planning tool.

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Wealthfront Launches Homeownership Planning Tool

The pressure is high in today’s housing market. Inventory is low in many parts of the U.S. and that, combined with the threat of rising interest rates and booming housing demand, is making home buyers feel the need to buy. Automated investment advisory company Wealthfront announced today that it is here to help with the addition of home planning tools for Path, the company’s automated financial planning solution.

The Path home planning tool aims to help buyers understand what they can afford today and what it may take for them to be able to afford a larger home in the future. Also importantly, the tool shows users how this purchase may impact future goals, such as retiring early or paying for a child’s college tuition. Path extends beyond traditional affordability calculators to show a cost estimate that considers the user’s financial standing and other financial goals.

Leveraging third party data, Path projects future home prices and mortgage rates that are specific to the borrower’s financial situation. The tool also takes into account the varying home prices in different zip codes. Once the borrower defines the specific location and type of house they’re looking for, Path lets them know if they’re on track to afford it. When they find the home they’re looking for, Path advises the user which account the downpayment funds should come from.

This is a noteworthy addition to Path, which originated as a retirement and education planning tool. With this week’s launch of homeownership planning, the tool still has one last financial frontier left– helping users financially plan to start a family.

Wealthfront allows users to invest up to $10,000 for free and currently manages $10.5 billion in assets for investors across the U.S. The company debuted as KaChing in 2009 in the early years of Finovate. Last June, Wealthfront was named to CB Insights’ Fintech 250 list and earlier this month received $75 million in funding, bringing its total raised to $205 million.

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Wealthfront Rakes in $75 Million

Here’s a little-known fact about wealth tech player Wealthfront— the company debuted as KaChing in 2009, then changed its name and relaunched in 2011 as Wealthfront. Another fact about Wealthfront– the California-based company raised $75 million this week.

The financing was led by Tiger Global Management with participation from existing investors Benchmark Capital, DAG Ventures, Greylock Partners, Index Ventures, Ribbit Capital, Social Capital, and Spark Capital. Wealthfront’s total funding now sits at $205 million. While the company has not disclosed its valuation, CB Insights valued it at $700 million in 2014.

In a blog post, Wealthfront founder and CEO Andy Rachleff said that the company will use the financing to help “pursue an even more aggressive push into software-based financial planning and financial services.” He added, “It will also allow us to accelerate our investment in our brokerage infrastructure which should enable us to build and launch new services even more quickly than the accelerated rate at which we did in 2017.”

Among Wealthfront’s new, 2017 offerings was Path, an automated financial planning solution. Path offers an interactive experience that allows users to explore different scenarios that may help them reach their goals. For example, users can input different decisions about their plans for their home once they retire– opting to stay put, downsize, or move to a more expensive home. “We started with retirement planning,” said Rachleff, “because there really aren’t any great options to forecast your financial future outside of basic ‘retirement calculators’ that require a lot of guesswork.”

Similar to Betterment and Personal Capital, Wealthfront offers an automated investment approach. However, the company differentiates itself in a couple of key ways. First, Wealthfront does not offer a hybrid wealth management product– that is, the company does not sell a tiered offering with access to certified financial advisors. Personal Capital has always offered this “high-touch” approach, and Betterment augmented its certified financial advisor offerings last summer. Second, Wealthfront has bundled fintech services by launching a Portfolio Line of Credit product– something unique among the top automated investment services.

Wealthfront allows users to invest up to $10,000 for free and currently manages $9.5 billion in assets for users across the U.S. Last June, the company was named in CB Insights’ Fintech 250 list.

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This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.