Wealthfront, the automated investment services company that competes with traditional financial advisory behemoths like Fidelity, has today crossed the $2 billion mark in terms of assets managed.
The achievement for a company, which one year ago was managing approximately $500 million in client assets, is impressive, and it makes Wealthfront the first in its space to rake in that much cash.
Most of Wealthfront’s clients are in their 20’s and 30’s, and their account with Wealthfront is most often their first investment account ever. Nash says that of the ~22,000 clients, the average puts around $90,000 in the hands of Wealthfront, with the biggest account topping out at $10 million.
“We’re not very concerned about the large companies being able to keep pace,” said CEO Adam Nash. “They simply can’t innovate and deliver features fast enough. Instead, we’re focused on defining a better way to invest for this generation.”
Though Wealthfront has shown tremendous growth, $2 billion is but a grain of sand compared to the trillions of dollars in assets managed by incumbents Charles Schwab and Fidelity.
Massive players are not only competing through traditional means, but giants like Charles Schwab (with more than $2.5 trillion in assets managed) have announced algorithmic asset management tools as well. CS’s “Intelligent Portfolios” product, which is branded as a horror film set in cyber space, is set to launch later this month.
Schwab and Fidelity also have a leg up in industries outside of technology, where they’re the default asset manager for many of the largest companies in the U.S.
Wealthfront has made its name (and carved out the bulk of its user base) mainly among the tech companies who also put their trust in algorithms.
The company uses its own set of complex algorithms and software to make financial advisory decisions for clients looking to save up for their future, a job traditionally handled by (ostensibly) very intelligent humans. Alongside managing more than $2 billion in client assets, Wealthfront also says that it has saved its clients a total of nearly $10 million in fees they would have been charged with a traditional advisor.
Two years ago, Wealthfront hired Adam Nash to take the CEO position. At the time, the company had less than $100 million in management.
Wealthfront raised roughly $70 million in October of 2014, preceded by a $35 million raise in April that was led by Index. In total, the company has raised nearly $130 million across five rounds.