Note: Wealthfront’s Stock-level Tax-Loss Harvesting is now called US Direct Indexing.
When we launched Wealthfront in December 2011, the idea behind our first generation service was simple: take the best practices of investment management like diversification, rebalancing, dividend reinvestment and tax-loss harvesting, and automate them so investors could get these benefits without the high fees and high minimums of the traditional industry. The advent of low-cost ETFs and the relentlessly improving economics of consumer software made Wealthfront 1.0 possible.
In December 2013, we launched Wealthfront 2.0. Our second generation service built a series of high value-added services that previously were only available to the wealthy, and layered them on top of our basic service. These innovative services include our Stock-level Tax-Loss Harvesting Platform, Single-Stock Diversification Service, and Automated Tax-Minimized Brokerage Transfers. No other automated investment service has yet been able to replicate any of these services.
Today, we are on the cusp of something even bigger: the rise of artificial intelligence applied to financial services.
We believe that over the next decade, artificial intelligence is poised to transform our industry. The entire fabric of the financial system will be rethought, redefined and rewired.
In order to meet this future, we need to start building for it now. So I am excited to unveil the beginning of the next generation of Wealthfront – Wealthfront 3.0. Starting today, our clients will begin to see a new experience that lays the foundation for an advice engine rooted in artificial intelligence and modern APIs, an engine that we believe will deliver more relevant and personalized advice than ever before.
We are building for a future where Wealthfront will be the only financial advisor our clients will ever need.
Redesigning Wealthfront for the Future
To deliver on this promise, our Vice President of Design, Kate Aronowitz, and her team had to rethink our entire client experience from the ground up. Our engineering team rebuilt our front-end architecture to display results based on original research from our experienced and talented team. The result is an entirely redesigned Dashboard that will be the center of your financial life, from which all other services can plug into and provide you a complete picture of your net worth today and tomorrow.
The first thing you will notice about the new Dashboard is a projection of your net worth designed to orient you towards the long term. You will see Wealthfront 3.0 come to life with relevant, data-driven advice each time you link an account or third party service to your Dashboard. Only Wealthfront provides recommendations on diversification, taxes and fees that are personalized not only to the specific investments in your account, but also to your specific financial profile and risk tolerance. Do you have enough cash in your emergency fund? Are you holding too much stock in your employer? Wealthfront will help you.
Over 60% of Wealthfront clients are under 35, and not surprisingly, many of the financial services they use are built with modern APIs for direct integration. Wealthfront 3.0 will feature direct integrations with platforms like Venmo, Redfin, Lending Club and Coinbase as well as bank accounts and external brokerage accounts.
Anyone who has ever registered for a bank or brokerage account provides their address, but with Wealthfront 3.0 that information is used to automatically integrate with modern services to give up-to-date financial advice about your home.
Actions Speak Louder Than Words
We’re firm believers that artificial intelligence applied to your actual behavior will provide far more powerful advice than what traditional advisors offer today. The reason is quite simple: actions speak louder than words. Observed behavior can’t be fudged on the phone or lied about in person. More importantly, observed behavior may reveal insights about ourselves that we aren’t even consciously aware of.
Wealthfront has been built from the ground up with the same social contract that is at the heart of fiduciary advisor: our clients trust us with the relevant details of their financial lives and we keep their information private and secure. Our advocacy for a fiduciary standard is based on the premise that it will lead to far better advice and outcomes.
We understand that many older investors who meet the high minimums of the traditional industry will continue to find more comfort in a personal relationship with a traditional advisor and we respect that. However, we are building our service for a new generation of investors, and designing it to grow with the profound capabilities we expect from intelligent services in their lifetimes.
The Future Starts Today
On March 9th, the world was stunned when Google DeepMind defeated legendary Go player Lee Se-dol. Over the next decade various forms of artificial intelligence will be brought to bear on every industry, including financial services. This intelligence will be built on modern platforms that translate data delivered by APIs into relevant advice.
We believe the ultimate financial impact of artificial intelligence on society will be far bigger than what we are building at Wealthfront. These changes will not just impact the next few months or years, they will continue to accelerate over the next few decades.
Over the next two months, Wealthfront clients will begin to see these features roll out progressively across our mobile and web experiences. A journey of a thousand miles begins with a single step, and today is just the first of many.
One thing is certain. 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.
Welcome to Wealthfront 3.0. We’re just getting started.
Nothing in this article should be construed as tax advice, a solicitation or offer, or recommendation, to buy or sell any security. Financial advisory services are only provided to investors who become Wealthfront clients. Product screenshots and projected returns do not represent actual accounts and may not reflect the effect of material economic and market factors. Past performance is no guarantee of future results. Actual investors on Wealthfront may experience different results from the results shown.
About the author(s)
Adam Nash, Wealthfront's CEO, is a proven advocate for development of products that go beyond utility to delight customers. Adam joined Wealthfront as COO after a stint at Greylock Partners as an Executive-in-Residence. Prior to Greylock, he was VP of Product Management at LinkedIn, where he built the teams responsible for core product, user experience, platform and mobile. Adam has held a number of leadership roles at eBay, including Director of eBay Express, as well as strategic and technical roles at Atlas Venture, Preview Systems and Apple. Adam holds an MBA from Harvard Business School and BS and MS degrees in Computer Science from Stanford University. View all posts by Adam Nash