2. 2
Problem
Wealthfront aims to
automate the investing
process to more efficiently
manage portfolios, cut
management costs and
customer facing fees, and
hand value back to the
customers.
Products
High-InterestCash Account
General Long-Term
Investing
Retirement Investing (IRA)
College Investing (529)
Portfolio Line of Credit
3. 3
• 25
• Wants to invest but doesn’t know where to start
• Doesn’t want to pay a financial advisor to do it for
them
Rob Park
Young Professional
5. 5
0 10 20 30 40 50 60 70 80
Series A (2007)
Angel Indiviual
(2008)
Series C (2009)
Series D (2013)
Series E (2014)
Series F (2014)
Series G (2018)
$ in Millions
Rounds of Funding
6. Business Model
6
Market Appreciation
AUM should grow by approx. 6%
annually – built in 6% increase in
revenue
Automation
Saving money by automating the
work of financial advisors
0.25% Advisory Fee
On all assets under management
Organic Growth
Rely onWord Of Mouth Advertising -
cut marketing costs
7. History
2008 – Andy Rachleff and Dan Carroll start kaChing
2011 – Pivot to Wealth Management, became Wealthfront
2012 – Started offering Tax Loss Harvesting
2014 – Adam Nash becomes CEO
2016 – Launched 529 Accounts & Andy Rachleff reclaims CEO role
2019 – Launched Cash Accounts
7
9. “The proof of this leverage is
last year we were able to
grow our assets under
management by 100% and our
revenue by 110% while only
growing our headcount by
15%” - Andy Rachleff
9
10. What’s
Hot
10
High Interest Cash Account
National Average – 0.27%
Wealthfront – 1.78%
Tax Loss Harvesting
Capture losses in investment to reduce
your tax bill
Portfolio Line of Credit
Low interest (3.90% - 5.15%) loans to
protect your savings without a credit
check
11. 11
Wealthfront Betterment Acorns
Advisory Fee 0.25% 0.25 - 0.40% $1-$3 a month
Assets Under
Management
$20 Billion $21 Billion $1.2 billion
Minimum Deposit $500 $1 $1
Cash Account Yes, 1.78% Yes, 1.83% Yes, no interest
Cash Account Debit Card Coming Soon Coming Soon Yes
Financial Advice Yes, free Yes, +0.15%; $149-$399
/ call
No
Inexpensive Borrowing Yes No No
Tax Loss Harvesting Yes Yes No
High-interest cash
FDIC insurance up to $1 million through our partner banks. Unlimited transfers and no fees. Current APY: 1.78%
General long-term investing
All-purpose investment accounts for goals at least five years away.
Retirement investing
Tax-advantaged accounts for money you won’t need before your 60th birthday.
Roth, SEP, Traditional
College investing
Tax-advantaged accounts to cover educational expenses.
529 account
https://www.freepik.com/free-photos-vectors/business
A significant portion of our revenue is derived from the 0.25% advisory fee we charge on assets under management.
Another source of growth is market appreciation. Our assets under management should grow by approximately 6% annually on average due to market appreciation. I don’t know of many businesses that have a built in 6% increase in revenues that doesn’t require any marketing effort or expense. However, the downside of this cost-free growth is its high variance. In some years market appreciation can be much greater than 6% (for example 19% in 2017), and in other years it might be negative. When markets turn down, our growth rate temporarily declines, but the good news is it picks right back up when the markets recover. According to our research, the average market correction (peak to trough decrease of more than 10%) takes only 121 days from which to fully recover, so we typically expect to experience a dampening of growth for a short period of time. We also experience much lower withdrawals than the traditional investment industry during market declines because our clients tend to stay true to a passive investing strategy and keep investing despite the volatility.
Unlike most consumer Internet startups, we rely almost exclusively on organic growth. Great companies are built through word of mouth, not by relying on advertising. Customer delight is the greatest form of virality, which is why we put all our efforts into building exceptional products. The secondary benefit of organic growth is it leads to much higher margins.
https://www.freepik.com/free-vector/social-media-marketing-efficiency-promotion-report-mobile-phone-with-loudspeaker-data-graph_4102840.htm#page=5&position=4
The power of automation