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Money20/20 Las Vegas: Wealthfront’s Freemium Tool Shows How Robo-Advisors Can Capture Market Share from Incumbents

At Money 20/20 in Las Vegas, Wealthfront announced it is opening up its financial planning service to anyone for free. The freemium service is currently in beta and will be available by the end of this year. 

Heike van den Hoevel, Senior Wealth Management Analyst at GlobalData, who is attending the conference commented, “Our data shows that cost of advice is a big deterrent. Making higher-value services such as pension advice available free of charge will thus allow Wealthfront to widen its customer base and take away market share from traditional players.”

According to GlobalData’s 2016 and 2017 Mass Affluent Investors Surveys, a fifth of investors globally have made use of a robo-advisor at some stage during the investment process. However, only 1% regard it as their primary provider.

van den Hoevel explains: “Many investors are willing to use a robo-advisor for basic investments, but prefer a bit of handholding when it comes to more holistic financial planning or complex investment products. However, advances in artificial intelligence will drive automation of aspects of the financial planning process, which in turn will empower consumers to manage a wider array of their financial lives independently.”

Wealthfront’s freemium service will allow users to connect all of their financial accounts, receive recommendations powered by Wealthfront’s automated financial advice engine Path, and build a personalised financial plan. Speaking at the conference, Wealthfront’s co-founder and chief strategy officer Dan Carroll stated that the service will allow users to calculate what their current net worth at retirement would be, the monthly sum this would amount to were the user to retire immediately, and what regular savings are required to achieve a set amount for retirement – even factoring in conflicting savings goals.

When asked for further clarification, Akshay Vyas, a spokesperson for Wealthfront, added: “It allows clients to easily plan for all of life’s major milestones, including retirement, buying a home, sending a child to college, and taking time off for travel. All goals ‘talk’ to each other, so to speak, meaning Wealthfront will always show clients the tradeoffs for the goals they have.”

Recommendations on how to achieve a set pension income as well as other savings goals will span an investment range provided through Wealthfront as well as external providers.

van den Hoevel concludes: “Traditionally, investors would see a professional to obtain pension advice and many will continue to do so – at least for now. However, equipping investors with the right tools and knowledge free of charge will see more of them opt for digital channels, even when it comes to more complex products.

“As algorithms continue to evolve, the proportion of investors that regard their robo-advisor as their primary investment channel is set to rise, particularly as younger digital consumers start thinking about their golden years.”


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