Wealthfront Puts More ‘Robo’ Into Financial Planning

February 2, 2017, 7:24 PM UTC
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Wealthfront, one of the largest digital wealth management startups known as “robo-advisors,” has launched a new automated financial planning tool as it continues to focus on electronic services while competitors add human advice.

The company’s new offering called Path connects to client’s non-Wealthfront accounts and uses their real transaction history to automatically calculate their saving and spending rates and help them create a plan for retirement, the company said in a blog post on Thursday.

Users can play around with the numbers and charts on the mobile app and get real time projections on how much money they will need to save to retire at a certain age, or how much they will have to spend monthly during retirement.

Wealthfront’s product launch comes days after the company’s rival Betterment unveiled new services that will include access to human certified financial planners.

Betterment’s new offering marked a significant strategy change for the company, which like Wealthfront had initially sought to shake-up the traditional wealth management landscape by using automation to sustainably service clients with less to invest.

Robo-advisors automatically create and manage portfolios made up of low-cost exchange-traded-funds for clients with as little as a few hundred dollars to invest.

While their innovations enticed established players to launch similar services, some incumbent firms have said that a model combining human advice and enhanced digital tools may prove more successful in the future. Betterment’s launch highlighted this view.

Wealthfront plans to stick to its purely digital offering, which it sees as less impersonal than meeting with a financial advisor once a year, according to co-founder and chief strategy officer Dan Carroll.

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“Wealthfront is focused on serving the wealth management needs of the next generation, people in their 30s and 40s,” Carroll said. “This audience finds the current model for receiving financial advice incredibly dehumanizing.”

Increasing competition from established institutions has also raised concerns about the ability of robo-advice startups to grow sufficiently to become profitable. This has prompted startups to diversify their offering with added tools and features. Earlier this month Wealthfront launched a new service to help employees of listed firms sell stocks in their companies.

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