What happened — Swiss-banking giant UBS is paying $1.4 billion to buy millennials focused investing platform Wealthfront, trying to push deeper and align its services to the next generation of retail consumers in the US.
Wealthfront is basically what they call a robo-advising platform, helping a base of about 430K affluent millennials and GenZ investors park their money into a diversified pot of assets — managing over $27 billion in assets, competing against the likes of Betterment, Acorns, Stash, and others.
Wealthfront’s algorithm charges just 0.25% — which as you can understand, is a steal compared to what financial advisors charge for mostly subpar guidance.
UBS meanwhile earns its bread by offering custom banking and money management services to a mostly wealthy client base. They’ve recently been rewiring services to service younger consumers (think tech bros and gals with stock options and growing wealth), and hope this transaction helps grow share against rival offerings from JP Morgan, Goldman and others
Worth noting — banks, who have been silent witnesses to the rise of fintech, are now starting to pull out their checkbooks to buy category leaders. And as liquidity dries up and the IPO feast ends, upstarts are counting on these exits.