UBS Group AG is buying online wealth adviser Wealthfront for $ 1.4 billion to reach the young rich and manage more money for people through their devices, the company said Wednesday.
UBS said it would pay cash for the digital platform, one in a group of startups whose assets have grown rapidly in an industry shift to automated consulting. The California-based Wealthfront has $ 27 billion under management for nearly half a million customers.
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UBS Americas President Tom Naratil said the Wealthfront acquisition further indicates UBS’s ambition to attract more affluent U.S. customers, particularly Millennium and Gen Z investors.
“This can also be a feeder for our business in the future because some of these people will be the customers of the future with high net worth and ultra-high net worth,” said Mr. Naratil.
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For many of them, digital advice rather than an old-fashioned broker relationship is the preferred solution, he said.
Mr. Naratil said the bank needs to consider whether it is “positioned correctly, for those who do not necessarily believe the traditional financial adviser model is right for them.” UBS gets most of its wealthy clients in the United States through a 6,000-strong army of financial advisers. It is cheaper to provide digital advice and should improve the advances, UBS executives have said.
Wealth managers and banks across the industry have invested heavily in digital tools to bring in younger clients who are reluctant to hand over control of their finances to a traditional adviser.
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UBS CEO Ralph Hamers said in October that the US market is a priority for the Swiss bank. The company bills itself as one of the world’s largest asset managers with $ 3.2 trillion in invested assets and access to more than half of the world’s billionaires.
Sir. Hamers joined UBS in 2020 from ING Groep NV, a pioneer in growth through online banking.
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Sir. Hamers has compared UBS ‘ambitions with Netflix’s and Spotify’s ambitions to engage users and provide them with relevant content. An engine in UBS’s asset management business is an investment manager who delivers streams of investment ideas to clients.
Mr. Naratil said UBS now has a chance to learn from what has worked for Wealthfront, both in terms of reaching audiences and developing user-friendly applications. Wealthfront users can access its services through an app or online. It helps clients build automated portfolios and helps them plan life events, such as sending a child to college. It uses algorithms to advise clients on tax loss collection and direct indexing, among other investment strategies.
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