Wealthfront’s banking roadmap is ‘self-driving money,’ CEO says

SAN FRANCISCO — As a number of fintechs move into banking services, Wealthfront CEO Andy Rachleff was asked what his digital investing firm could do that traditional banks can’t.

“First and foremost, we can be fairer to our customers,” Rachleff said in an interview with American Banker Editor at Large Penny Crosman at SourceMedia's In|Vest West conference. “Everyone hates their cable guy and everyone hates their banks.”

Days after the Palo Alto, California-based firm said it would expand from its base in robo advice into mortgages, Rachleff laid out an ambitious roadmap he describes as “self-driving money.” Wealthfront has $22 billion in its client savings and investment accounts, including more than $13 billion in assets under management.

Like its competitors from various sectors in wealth management such as Betterment, Personal Capital and Carson Wealth, Wealthfront began offering high-interest cash accounts earlier this year. Rachleff described the array of banking services the firm expects to roll out in 2020.

By the end of the first quarter, Wealthfront aims to launch a debit card, automated bill pay and direct deposit. After the second quarter, the company anticipates it will have other automated features ready like rerouting of leftover money into clients’ investment portfolios.

“In order to figure out what you spend and save every month, that's machine deep learning. And so we use that to figure out what you spend. And then we use optimization techniques to make sure you have the right amount,” Rachleff said.

“With what we're doing, you no longer need a checking and a savings account. You have just one account,” he added. “There's no reason for two accounts — other than regulatory restrictions.”

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Wealthfront is working with an online banking company called Green Dot to enable it to provide most services. Crosman pointed out that the firm faces competition from multiple sectors — from other fintechs or incumbent wealth managers and large banks.

Rachleff acknowledged as much. He also admitted that, in his prior career as a venture capitalist, he served on a board that “stupidly” turned down Netflix CEO Reed Hastings three times when he approached them with the idea for the streaming giant.

Calling Hastings “the best CEO I’ve ever encountered,” Rachleff says he hears his voice in the back of his mind all the time while leading Wealthfront.

“One of the things that I learned from Reed is you ignore your competition, because following your competition can't cause you to lead,” Rachleff said. “In technology, you can't come from behind by out-executing the leader.”