‘If we can’t automate it, we don’t build it’: Wealthfront’s Andy Rachleff on ‘self-driving money’

Andy Rachleff, co-founder and CEO of Wealthfront

In 2019, a chorus of digital investment platforms branched out into checking and savings accounts. Throughout the year, Wealthfront continued on its trajectory of becoming a central hub for all of its customers’ financial needs.

Co-founder and CEO Andy Rachleff said the company is on pace to automate all of its customers’ financial needs, a vision he calls “self-driving money.”

Since its establishment in 2008, Wealthfront has become one of the largest independent digital investment platforms. According to the company, 90% of its clients are under 40 years of age. It more than doubled its assets in 2019, with more than $22 billion in assets under management.

Wealthfront’s offerings include investments, savings and digital lending products. It’s working with Green Dot to support debit card and direct deposit capabilities. The company has also signaled its interest in offering mortgages in the future.

Bank Innovation spoke with Rachleff on the company’s priorities for 2020. The following has been edited for length and clarity.

Wealthfront is aiming to become a full-service financial platform, moving beyond investing and into banking products. What was a major milestone in 2019?
By far the highlight for Wealthfront was the launch of our FDIC insured high-interest cash account. We’d heard from our clients that they wanted us to build this product, but we had no idea how wildly successful it would be. The cash account introduced an entirely new segment of our target audience to Wealthfront and propelled our growth.

Where is your game plan taking you next year?
About half of our clients have told us that they want to replace their bank with Wealthfront and make us their main financial relationship. So next year, you can expect to see us continue to launch products similar to what you get from your bank — a debit card, direct deposit and automatic bill pay. These features will be built on top of our high-interest cash account so you can earn more [returns] on all of your money.

Wealthfront has always supported automation instead of humans. Has that changed at all?
We are all in on automation and delivering a completely digital service because that is what our clients want. They quite literally tell us, “I pay you not to talk to me.” We’ve consistently respected that preference. If we can’t automate it, we don’t build it.

The audience we’re focused on is a subgroup of millennials who are achieving great success in their careers and amassing meaningful savings. We estimate there are about 20 million people in this group in the U.S. alone. They don’t want to go to a bank branch; they want to take out their phone and manage their money in the same way they order an Uber.

See also: Inside Wealthfront’s lifelong customer loyalty strategy

This past year, Wealthfront acquired the technology and team from financial platform Grove. How will this contribute to Wealthfront’s vision?
We were incredibly excited to add Grove’s co-founder and CEO Chris Hutchins to lead our advice automation team. Its work will be crucial to deliver our ultimate vision of what we refer to as “self-driving money.”

We are building a service where our clients can direct deposit their paychecks with us and we can take care of the rest. We’ll automatically pay your bills, make sure you have enough in your emergency fund and invest the rest — true financial nirvana.

Is Wealthfront a challenger bank?
We are building a next-generation banking service that will be the central financial hub for our clients. The number one difference between what we’re building compared to what challenger banks like Chime, for example, are building is the audience we’re focused on.

How is your audience different from the so-called challenger banks?
Chime has done a wonderful job solving the pain points of folks living paycheck to paycheck with features like getting your paycheck two days early.

But for our audience of young professionals, getting paid two days early doesn’t solve a problem they have. They are concerned with optimizing their savings through products like a high-interest savings account and being able to manage multiple accounts through one service with seamless money movement. So our service will inherently look different because of our focus on a different audience.

A number of robo investment platforms are getting into cryptocurrencies. Is this something Wealthfront is considering?
No. We believe that crypto is a speculation not an investment, and we only apply best investment practices that are academically proven.

Wealthfront’s marketing strategy has been focused on word-of-mouth referrals instead of paid digital advertising. Is this how the company will continue to spread its message?
We’ve always been a product company first and foremost, which means we grow by launching delightful, value-added products that inspire people to tell their friends about them. This is how all great product companies have grown. You never saw an ad from Netflix or Amazon — you heard about it from a friend. This is a core piece of our strategy and will continue to be.

Bank Innovation Ignite, which will take place on March 2-3 in Seattle, is a must-attend industry event for professionals overseeing financial technologies, product experiences and services. This is an exclusive, invitation-only event for executives eager to learn about the latest innovations. Request your invitation.