The US-based digital wealth manager is enabling users to customize their portfolios from a selection of exchange-traded funds (ETFs) and a wider array of socially responsible investing options, per Insider. Wealthfront will also allow users to invest in cryptos starting later in 2021. It is not yet clear whether this will take the form of direct investing options or ETFs—the first crypto ETF is expected to be regulated this year—but there will likely be an investment cap to protect users against volatility.
In an increasingly crowded US robo-advisory market, these new offerings should help Wealthfront stand out and grow its assets under management.
- The new portfolio customization capabilities will broaden the appeal of Wealthfront’s platform. This taps into surging interest in self-directed investing and the rapid growth of “do-it-yourself” investing platforms like Robinhood, which added 3 million new users in 2020 to reach over 13 million in total. It also marks a slight pivot from the limited portfolio customization that typifies robo-advisors and will allow Wealthfront to gain an edge on its competitors, such as Betterment, which is also exploring more tailored offerings.
- Supporting crypto options ahead of its competitors will also differentiate Wealthfront’s offering and fuel customer growth. Fintechs that add crypto products can harness swelling interest in crypto investing and profit from vast customer acquisition opportunities: Robinhood Crypto added 6 million customers in the first two months of 2021, for example. Wealthfront is following the lead of US-based MoneyLion, but its major competitors Betterment and M1 Finance have yet to jump on the bandwagon. That could enable Wealthfront to benefit from an early mover advantage and scoop up customers for the time being.