UBS is set to acquire Millennial and Gen Z-focused wealth management platform Wealthfront in an all-cash deal worth $1.4 billion.
Wealthfront will become a wholly owned subsidiary of UBS
The platform will serve as the foundation of the bank’s digital-first wealth management offering. UBS says the move underscores its US expansion ambitions as it looks to grow its customer base by catering to “the next generation of investors”.
Wealthfront will become a wholly owned subsidiary of UBS and will operate as a business within UBS Global Wealth Management Americas. The transaction is expected to close in the second half of 2022.
The acquisition forms part of UBS CEO Ralph Hamers’ three-year digital transformation strategy, which saw around 3,000 jobs on the chopping block in May last year as part of a $1 billion series of cost-saving measures.
The cuts zeroed in on jobs expected to become redundant as a result of the multinational’s digitalisation strategy, Bloomberg reported at the time. Managing directors, junior bankers and wealth management execs were all facing redundancy, with most of those cut responsible for wealth management clients.
UBS also shuttered its US private banking arm in January last year, again as part of a wider overhaul of its wealth management business. Bankers were offered the chance to migrate into wealth management roles.
Wealthfront’s automated investing and personalised financial planning platform is aimed squarely at Millennial and Gen Z investors — a “high-growth segment” of US investors, it says. It has more than $27 billion in assets under management and more than 470,000 US users.
It provides access to financial planning, banking services and investment management solutions.
Hamers says the acquisition complements the multinational’s core business in the US, providing wealth management expertise to investors.
“Adding Wealthfront’s capabilities and client base to our global investment ecosystem will significantly boost our ability to grow our business in the US,” Hamers adds.
He says the deal will also “enhance our long-term ambition to deliver a scalable, digital-led wealth management solution to affluent investors”.
Wealthfront will expand UBS’s existing offering through its Wealth Advice Center, which focuses on core affluent clients, and its Workplace Wealth Solutions business, which works with employees of corporate clients. Wealthfront users will also have access to UBS’ wealth management expertise, products and services.
Wealthfront CEO David Fortunato says the new partnership will allow his firm to offer “additional value-added services and best in class research” to its customer base of Millennial and Gen Z investors.
UBS has attempted to launch a digital-first wealth management platform in the past. In 2017, its wealth management arm launched robo-advisor SmartWealth, the first of its kind in the UK.
That endeavour came to an end in August 2018, with UBS determining after a “thorough assessment the near-term potential was limited”. The intellectual property relating to SmartWealth was sold to San-Francisco-based SigFig.
