Wealthfront to offer automated financial planning tool for free

LAS VEGAS (Reuters) - Wealthfront, one of the largest digital wealth management startups known as “robo-advisers,” will offer its automated financial planning tool for free by the end of the year as it seeks to grow its customer base, it said on Tuesday.

Individuals in the United States who do not have money managed by Wealthfront will be able to connect their various financial accounts to the company’s Path tool, which will calculate their saving and spending rates and help them create a plan for retirement.

Wealthfront launched Path for clients in early 2017 as competitors started to shift strategy by creating new services that included access to human advisers. Others launched similar automated financial planning tools but offered them only to clients with larger accounts.

Wealthfront, which has over $11 billion in assets under management, said growth picked up following the tool’s launch. It hopes that offering it for free will fuel growth as users decide to have Wealthfront manage their money for a fee, Dan Carroll, co-founder and chief strategy officer, said in an interview.

“We don’t believe that financial advice should be for the ultra wealthy and it shouldn’t be behind the pay wall,” Carroll said. “We were gratified when we looked at the data, that clients that engage with the engine do save more.”

Users can link various non-Wealthfront accounts to the platform, including bank accounts, brokerage accounts and information on the value of their homes. They can play around with the numbers and charts on the mobile app and get real time projections on how much money they will need to save to retire at a certain age.

Robo-advisers automatically create and manage portfolios made up of exchange-traded-funds for customers with as little as a few hundred dollars to invest. This model has driven established players to launch similar services, but some large and smaller firms believe that combining human advice and digital tools could be more successful.

Independent robo-advisers have also been facing concerns about their ability to grow enough to become profitable. This has prompted them to diversify their offerings with new kinds of tools.

(This refiled version of the story fixes quote in paragraph 5, spelling of “advisers” throughout.)

Reporting by Anna Irrera; Editing by David Gregorio and Dan Grebler