Wealthfront (WLTH): The Self-Driving Bank
1. Executive Summary
Wealthfront is the premier independent robo-advisor, managing ~$55B+ in assets. It wins by targeting the "HENRY" (High Earner, Not Rich Yet) millennial demographic with automation, tax-efficiency, and industry-leading APY on cash. It is the closest thing to a "Self-Driving Bank" in existence.
Key Thesis Points
- Cash as Acquisition: The Cash Account (5.00% APY, FDIC insured) has become the ultimate customer acquisition tool, with nearly zero CAC compared to traditional banking.
- Path to Profitability: Unlike many fintechs, Wealthfront runs lean and is highly profitable, generating revenue from advisory fees (0.25%) and net interest margin.
- Product Expansion: Moving into lending (Portfolio Line of Credit) and customized indexing (Direct Indexing) increases wallet share.
2. Business Overview
- Investing: Automated portfolios of ETFs. Tax-Loss harvesting is the killer feature, often paying for the fee itself.
- Banking: High-yield checking.
- Borrowing: Securities-backed lines of credit.
3. Financial Analysis
(Private Company - Estimated)
- AUM Growth: Consistently growing at 20-30% annually, accelerated by the high interest rate environment (cash inflows).
- Unit Economics: Very high LTV due to "set and forget" nature of passive investing. Churn is minimal during bull markets.