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Wealthfront’s New Autopilot Service More Competitive With Banks Than Advisors

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Two months after Wealthfront introduced debit card and checking services, the independent digital advisor is offering automatic transfers of clients’ funds from their Wealthfront savings or checking accounts into their investment accounts.

Autopilot, as the new service is called, acts as a “free financial assistant,” automating clients’ financial tasks to ensure that their savings are immediately deposited into the Wealthfront account that best suits their financial goals, said Chris Hutchins, the firm’s head of autonomous financial planning, in a statement.

Autopilot is the first tangible service of the firm’s Self-Driving Money platform, which aims to automate the distribution of money from a cash account into investments, savings and bill and loan payments, said a spokeswoman.

(Related: Why Wealthfront’s Latest Deal Won’t Impact Advisors)

Here’s how it works: Clients tell Autopilot how much cash to keep in a checking or cash account and the service will automatically save or invest the rest.

Once the balance exceeds at least $100 above that ceiling, Autopilot will schedule the excess cash to be moved into the Wealthfront savings or investment account,  and clients will have the ability to cancel the transfer 24 hours before its scheduled as well as the ability to cancel the Autopilot service at any time. 

Wealthfront plans to add other destinations for the excess cash in the near future, including transfers to 529 plan accounts and IRAs, and to instantly route paycheck deposits, already available two days early, to savings, according to its spokeswoman.

Industry Perspectives

Autopilot’s features are nothing new. “Cash optimization platforms like MaxMyInterest and StoneCastle have been around for quite some time, so advisors have some pretty sophisticated solutions available for their clients,” says Tim Welsh, president of Nexus Strategy, a consulting firm.

Also, ”anyone can set up an automated investing plan with any bank or broker, so there really is nothing to get excited about,” Welsh explained. 

Within the robo-advisory space, Betterment offers a two-way automatic sweep of extra cash from a linked checking account to a high-yield cash account — and back when clients need those funds, but not a sweep into an investment account, says David Goldstone, manager of research and analytics for Backend Benchmarking, which publishes The Robo Report.

Goldstone doesn’t expect these additional services from digital advisors to represent tough competition for the “higher touch services” of financial planning and estate planning that financial advisors offer. The services compete more closely with banks’ offerings.

Longer term, however, all the additional services that digital advisors offer, including the personal advisors available via Betterment’s premium services, could represent tougher competition for advisors if only because those digital services capture potential advisors’ clients first, before they had enough money to qualify for higher advisors’ minimums, he says.

— Check out Tax-Loss Harvesting During Market Turmoil: Who Did It, Who Didn’t on ThinkAdvisor.