Millennials have been on the receiving end of many a cultural lashing. Their penchant for avocado toast, their leaning into the gig economy, their inability to save for a home—all of this has gone a long way in furthering the conversation about an entire generation’s depleting savings. And as the tech industry works to address the developing needs of a new generation, millennials are, unsurprisingly, in their crosshairs. Their radically altered approach to investing has created a new demand for software that serves as a tool.
Wealthfront, a California-based software company, has been building a platform over the last decade which is dedicated specifically to this next generation and has followed the millennial credo: cut out the middleman, and let the machines do the talking. Wealthfront leans more heavily on algorithms of instead advisors, prioritizing efficiency over everything else.
The merging of the tech sector and finances are far from a revelation. The stock exchange, for example, can oftentimes look more like a spaceship. But the convenience of technology is a distinctly millennial demand, and ideal for fusing with financial planning, asset management and loan services. Wealthfront has already raised $130 million in investment capital from groups like Tiger Global, Index Ventures, Greylock Partners, and more. The company is aiming for $75 million in an effort to further expand in an effort to become “the leading automated financial advisor for people under 40.”
Money through a millennial lens
Wealthfront is, in many ways, aiming to combat the misconceptions of an automated digital advisory by focusing on a sophisticated platform that is, in its current iteration, managing over $9 billion in assets. More than anything else, the company may prove to be an innovator in identifying not just what customers want, but also what they don’t want. The cliché about the millennial generation is that they are simultaneously more connected than ever—more accessible, more immediate—yet less willing to be inconvenienced. The definition of inconvenience has become broader and more loosely applicable, as phone calls and face-to-face work seem to corroborate. But financial advising often requires a bit of both; Wealthfront aims to be the first in line to make good on the millennial need for efficiency without the added “burden” of working with others.
The company also offers lower fees in an effort to incentivize curious new customers into giving Wealthfront a shot. Companies like Monzo have made a name for themselves not only by disrupting archaic banking methods but also by appealing to the greater instincts of a new generation of customer. Monzo updates your balance instantly, sends notifications, handles the complications of foreign transactions, and much more.
Finding new investors
In addressing the second branch of financial needs, Wealthfront may pave the way for more companies to speak directly to millennial consumers, and acknowledge that the shifting finances of millennials might be the first step. Only one in three millennials are buying stocks, and while many frame the behavior as indicative of shifting youthful priorities, it also reflects their financial status. A 2017 study by the Young Invincibles found that young adult workers today earn half as much as baby boomers when accounting for inflation. Wealthfront offers a free service that allows people to invest up to $10,000 free of charge, charging only a quarter of a percent in fees after that.
Other companies like Betterment are also beginning to offer automated investing, and even industry dinosaurs like Morgan Stanley are allegedly in the beginning stages of a platform developing a platform. The gap is large; millennials may be poorer than their parents, but a small percentage of them are also becoming increasingly more wealthy largely, through the same technological inventions that make companies like Wealthfront possible. Walking that tightrope is difficult, but as companies begin to target millennials with more precision, perhaps it will force a change in the industry itself, and force financial companies to put their money where their mouth is.