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Cresto Narang Wealthfront.pdf


Anteprima del file PDF cresto-narang-wealthfront.pdf

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1 Introduction
The aim of this monography is to analyse Wealthfront strategy and its competitive
advantage in the Wealth Management industry.

1.1 Wealthfront History

Andy Rachleff and Dan Carroll founded Wealthfront in 2008 as kaChing, a mutual-fund
analysis company, before pivoting into wealth management.
Its Chief Investment Officer is Burton Malkiel, the worldwide famous theoriser of the
“Random Walk” theory for future asset prices. The management team is made by
experienced professionals from both the technology and investment industry.
Since its debut in the industry, Wealthfront has enjoyed a sustained strong growth,
synthesised by the chart below:

Million $ Under Management

Wealthfront Growth
3000

CAGR= 714 %

2500
2000

Wealthfront

1500
1000
500
0

2012

2013

2014

2015

https://blog.wealthfront.com
1.2 Mission and Value Proposition
Wealthfront’s mission is to propose a world-class investment service to anyone in the world.
The value proposition is to provide high-level investment strategies with the lowest
minimum account and charging the lowest fees in the industry, by leveraging on process
automation. In doing so, the firm is devoted to provide full transparency and accessibility,
along with an outstanding degree of customisation to customers’ needs.
The value proposition is extremely relevant with respect to passive portfolio management,
the one Wealthfront provides. Passive management is a strategy who aims at replicating
indexes’ (ETFs) and markets’ performances, based on the underlying assumption of market
efficiency, i.e. it is not possible to outperform the market. Under this type of investment
management, human intellect is much less relevant than in active management (which aims

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