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November 14, 2011

Wealthfront Pivots

Wealthfront (formerly known as Kaching) looks like they have pivoted once again. According to a recent SEC filing and information on their website, they will be dis-continuing their model manager program— the service that allowed clients to invest in third party SMA providers— for consumers, and instead begin to offer asset management based on Modern Portfolio Theory. They will be charging a 0% management fee for assets from $5,000-$25,000 and 0.25% management fee for assets of $25,000 and up. The portfolios will consist of ETFs exclusively. This fee is not wrapped, meaning trading and custody fees still apply. The service will be similar to those offered by Hedgeable’s Free Program and Betterment.

It remains to be seen whether they will continue to offer the backend reporting for RIAs, a service which they hoped could attract high quality money managers and in turn consumers for their marketplace.