From Eric Savitz at Forbes:
Can the Valley reinvest the money management business?Also at Forbes (definitely not Savitz):
That’s the question WealthFront is trying to answer.
When you get right down to it, WealthFront is taking a pretty basic approach to money management, but applying some interesting Silicon Valley twists. The Palo Alto-based startup is headed by Andy Rachleff, a founder and former partner at Benchmark Capital, who stepped down from the VC firm in 2004 to teach coures in entrepreneurship at Stanford’s Graduate School of Business.
WealthFront was started in 2008, originally with the idea of offering the masses access to equity managers generally not accessible to relatively small-scale investors. The idea was to democratize access to sophisticated financial advice. That approach didn’t quite catch on; in recent months the company has switched directions. The new plan: serve as a Web-enabled money manager for the newly rich with a low-cost approach that invests solely using publicly traded ETFs, or exchange traded funds.
Rachleff says the company’s target is 25-35 year olds who work in the tech business. In an odd twist for a fund management company, WealthFront is using a fremium model. They will manage up to $25,000 of assets for free – no advisory fees at all. And for every new client you refer, they’ll manage another $10K at no cost. After that, fees are just 0.25% of assets – dramatically below what any mainstream financial adviser will charge....MORE
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