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UBS and Wealthfront Announce Termination of Planned $1.4B Merger

admin by admin
September 3, 2022
in Wealth Management


UBS and Wealthfront announced Friday that they’ve mutually agreed to terminate their merger agreement. 

Initially announced in January of 2022, UBS Americas Inc. was to acquire Wealthfront for some $1.4 billion with the intention to expand UBS’s Wealth Advice Center and Workplace Wealth Solutions business. At the time, Wealthfront had almost 500,000 clients and managed nearly $27 billion.

UBS will instead purchase a $69.7 million note convertible into Wealthfront shares. The bank said it remains committed to its growth plans in the US and will continue the build-out of its digital wealth management offering. 

In January, UBS executives said the acquisition was meant to bring more young, wealthy clients to the Swiss-based bank’s U.S. wealth management division.

“Adding Wealthfront’s capabilities and client base to our global investment ecosystem will significantly boost our ability to grow our business in the U.S.,” CEO Ralph Hamers said in the statement announcing the acquisition. It “will enhance our long-term ambition to deliver a scalable, digital-led wealth management solution to affluent investors.”

Wealthfront, one of the original robo-advisors, was founded in 2008. Unlike competitor Betterment, Wealthfront continued to shun the idea of adding or working with human advisors, insisting that an all-digital automated advice and investment platform was the future of the industry.

“The hybrid model hasn’t worked at all,” Wealthfront co-founder Andy Rachleff told attendees of the 2020 CB Insights Future of Fintech event. “We’ve been validated in the approach that we take.”

UBS has some 6,000 financial advisors in the U.S., and in January Hamers said he envisioned Wealthfront as the basis for a digital platform for clients that would also include access to human advisors.

The acquisition news raised eyebrows among some in the wealth management industry not only for the robo’s aversion to human-powered financial advice but also because UBS had already made a significant investment in automated investing platform SigFig, and rolled out a SigFig-designed digital advice platform to U.S. clients in 2018.

It’s unclear what drove the firms to terminate the merger. UBS most recently announced an 11% drop in year-over-year profits in its wealth management business, amid what Hamers called “the most challenging periods for investors in the last 10 years.”

In a blog post addressing the change, Wealthfront CEO David Fortunato said,  “I am incredibly excited about Wealthfront’s path forward as an independent company and am proud to share that thanks to the hard work of our team and the trust you put in us, we will be cash flow positive and EBITDA profitable in the next few months.” 



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