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Robo-adviser Wealthfront adds home planning service

  • Wealthfront added a home planning service to its financial planning tool Path
  • The move helps Wealthfront become a portal for multiple financial transactions beyond investing
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Robo-adviser Wealthfront adds home planning service

The race to build the fullest suite of financial services just got a little more interesting.

Wealthfront, which raised $75 million earlier this month, expanded its offerings Monday to include a home purchase planning service.

“A lot of our customers are using spreadsheets and online calculators, and that doesn’t tell you how that impacts your goals,” said Kate Wauck, a spokeswoman for Wealthfront. “We’re taking third-party public data that exists, using the knowledge to combine it into algorithms and apply it to our clients’ individual balance sheets to give them personalized advice.”

The service is designed to give Wealthfront customers realistic estimates of how much a buying a home would cost. Based on what it knows about the customer’s financial life, it offers a “total home affordability number,” which accounts for how much a mortgage and associated fees would cost. In addition to what a customer can comfortably spend on a home, it also provides “stretch” or “unaffordable” numbers. That’s a shift from the old guard of finance, which tends to be less transparent about the total cost of financial products to customers — a point that’s highly criticized, both subtly and explicitly, by newer financial services providers.

The home planning service is Wealthfront’s third major addition to its Path platform in a year. Using APIs, Path connects to services like Redfin and Zillow to apply things like home pricing data to each client’s balance sheet, showing them how much they can afford and what mortgage they would qualify for. It also serves as a financial planning tool for customers, Wauck added; it serves customers content on how to save, the impact home purchases have on retirement and what to do with home equity upon retirement.

Wealthfront doesn’t expect to profit from the service itself, but it’s one stop along a line of possible new product iterations that could generate new revenue streams for Wealthfront — which also includes mortgage loans, either from the company or through a partner, according to Wauck.

“Real estate has always been a focus for Wealthfront, simply because of where their customer base is located,” said Davis Janowski, senior analyst at Forrester Research. “They would see it as more of a problem to solve for specific customers rather than something to add that their competitors aren’t doing, and partnerships with Redfin make it easier.”

Last year, Wealthfront made credit lines available to customers with at least $100,000 invested, and earlier launched the financial planning tool Path, whose service offerings grew to include college savings. The new service is another reason for its customers to look to Wealthfront as a one-stop shop for their financial needs, a move consistent with other financial startups like SoFi and BankMobile that are evolving into portals through which customers can carry out a variety of financial tasks beyond a core product offering — with or without a banking license.

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