UBS, Wealthfront cancels $1.4 billion deal
When the deal was announced on January 26, Wealthfront has approximately $27 billion in assets under management and more than 470,000 customers in the United States
In his analysis earlier this year, Nexus Strategist President and CEO Tim Welsh concluded that the average asset level per client account was about $57,000. He explained that “Wealthfront’s pricing schedule of 25 basis points (the first $10,000 is ‘free’) means that UBS only pays $3,000 for $117 in annual recurring revenue (ARR), which is problematic when looking at it on an ROI basis” column ThinkAdvisor.
Late Friday, Wealthfront CEO David Fortunato said in a statement: “Today we announced that with UBS we have decided to terminate our pending acquisition and will instead remain an independent company.”
“I’m incredibly excited about Wealthfront’s path forward as an independent company, and I’m proud to share that with the hard work of our team and the trust you have placed in us, we’ll be cash flow positive and EBITDA in the next few months,” Fortunato explained.
The news of the canceled Wealthfront deal comes four years after UBS shut down SmartWealth, a digital wealth management platform. In August 2018, UBS sold the technology to bot advisor SigFig, which the Swiss-based bank had invested in for the past two years.
In late July, UBS Group AG missed analyst estimates and reported a net profit of $2.108 billion in the second quarter, up from about $2 billion it made in the same period last year. Revenue was $8.92 billion compared to $8.90 billion in the previous year.
“The second quarter was one of the most challenging periods for investors in the past 10 years,” CEO Ralph Hammers said in a statement at the time.