UBS has agreed to acquire California-headquartered digital-only wealth platform Wealthfront, amidst broader plans to tap into the affluent segment worldwide.

UBS has signed an agreement to acquire Wealthfront in an all-cash transaction valued at $1.4 billion, according to a statement on Monday. The deal will allow UBS to accelerate its growth plans in the U.S., increase reach into the affluent segment as well as expand distribution and other capabilities. 

«Wealthfront complements our core business in the U.S. providing wealth management to high net worth and ultra-high net worth investors through trusted relationships with financial advisors, and will enhance our long-term ambition to deliver a scalable, digital-led wealth management solution to affluent investors,» said UBS group chief executive Ralph Hamers.

After the transaction, which is expected to complete in the second half of 2022, Wealthfront will become a wholly-owned subsidiary of UBS and operate as a business within UBS Global Wealth Management Americas.

Wealthfront Business

Based in Palo Alto, California, Wealthfront is a digital-only platform providing access to financial planning capabilities, banking services and investment management solutions with a focus on affluent millennial and ‘Gen Z’ investors. 

Currently, Wealthfront has over $27 billion of assets under management with more than 470,000 clients in the U.S. Following integration, Wealthfront clients will also benefit from access to UBS’ wealth management capabilities including content from its chief investment office, its global footprint alongside its shelf of products and services.  

Global Affluent Expansion

The newly signed agreement follows recent comments by Hamers about UBS’ plans to target mass affluent customers worldwide via an offering that combines digital capabilities and access to human advice.

«It is clear that we should cater for the entrepreneurs, but we should also cater for that segment of the market that may not be completely digitally engaged, but also doesn’t want to have 100 percent client-advisor coverage, but something in the middle,» he said during the bank’s third-quarter results last year, calling the segment a «sweet spot».

According to Hamers, the plan is to first make a push in the U.S. before rolling out an offering to target affluent clients globally.