The Wealth Management Digest

Featuring Zoe CEO & Founder, Andres Garcia-Amaya, CFA

November 22, 2023 

Watch Time: 2.5 minutes

Transcript: Welcome to this week’s Wealth Management Digest. We’ll cover two topics today. The first is Wealthfront hits $50 billion in AUM. And then the second one is that LPL launches their W2 model for high-net-worth advisors.

All right, so let’s start with Wealthfront. Wealthfront announced earlier this week they hit $50 billion in inclined assets. They also mentioned that they now have EBITDA margins above 40%, which is pretty remarkable. So they’re a profitable company that is also growing at over 100% year-over-year. It is worth noting that a lot of their growth has come in through their cash products. And Rex Salisbury did some interesting analysis showing that based on his estimates, the revenue for Wealthfront is around $200 million, with about $90 million in EBITDA growing at 140% year-over-year. I think this is really remarkable. Just a couple of years ago, everyone said, “Wealthfront’s dead, robo advisors were stupid, it’s an awful idea.” Well, it turns out that if you let these things compound for a while, now they have hundreds of thousands of clients. Even though the accounts are small, they’ve been able to layer in new products and made their company profitable. So yeah, that’s something to keep an eye on as they continue to develop new products. We have to remember this is how Schwab started as like a “silly idea discount broker.” And over time, some of these silly ideas end up becoming 100 billion dollar businesses.

The other news was that LPL launched W2 model for high-net-worth advisors. LPL Private Wealth Management is an employee model, and it’s aimed to provide the resources and structure that a wirehouse would provide, with a better payout than a wirehouse would provide. So we will see what this means for kind of the dynamics between the independent broker-dealers and the wirehouses. But LPL being the largest independent broker-dealer, that’s a pretty big deal that they launched this.That is it for this week. Stay tuned for next week, and have a great Thanksgiving.

– Andres

Disclosure: This material provided by Zoe Financial is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Nothing in these materials is intended to serve as personalized tax and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Zoe Financial is not an accounting firm- clients and prospective clients should consult with their tax professional regarding their specific tax situation. Opinions expressed by Zoe Financial are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Zoe Financial, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. 

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