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Wealthfront acquires financial planning fintech Grove

Wealthfront is acquiring Grove, a robo advisor focused on providing financial plans to clients for a flat fee. Terms of the deal were not disclosed.

Andy Rachleff, CEO of Wealthfront, said the deal will accelerate the development of Self-Driving Money, the firm’s technology-laden vision for wealth management’s future in which client paychecks will be directly deposited onto the platform, bills automatically paid, emergency funds topped off, and investment accounts properly funded.

"This is an incredible time for Wealthfront," Rachleff said in a statement, adding the firm nearly doubled total client assets this year.

Wealthfront manages approximately $11.5 billion in assets for 220,000 clients, according to SEC filings from August.

The Redwood City, California-based digital firm previously teamed up with the banking and financial services company Green Dot to offer clients a Visa debit card and the ability to direct deposit paychecks from employers. Wealthfront launched a cash account in February that attracted $1 billion in deposits in just a few months, according to the firm.

Wealthfront CEO Andy Rachleff revealed how his firm plans to evolve at CB Insights' Future of Fintech conference in New York City.

The company declined to answer follow up questions about the Grove deal.

“It’s not just Wealthfront,” says Will Trout, a senior analyst at Celent. “There’s also a broader convergence of banking, credit and investments functions taking place in the industry as well. The idea is to create a one-stop shop for financial services, whereby the client’s money is always at work.”

The deal marks the third independent robo advisor to change hands or close shop in recent weeks and a turbulent time for digital advice startups. In August, United Income was purchased by Capital One for an undisclosed fee and Swell Investing, a subsidiary of Pacific Life Insurance, closed its doors for good in July.

“The industry is falling over itself to attract new money, especially from Millennials,” Trout says. “While consolidation is the word of the day, it’s much, much bigger than the robos.”

As of April, Grove listed $4 million in assets under management and 17 employees in SEC filings.

Founded in 2015 by Chris Hutchins and Chris Doyle, the San Francisco-based startup provided access to CFPs and financial plans for clients who lack the requisite assets for a traditional financial advisor.

"We've always appreciated the role technology and automation can play in scaling quality financial advice,” said Hutchins in a statement.

Grove raised a total of $10 million from investors, including First Round Capital, Upside Partnership, Fuel Capital, Defy Ventures and Tusk Ventures, according to a release.

However, not all of Grove’s clients will be making the transition to Wealthfront.

“Grove clients signed up for a hybrid financial planning service and we want to respect that preference,” says a Wealthfront spokeswoman Kate Wauck. “As you know our focus at Wealthfront is delivering financial advice solely through technology and ultimately via Self-Driving Money vs. CFPs.”

Clients that wish to remain under human care have the option of transferring assets to Facet Wealth, a hybrid robo advisor focused on a mass-affluent clientele. Five hundred households are slated to make the move, according to the firm. The Baltimore-based firm will also add CFPs from the Grove team, according to the release.

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