Wealthfront Expands Partnership With Green Dot, Increases Annual Percentage Returns

Dive card:

• Automated wealth management fintech Wealthfront expanded its partnership with digital bank and bank-as-a-service provider Green Dot, the companies announced on Monday.
• The two companies first teamed up in 2020 to launch Wealthfront’s cash account, which includes features like early direct deposit and bill pay.
• The partnership expansion comes as Wealthfront recently raised the annual percentage rate (APY) on its cash account from 3.3% to 3.8%, a move the firm says is in line with its efforts to pass a large portion of every rate hike from federal funds to clients.

Diving Insights:

“Today’s investors want smart savings and investment products that help them build wealth in all market conditions, which is why we’re proud to offer the Cash Account to help our customers earn more from their uninvested savings,” Dave Myszewski, Director of Product at Wealthfront said in a statement. “With one of the highest rates on the market plus control features powered by Green Dot, we are able to offer a best-in-class cash account far superior to what a traditional bank can offer, allowing our clients to grow their long-term wealth simple and convenient.”

The average age of a Wealthfront client is 37 and 70% of fintech clients are under 40, according to the company. Fintech said the average Wealthfront cash account has about $30,000.

Wealthfront’s new APY comes as the national average savings rate is 0.19%, according to Bankrate.

Elly Stolnitz, a spokesperson for Wealthfront, said the firm has tried to offer its clients high rates since the account was launched in 2019.

“Other institutions are able to pay a high interest rate like Wealthfronts, they just don’t,” she said.

Wealthfront’s APY increase follows a similar increase from fellow fintech Upgrade, as in October launched a new high-interest savings account offers a 3.5% APY to consumers who maintain a minimum balance of $1,000.

The upgrade and Wealthfront’s move to increase percentage returns on its accounts comes amid huge competition among fintechs in the high-yield savings space.

However, most traditional institutions have not responded with similar increases, Ted Rossman, a senior industry analyst at Bankrate.com told Banking Dive last month.

“They have all the deposits they need,” he said.

Wealthfront goes it alone

Wealthfront’s partnership extension with Green Dot, as well as its latest high-yield push, comes as the fintech moves forward as a standalone company, following the dissolution of a planned $1.4 billion acquisition by UBS, which was announced in January.

The merger agreement was discontinued in Septemberand the Swiss banking giant instead provided Wealthfront with $69.7 million in funding.

The companies “continue to explore ways to work together in a partnership,” the robo-advisor’s CEO, David Fortunato, wrote in a blog posts in September.

A Wealthfront spokesperson declined to share additional details related to the closed deal, but said the company is excited about its path forward as an independent company and is “focused on building an enduring company that positively impacts the lives of our clients for decades to come.” “