Robo advice firm launches “first foray into personal banking” with lending service
Could the new front in the much-touted trend of fintech synergies be between lenders and robo advisors?
California-based Robo advisor Wealthfront has launched a lending service for its investors.
The firm, along with New York-based Betterment, is one of the best known online wealth managers targeting the disruptive, low cost advice market.
Now its investors, or at least those with $100k in their account, can borrow against their portfolio thanks to the new Portfolio Line of Credit Service.
The firm says this could include extra money for home down payments, unexpected tax bills, home renovation projects, and investors/borrowers can expect to receive their loan within one working day.
Loans can be up to 30 per cent of the value of portfolios and investors do not need to apply or meet any other criteria beyond the $100k threshold.
Wealthfront’s co-founder Andy Rachleff on the company’s blog says “traditional forms of credit come with long lead times and takes weeks “”and comes with a ton of paperwork.”
“…And there’s no guarantee you’ll actually get the loan. Alternatively, you can take money out of your investment account, but you may have to pay taxes on the withdrawal (not to mention shrinking your nest egg!)."
“We live in a world of “instant delivery,” from taxis to groceries to handymen. So why not add lines of credit to the mix? At Wealthfront we want our clients to be able to borrow what they need, when they need it, directly from their smartphones.”