The trend toward offering more holistic solutions continues to accelerate among leading wealth managers. Two recent developments that add traditional banking services to wealth offerings are worthy of mention:
○ The addition last month of the Cash Account to Wealthfront’s investment offering
○ The announcement last week by Carson Group of its partnership with fintech payments firm, Galileo, to offer Money+, a bank-like checking and savings accounts in the third quarter
For both firms, accounts are FDIC insured, offer high interest rates, charge no fees and have low minimums. Wealthfront’s Cash Account, however, is online only. It does not include an ATM card or a checking account version, although Wealthfront promises new features to be added “over time.” For now, it is meant as a high yield cash savings tool more in line with traditional sweep accounts. The planned Carson Group products, in contrast, are designed to replace clients’ need for a bank relationship. They include debit cards, ATM access, online bill pay, and checking features and are intended for everyday transacting.
Regardless of their differences, both developments have been facilitated by technological advances in payments processing and in the familiarity with, and acceptance by, the market of online banks. Both also represent moves by wealth/investment managers to keep more client money in-house and under control and to address the competitive advantage of large brokerages with built in bank affiliations.