UBS says it’s expanding its wealth management presence in the U.S. and broadening its reach among younger affluent clients, with the planned acquisition of robo-advice provider Wealthfront.

UBS has signed an agreement to buy Wealthfront in an all-cash deal valued at $1.4 billion, with the deal expected to close in the second half of 2022, according to the Swiss-based bank.

After the deal is completed, Wealthfront will become a wholly owned UBS subsidiary and operate within UBS Global Wealth Management Americas, UBS says.

Wealthfront manages more than $27 billion for over 470,000 clients and focuses primarily on Millennial and Generation Z investors — a demographic “with significant domestic growth potential,” representing at least 130 million investors just in the U.S., according to UBS.

After the deal’s completion, Wealthfront clients will have access to UBS chief investment office research and other UBS products and services, according to the company.

Wealthfront’s offerings, in turn, will serve as “the foundation” of UBS’ digital services, with access to human advisors, the company says. The acquisition will broaden UBS’s services through its Wealth Advice Center, which caters to core affluent clients, and the Workplace Wealth Solutions unit, which advises employees of corporate clients on equity plan participation, retirement programs and more, according to UBS.

“Adding Wealthfront’s capabilities and client base to our global investment ecosystem will significantly boost our ability to grow our business in the US,” Ralph Hamers, group chief executive officer of UBS, said in a statement. “Wealthfront complements our core business in the US providing wealth management to high net worth and ultra high net worth investors through trusted relationships with financial advisors, and will enhance our long-term ambition to deliver a scalable, digital-led wealth management solution to affluent investors.”

Founded in 2008, Palo Alto, California-based Wealthfront, together with Betterment, revolutionized the wealth management industry as the first companies to roll out digital advice platforms.

Wealthfront has been trying to stay cutting-edge: to make sure it’s reaching its target audiences, Wealthfront has partnered with at least 15 influencers who dole out financial advice on social media platforms.

David Fortunato, Wealthfront’s CEO, believes the Swiss-based bank that traditionally catered to the high-net-worth market is the correct partner to reach those audiences even faster.

“We couldn’t be more excited to have found a strategic partner who has the same view on the power of technology as we do,” Fortunato said in a statement. “We look forward to providing our service to even more millennial and Gen Z investors.”

In a blog post announcing the deal on Wealthfront’s website, Fortunato also called Hamers “a digital native” who was clear since joining UBS in 2020 that he would digitize the firm’s offerings.

Fortunato added that Wealthfront has been in talks with UBS since 2020, when it began talking about a banking partnership.

UBS, meanwhile, has been making a steady push to serve more types of clients even before the Wealthfront acquisition.

In October, Hamers announced that the company was developing a digital advice service of its own for affluent clients in the U.S. The service was expected to roll out toward the end of 2022 and be focused on around two million plan participants UBS serves through its U.S. corporate stock plan and retirement business.

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