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Agricultural Commodities: Rooted in Resilience

It ends with a whimper

The end of the robo-advice movement has not been heralded with a bang. No spectacular blow-up or cataclysmic explosion. No scandal, no outcry, nary a sound. Rather, it goes out with a whimper, in the dead of winter, away from the cameras and the glare of the lights. What once appeared to be a revolution now longer seems important in the slightest.

I’m not terribly surprised. We’ve seen similar ends to investing fads like cannabis, NFTs, defi tokens, DAOs, ESG, nanotechnology, 3D printing, hydrogen energy, etc. All the press releases and audacious predictions come in the beginning. No one makes much of a fuss in the end.

The idea of people replacing their financial advisors with commoditized, automated asset allocation is now, in the year 2025, as dead as a doornail. The consumer understands the difference between asset allocation and a relationship with an advisor. Those with the means to meet minimums and the willingness to pay people for their time and expertise are opting for the best of both worlds - effective technology paired with customized advice and a real-live person to speak candidly with. The mass market with less complex needs can get automated ETF portfolios for free, virtually anywhere. The bank. The brokerage. The gambling app. 7-Eleven. Eight ETFs and an annual rebalance, no big deal. After all the banging of pots and pans a generation ago, the whole thing turned out to have had no discernible impact on the profession. It’s a useful service, but it has become largely commoditized. That’s not a bad thing, for many investors it’s exactly what they need at a certain stage in their lives.

Betterment saw this commoditization coming in the B to C robo space a generation ago and they went and did something about it, transforming into a multifaceted asset manager, advisory firm, 401(k) provider and RIA custodian with some of the best tech in the world. They have surpassed the now passé “robo” label as the service now features some human CFPs and a highly-regarded platform supporting firms like mine with digital onboarding, asset allocation and more. We’re big fans of Betterment and most advisors I talk to who have looked at the platform can see how advanced it is relative to other custodians in the industry.

Betterment’s early rival in robo-advice, Wealthfront, is the other last man standing from the early days and they opted for a different pivot. Rather than adding any human layer to their service, they’ve opted to grow assets via selling cash management products in a time of high interest rates. That time is ending, but we’ll get to that in a moment.

Both companies have made a positive impact on the financial services landscape even though the majority of that positive impact has accrued to others. It happens. Robo-advice was an improvement over the lack of access and limited solutions for millions of Americans that once existed before, but that’s pretty much it. No world-beating market share gains. No sex appeal. No earth-shattering difference versus owning a lifecycle mutual fund. They came, everyone else adapted, the end.

For all the talk of upheaval, there’s not a shred of evidence that any such disruption has taken place. Instead, there’s an industry filled with 300,000 human advisors who haven’t felt a thing. There’s literally an advisor shortage. If the whole robo-advice tent folded up tomorrow and left town, there’s not a single advisor who would even notice the difference. “Did you just hear something? No, me neither. Okay, back to work.”

Younger, faster moving financial advisory firms have adopted the automated asset allocation tools and digital onboarding tactics of the robos into their practices (as we have). And everyone else just sort of ignored it. And it’s fine. Better than fine. The human advisor has never been busier, more profitable or as highly engaged in the lives of her clients as she is today. It’s practically a goddamn renaissance.

Renaissance

Since 2012, the RIA channel has outgrown every other segment of the financial services business. As of end of 2024, the full U.S. RIA universe oversaw roughly $144.9 trillion in total client assets. RIA market share is up from a mid-teens percentage of the advice business in the early 2010’s to roughly 27% today (Cerulli Associates). At the current growth rate, we’ll be over a third of all industry assets soon. Over at the wirehouses, the growth rate is slower but equally impressive - the big four comprised of Morgan Stanley Wealth, Merrill, Wells Fargo Advisors and UBS Wealth Management Americas are now overseeing $20 trillion in assets under advisory. No competing robo service has made even the slightest dent in anything the human advisor is currently doing.

This is not how the experts thought things would be playing out during the dawn of the robo-advice era. We were told the human advisor was obsolete. That people only valued speed, convenience, lower costs and the ability to hide behind a screen rather than have a conversation. I never believed it, but I sat on lots of industry panels where people did. Those people are long gone, pushed out by their own investors or involuntarily retired by frustrated boards of directors. The promised “new paradigm” never materialized. The much prophesied disruption never occurred. You can see these people today shuffling around the exhibit halls of financial advisor conferences, selling AI software solutions or launching “agentic” this, that or the other thing. It’s sort of funny.

Between 2012 and 2015, some extremely aggressive forecasts from major industry researchers became accepted as obvious, especially among headline-writing editors in search of something scary enough to generate clicks. In 2015, A.T. Kearney projected that U.S. robo-advisors would grow from roughly $300 billion to about $2.2 trillion in AUM by 2020, implying close to 70% annual growth. Around the same time, Business Insider Intelligence circulated one of the most widely repeated estimates of the era, arguing that robo-advisors could manage as much as $8 trillion globally by 2020. In 2014, MyPrivateBanking forecast that global robo platforms would reach roughly $255 billion in assets within five years, explicitly warning that traditional wealth managers faced “severe disruption.” Collectively, these predictions shared the same assumption - that low-cost, automated portfolio construction would scale like software, rapidly displacing human advisors—particularly in the mass-affluent market—and turning wealth management into a high-volume, tech-driven business measured in pennies, not in relationships.

Oops.

That’s not what happened. Robo-advice became widely acknowledged as being an efficient and specific tool (automated asset allocation) rather than a complete advice solution. It worked great for people who could not or did not want to find a human to work with, but that market opportunity was never interesting to anyone talented or credentialed. A trained chef does not walk out of the kitchen and wander into the street, in search of a person who may or may not be hungry. Robo-advice was great for a brokerage customer or a potential annuity buyer and probably someone who was going to get abused anyway. Having a cheap robo platform as an alternative for these people worked out great. The market had a hole in it and the robo-advice movement filled that hole. Schwab, Merrill Edge and others were able to adopt this technology to replace a lot of bodies answering the phones in their call centers. Win-win.

And sure, some very wealthy technology industry people also parked a bunch of money on these platforms, mostly because Adam Nash (one of us! one of us!) ran around Silicon Valley with a PowerPoint explaining fees and compounding to all his tech industry friends. It was like they had discovered fire. Lots of oohs and ahs at a concept that Vanguard had been extolling since the 1970’s. Some of them allocated to robo-advisors because software and startup people are attracted to software and startups - they call this affinity marketing. Some even thought there was some sort of futuristic technology involved in selecting the investments (I have spoken with many of these folks subsequently, it’s not a joke, this is what they actually thought because there was robot imagery in some of the ads). But that was the extent of it. Away from the Valley and the Alley, America’s wealthiest households continued to work with their wirehouse advisors or RIA financial planners and the band played on. There was very little cross-species competition. I told you a long time ago that “Rich people don’t talk to robots” and that this had been one of the easiest bets I’ve ever made.

Today, there are one and half standalone robo-advisors left from an initial field of more than two dozen. No one talks about it at all. Whimper.

You get what you pay for

In the physical world, you mostly get what you pay for. Pay less, get less. That’s not true in asset management. The success of passive investing and the index ETF revolution have proven that sometimes you pay less and get more. Conflating allocation (which ETF should I buy?) with advice is where people get themselves confused.

Wealthfront charges investors 25 basis points for its portfolio of ETFs that they can get anywhere for free. This is the innovation that is robo-advice. I know, it’s very exciting. And yes, there’s tax loss harvesting and direct indexing. They’ve added play accounts and crypto and I’m sure they’ll get around to private equity and private credit and whatever the next trend is and the next. But that’s basically the cost and the benefit - 25 basis points and you get portfolio management on the internet. I bring this up because the belligerently anti-human robo-advice company had a tiny little IPO this past week with zero fanfare and barely a scintilla of press coverage.

Why so little attention? Isn’t fintech a hot category? I couldn’t really find anyone who even knew that this debut had happened. The ticker is WLTH by the way.

The Apathy

I thought about it and came up with a few reasons why nobody cared about the IPO.

The first and most obvious thing is that they missed their moment. This could have been a SPAC in 2021. They could have talked a lot about crypto and defi bullshit and ran this thing to a four or five billion dollar valuation to get themselves out of it. I guess there’s some honor in the fact that they didn’t. Unfortunately, Robinhood, SoFi and Coinbase are all doing robo-advice now with a much larger client population and a way better brand. So are Schwab, Fidelity, Vanguard, Merrill Lynch and anyone else who can afford to pay a few developers to create an user interface for an ETF model portfolio attached to a Plaid bank connection and some automated email software. The technology is really no big deal anymore. You might see Draftkings in this space someday. Or Fanatics. Or Fanduel. As Robinhood and Coinbase invade the sports betting and prediction fiefdoms, you may see a counterstrike coming in from the other side. And then you can’t put it past Square and PayPal / Venmo to come in. How about Elon / XAi? Can Amazon stay out of this business forever? A robo-advisor in every app. Who cares.

The only relative edge one player may have over another is in the cost to acquire a customer. The funnel matters more than the product. Robinhood’s funnel is wider and faster than anyone else’s for the Zillennial customer and they’re already talking to Gen A via sports betting, predictions, crypto, meme stocks, etc. Schwab and Fidelity are talking to probably a combined 80% of the country. I don’t know who Wealthfront talks to. Same audience as Betterment and SoFi I would guess. Whoever it is, they have to pay. This is an expensive audience to reach.

So how much is Wealthfront paying to acquire a customer? One analysis I saw pegs their CAC at over $300 per new account. Wealthfront’s sales and marketing spend divided by net new accounts in 2024 works out to roughly this figure. One analysis estimated Wealthfront spent about $61.4 million on sales and marketing in 2024 to add about 195,000 funded accounts, which implies a CAC of roughly $315 per acquired customer. So taking an average client balance of $61,000 and change, multiplying that by 25 basis points when fully invested and you’re talking annual revenue of $143.

But there’s a catch. The company is making most of its money in interest on cash balances, not from investment management fees.

What?

Yup.

What is this, a bank?

Wealthfront isn’t really in the business of encouraging its clients to be fully invested. They actually make more money per client when the account is sitting in cash. About half the company’s assets under management are in cash or some sort of money market sweep product. This isn’t incidental, the user interface and the default settings encourage cash accounts and its been a great source of inbound inflows ever since the Fed began its hiking cycle in 2021. Wealthfront’s split on the interest income from client cash (in partnership with outside banks) is actually a better deal for them. According to their own filing, they’re making something like 40 basis points on customer cash deposits. What a fascinating conundrum to be in - the less of their clients’ assets that are invested in securities versus cash, the more money the platform earns.

Here’s Barron’s:

As of this fall when the company filed its IPO documents, its approximately 1.3 million customers had $88 billion in assets at Wealthfront of which $47 billion, or more than half, was “invested” in the company’s cash management product.

That’s strange. Why would a robo-advisor whose primary purpose should be encouraging their young clients to invest and compound have such a huge percentage of their assets (and revenue) in cash management products? Maybe it’s because there is no human advisor on hand to sit down with these clients and explain to them what they’re jeopardizing by not taking risk today while they’re young and still earning. Unless you’re going to tell me that all 1.3 million of these young investors are weeks away from buying a house. Maybe? Probably not?

Since this company was founded in 2008, they’ve been pounding the table about why human advisors are overpaid and how they can do better with emails. Okay, so this is the result? Half in cash? At prevailing APY rates worse than could otherwise be obtained elsewhere? That’s the better outcome produced by all this cutting edge techmolology?

The human advisors I talk to have been investing for their clients and, in many cases, encouraging them to hike their own financial goals as stock market returns have exceeded everyone’s wildest expectations. The conversations these days sound like this: “Good news, because you have been willing to bear risk for the last ten years, we can either take less risk going forward, retire sooner or raise our expectations for what’s possible in the future. Let’s talk.”

What are these Wealthfront advisor conversations like? Oh, I forgot, there aren’t any. It’s automated. “Dear Mr. Jones, congratulations on your massive cash position for which you’ve been losing to inflation and under-earning the interest you would otherwise get elsewhere. I am sorry to inform you that the purchasing power on your dollars is now 20% lower than it was when you first funded your account in 2012. Happy Holidays.”

I made that up, no one is sending that email. But what else could you say to a young person earning 3.5% a year while inflation ticks along at 3% (probably way higher in reality) and the stock market has just tripled? <Chandler Voice> Could you BE any worse advised?</Chandler Voice>

Anyway, that’s the business. Interest rates on cash balances. It’s not futuristic, it’s as old as the hills. They invented banking before they invented horses. Look it up.

(Yawn)

Is Wealthfront a deposit institution or a financial advisor? I don’t know a single financial advisory firm that’s got half its clients’ assets in cash, especially in the midst of a virtually uninterrupted fifteen year bull market for stocks. I suppose this would make sense if the average client were 88 years old. But Wealthfront tells us its average client is 38. It goes out of its way, in the S1 filing, to talk about the company’s focus on “digital native” millennials.

So maybe I’m just looking at this all wrong. Maybe it makes perfect sense for this to be a de facto cash deposit company with a low sweep rate for clients and a secondary business as an investment platform. Maybe all these so-called digital natives just love lower-than-possible interest rates and care more about automation than the returns they earn on their portfolios. That could be. Perhaps it is more like a deposit bank after all. That might explain why UBS balked at buying the company five years ago and chose to pay a break-up fee instead of consummating the deal. It would explain why it took the company’s founders and early investors almost two decades to get the liquidity relief of this initial public offering (VCs and insiders sold 13.1 million shares to the public alongside the 21.4 million shares sold by the company itself to raise proceeds). It would explain the vacuum-esque lack of attention and ho-hum valuation on what looks like an otherwise solidly profitable company. It would explain why the prevailing sentiment around this thing is so blah. In the end, it’s a vanilla robo-advice business that makes investing mistakes just like everyone else (see the recent mea culpa for the company’s risk parity mess), competes with some of the biggest and most aggressive fintechs and incumbents on earth (good luck) and is largely borne aloft by cash management revenues that are susceptible to declining interest rates.

Institutional investors took in the roadshow, looked at their watches and yawned. There’s nothing technologically disruptive about providing a degraded service (no relationships, no CFPs, no discussions, no empathy, no experience) for less money. Anyone could do that. It’s got no sizzle. No virality. Nothing to set it apart in the marketplace. Someone else could come along and say, “Oh yeah? How about 24 basis points? How about 23?” Race to the bottom. Have fun.

“But look at our app!” 

Sir, we’ve seen a lot of apps.

Wealthfront’s founder and former CEO Andy Rachleff famously said “Our clients pay us not to talk to them” and “If it can’t be automated, we don’t build it.” His instinct that millennials don’t want to sit on the phone or in meetings with people is correct. Except for those times when they really, really do. Not every decision in life can be automated. Some decisions - the really important ones, obviously can’t be. This is why the human-driven advisory firms who are automating as much as necessary - but no more than what’s necessary - are going to win the millennial generation in the end. The tech becomes commoditized, the UX becomes a gimmick, the automation feature becomes as rote as an elevator button or a digital thermostat. Honestly, who cares. By contrast, the confidence that comes from working with a caring professional who knows what to do and what to say in the right moment is invaluable - it almost can’t be measured. And it could make all the difference.

If avoiding being on a zoom with another human being is your highest aspiration in the realm of receiving financial advice because of social anxiety or some other reason, it’s good to know that there’s a perfect wealth management service out there just for you. If, however, you’re interested in verbalizing your feelings and making eye contact, you have a broader array of options. To each their own. It all works out for everyone. A lid for every pot.

Buy, sell or hold?

You can probably tell by now I am not a buyer of this stock but that doesn’t mean the stock can’t work. This is not a bad business. Wealthfront reported approximately $339 million in revenue for the 12 months ending July 31, 2025, with net income around $123 million and roughly 26% year-over-year revenue growth. That’s pretty good. Unfortunately, a lot of it is coming from interest income on cash (which we’ve discussed) and I’m not sure that’s the sort of thing Wall Street typically pays much of a multiple on - see the 70% crash from the highs for Circle (CRCL), the stablecoin issuer that went public in June.

As to the question of whether or not the stock is worth owning from here, just a few days post-IPO, I think the answer to that question hinges on two other questions.

One - how many more shares are there held by insiders still to be sold? Good question and the answer is unknowable at this point. But one thing we do know is that even factoring in the 13 million shares insiders and venture capitalists unloaded last week on the IPO, there are still tens of millions of shares held by them that could potentially hit the market when the company’s IPO lock-up period expires 180 days from the deal (approximately June 10th 2026). Once we hit lock-up expiry, as is typical with IPOs where holders had been waiting for a long time, the sales could be large. Pent-up venture capital holders have end-investors to get money back to. I would take the over on whatever amount of stock for sale you might be guesstimating just given the sheer length of time it’s taken for these people to have gotten liquidity.

Two - what is to become of this company now that it’s public?

Well, now they have a lot of capital and no debt. What will they do with it? I’m guessing commercials on TV and sponsoring sporting events and all the usual stuff that everyone else is already doing. Then what? Adding crypto? Adding prediction markets? Adding options trading? Partnership with Blackstone or KKR to sell people illiquid alternatives? Adding all the bells and whistles Coinbase and Robinhood already have? Maybe sports betting? Tokenized baseball cards? Will they fire up the spaghetti cannon? The new hot trend in fintech is the Everything App. I guarantee you they’re being pressured on a daily basis to do all of these things and more.

Aside

Just an aside here about financial technology companies in general, not Wealthfront specifically: You think these are purists and misssion-driven people who want to change the world, and maybe it starts out that way. But when you’re a public company, you can’t afford to hold onto your idealism. There’s no place for purists here. The investors want to see growth and market share gains and innovation. You’ll push back at first but eventually it becomes “Me too! Me too! Look at us, we’re letting our users gamble too! And look, we even found our own Trumpworld person to put on the board of directors! It’s Linda McMahon’s niece’s gardener’s son-in-law. He’ll be on Fox Business with Maria next Tuesday!” When push comes to shove, they believe in nothing, Lebowski. They will innovate you right into the poorhouse and democratize you right up the ass. Don’t forget, I have been telling you this since the dawn of time. The profit motive will always and eventually run over every other consideration, the larger a business grows the more unavoidable. It’s okay and I’m not mad about it. Just worth pointing out.

The Irony

One ironic outcome here would be if Wealthfront takes the $255 million or so they are raising and starts hiring human CFPs so they can move up the value chain and do some actual planning work that people are willing to pay more than 25 basis points for. This would, of course, represent a complete departure from the company’s stated raison d’être, but it would be the sixth or seventh pivot (we’ve all lost count) so not that big of a surprise. Acquiring a large RIA would give it a faster launch down that road if and when they decide to take it but then they’d have to delete a lot of social media content they’ve put out over the years openly disparaging the people who do this work.

They could buy or start a custody business but this would require an even bigger pivot and public apology to the human practitioners they would seek to serve - I would peg the percentage chance of this happening at approximately zero.

Another fun outcome here would be if an asset manager decides to acquire the whole thing as a distribution channel to push ETF products through. Also a long-shot but hear me out - there’s approximately $90 billion on-platform, almost half of which is in cash (I know), and a fairly unattended investor base you could tell whatever fairy tales you want to about alternatives, crypto, AI-enabled stock selection, etc. Wealthfront’s extremely high retention rate gives a potential acquirer a lot of inertia to work with.

Finally, Wealthfront itself could become the robo-advice arm of a significantly larger player filling out their own suite of services. Despite the failed merger with UBS, there are probably some opportunities out there. With a market cap of just under $2 billion this would be a bite-sized deal that many financial services firms could easily afford. Unless they looked at it and judged it to have been generically mid and lacking any sort of brand power or marketable differentiation. I’m sure it’s been shopped relentlessly over the years, so maybe this ship has already sailed. In any case, you certainly can’t be short a thing like this because of the possibility of M&A.

If I were in the CEO’s ear as a consultant, I would be whispering “David, double down on the investment management.” As rates fall, revenue from interest will fall unless they can persuade their cash management customers to shift more of their balances into stocks and bonds. I am sure they’re already working on this. It’s going to be a tough road ahead if they can’t get it done. I would also tell them to raise prices and try to do more for their clients, but Fortunato is the former CTO turned CEO who joined the company in 2009 and he probably has same attitude about adding human planning talent that the founder did. Great for the rest of the industry, I guess, never change guys.

Regardless of which direction they go, it will be fun to watch as the ultimate anti-human financial advisory firm embarks on its next chapter as a publicly traded company. We wish the Wealthfront investors who haven’t sold out of their shares yet all the luck in the world going forward. Bon chance and congratulations on your liquidity.

Coda

In an unrelated announcement, Charles Schwab decided to get out of the premium robo-advice business altogether. It turns out that pairing a call center filled with CFPs with small dollar clients who barely pay anything just isn’t a great business either.

Here’s the Daily Upside:

They dropped this news on December 18th, another whimper barely garnering any notice at all. Schwab knows what everyone else in wealth knows - advice is valuable and good advisors are not expendable on low-cost projects. Their time and effort is better spent elsewhere. The world is filled with people who actually want to pay them for their help. Schwab’s redeployment of this CFP talent makes perfect sense in a world that values the human element. The world we all currently inhabit.

The robo-advice era is over. Now it’s just advice. Some companies deliver it digitally. Some deliver it digitally with human assistance. Some deliver it humanly but with digital assistance. And everyone, from Wealthfront to Wells Fargo and all firms in between, is somewhere along the same continuum - the fee lever in one hand and the service lever in the other, just trying to perfect the equilibrium between these ancient trade-offs.

The more things change, the more they never actually do.

Bill Cohan on the Compound and Friends

Who will win the battle for Warner Bros and HBO Max? Netflix seems like it has the upper hand and the better offer. But Paramount needs it more and isn’t backing out (yet)? It’s going to be one of the largest deals of the era and one of the most important media turning points for a long time to come. What happens here will shape the landscape, force competing streaming platforms to adapt and potentially change the way Hollywood productions and sports licenses are bought and sold. Not to mention the impact it will have on where and how people get their news. CBS and CNN could potentially be combined in a Paramount-Warner combination whereas CNN and a bunch of legacy cable channels could end up being spun off or sold to another player if Netflix gets its way. And what will become of the last remaining movie theater chains under either scenario? Which of these deals means the most job loss in film and TV production?

There’s a lot up in the air. We brought on the legendary Wall Street and media dealmaking star reporter Bill Cohan to help us sort it out. Bill’s talking to the people involved on all sides of this one. He’s the perfect person to help us sort it all out for you. Bill had some takes on the renaissance happening with the big investment banks this year as well as the Apprentice: Federal Reserve Chair season now underway.

Watch or listen below!

FINNY Raises a Round

If you’re a financial advisor or work in the wealth management industry, you already know that finding the right clients who are actively looking for help from someone with your qualifications is the Holy Grail. Once you have clients coming to you, you can focus all your time and energy on working to improve their lives. For most advisors, this is a pipe dream. Instead, they have to spend up to half of their time trying to find the next client and then the next.

We cracked this code over a decade ago and have become the most powerful organic growth story in the industry. Our advisors spend 100% of their time serving clients, not running around networking or trying to craft the perfect LinkedIn post. Our advisors are giving advice. We’ve built a paradise for financial planners in many ways - putting them in front of high-intent, qualified potential customers is just one aspect of it. Very few firms are able to do this, which is a huge advantage for us and the degree of service we are offering. Even great advisors face a lot of uncertainty about where their next twenty prospective clients might come from. It’s a real problem and many legacy solutions (like brokerage custodian referral networks and seminars) no longer work as well as they used to.

When I met Eden and FINNY AI and she explained her engine for driving organic growth to financial advisors, I said “This is it. She figured out the biggest pain point and most sought after Grail quest in the industry. She’s going to solve it.” I invested personally and joined as an outside advisor to the company (we announced it on TV and here’s an article about why I took a stake in the company).

I am proud to say that FINNY just announced a massive $17 million Series A round with a valuation of $150 million. Venrock came in and preempted the round, taking down the entire thing. Venrock, in addition to investing in many large wealth tech players, is also one of the most storied funds in Silicon Valley, having invested in a pre-public company you may have heard of called Apple once upon a time. It’s an incredible thing to watch Eden and her co-founders Victoria and Theo creating a huge business virtually overnight. FINNY went from initial product launch this spring to over 400 advisory firms getting started on the platform, not to mention some pretty large enterprise deals both announced and in the pipeline. The company announced the Venrock news in a new profile at Forbes if you’d like to learn more.

Or! You can just watch the conversation I had with Eden and Victoria to explain what’s going on with the product, how advisors use it and what’s coming next - an all new episode of our industry-focused podcast Talking Wealth:

Thanks for stopping by. Have a great weekend, talk soon! - JB