Wealthfront rolls out yet another tool for the newly Valley rich

By Sarah Lacy , written on October 9, 2012

From The News Desk

Wealthfront is continuing its mission to upend the greedy, confusing, and cloistered world of financial management by using technology and courting the Venn diagram of people who like technology and suddenly have lots of money: Recent IPOs of Silicon Valley.

We've written before about Wealthfront's Online Investment Advisor aimed at this crowd, an interactive tool that shows you how much you could make by selling shares at different times if you worked at past IPOs and how much employees at startups should earn in cash and stock. That last one certainly sparked something among our readers: Erin's post embedding that tool was one of our most trafficked stories in PandoDaily history. Building a modern day financial company is one of the hardest things you can do in tech right now, but clearly there's a need for more information from the very people who are likely to come into wealth rapidly.

Wealthfront has pounded the Silicon Valley pavement to get this message out, giving seminars to some 50 companies including Facebook, LinkedIn, and Yelp on what to do once your company goes public. It's a low-touch tactic, with Wealthfront's products never explicitly discussed, focused not on the big earners but the rank-and-file employees who don't know where to begin.

Wealthfront isn't done. Today, it's releasing a slightly wonkier product that gives its core audience -- people who have money but not enough money they have an army to manage it -- another big advantage. It has to do with tax loss harvesting.

Say what? 

If that quick interjection of investment jargon was lost on you, here's what that means. Tax Loss Harvesting is when you sell securities at a loss in order to have a write-off against your portfolio's gains. Most advisors and do-it-yourselfers do this at the end of the year. More sophisticated money managers do it regularly. Benefits can be twice as large doing it this way.

Now, Wealthfront is offering an automated product that will continually sell off stakes in securities and replace them with comparable securities for no additional fee, if it manages $100,000 or more of your money.

There are more details on this here along with a cute video and a chart showing the difference in savings.

But the notable thing to me -- beyond the benefits for people who have $100,000 that doesn't go to childcare -- is the line Wealthfront is walking between being a hip, modern financial company that young programmers can relate to and being sophisticated enough financially that it's an acceptable option for someone who has just made millions of dollars.

The company has come a long way since its Web 2.0-ish roots, when it was called "Ka-Ching," but it has to guard against looking too much like an East Coast-based financial manager. The key seems to be breaking down jargon and concepts to simple charts, tools, and figures: Those are things its developer audience can handle.