UBS’s $1.4B acquisition of Wealthfront brings in new tech and, more importantly, lots of affluent millennial and Gen Z investors.

Wealthfront. Independent pure-play robo-advisor Wealthfront offers a high degree of portfolio customization: It can create its own personalized portfolio mix by adding or substituting Exchange-Traded Funds (ETFs). This includes socially responsible investing options, direct indexing, and access to two cryptocurrency trusts.

Wealthfront debuts customizable portfolios and crypto products to distinguish its offering in the crowded US robo-advisory market and tap into the growing popularity of self-directed and crypto investing.

The growth of investment robo-advisors—algorithm-based account services—spiked last year across the US, the UK, and Canada as investors, especially those belonging to younger populations, took advantage of investment opportunities during the pandemic. For instance, independent robo-advisors Wealthfront and Betterment both reported double-digit increases in account openings during the pandemic.

Startup wealth managers saw an uptick in adoption in 2020: Wealthfront, for example, saw a 50% spike in sign-ups in late February, while Wealthsimple reported 27% year-over-year (YoY) growth in deposits in March and April.

Robo-advisors will get in on the action to give retail investors access to the investment vehicle: Wealthfront recently added access to Grayscale’s trusts, and Betterment is mulling a long-term crypto offering.

Robo-advisors and wealth managers are also increasingly interested in adding crypto investment options for their retail clients: Wealthfront added two crypto trusts to its investment options. Crypto ETFs would let them offer less risky investment options than buying specific cryptos—potentially giving ETF providers a large addressable market.

This is the latest hot investment vehicle in the sector: Last week, Wealthfront added two crypto funds, and Betterment is mulling a similar crypto offering. Goldman, meanwhile, is among more than a dozen firms awaiting regulatory approval for an ETF focused on crypto-related companies.

Acorns’ competitors Betterment and Wealthfront, which also had record-breaking Q1s, could be next as they have been touted as prime acquisition targets.

In the US, for instance, Wealthfront users can set the feature to transfer excess cash between in-app accounts.

US PFM players M1 Finance and Wealthfront, for example, allow users to transfer excess cash automatically based on a threshold they set between their in-app checking and investment accounts. This would be a natural expansion of Chip’s existing services, which already automate transfers between users’ banks and in-app savings accounts.

US digital trading platforms (such as Robinhood) and robo-advisors (like Wealthfront) both have grown rapidly in the past year, fueled by interest from younger consumers. While these firms’ success creates a competitive market, Titan’s offering stands out because it offers active strategies, which aren’t usually available to retail investors.

Some context: The SEC first took action against two robos, Wealthfront and Hedgeable, in 2018 over false disclosures on their investment performance, fining them $250,000 and $80,000 respectively.

Wealthsimple struggled to gain a foothold in the US digital wealth management market since its 2017 launch, and its AUM was dwarfed by players such as Betterment and Wealthfront.

But Wealthsimple should also fuel user growth within its existing investment offering—to do so, it could follow the lead of fellow digital wealth manager Wealthfront and add more self-directed investing options. Wealthsimple could let users build their portfolios from a selection of ETFs.