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Wealthfront Unveils FDIC-Insured Cash Account

Is bill pay next? The robo advisor is one step closer to building a consumer-focused financial autopilot.

Wealthfront launched an FDIC-insured cash account, separate from its investment account, with a 2.24 percent annual percentage yield. The account is the company’s next step in building a product that will accept direct deposits from customers, pay bills, run funds through financial-planning software and automate investing.

For now, funds cannot be moved between the cash and investment features, but internal transfers will be available in the “near future,” according to the company. Funds in the cash account are swept into a money market mutual fund or a “participating bank.” The banks Wealthfront is working with are East West Bank, Associated Bank, New York Community Bank and Citibank. The automated advice platform, or so-called robo advisor, will make up to 2 percent (annualized) off the average aggregate daily funds on deposit with each bank.

While Wealthfront has made its financial planning available for free, the cash account is available only to customers with an investment account.

“We plan to support the opportunity to just open a cash account in the near future,” the company posted on its site. There are no fees for withdrawals and, unlike savings accounts subject to Regulation D, no restrictions on the number of times customers can withdraw or transfer money. Most transfers will take up to three business days to arrive at a customer’s bank, said the company. Customers cannot currently link a cash account to outside companies, like a credit card issuer, to pay bills, although certain liabilities are able to be aggregated within the company's platform. 

Cash management solutions have grown in popularity, with Betterment offering a cash tool and Robinhood announcing, then infamously “revamping,” its cash tool after questions around the type of insurance that would be offered to customers. 

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