Wealthfront (WLTH) 2027 財年第二季財報電話會議：平台資產達 990 億美元

重點摘要

• 截至季末，平台總資產達到 990 億美元，年增 12%、季增 2%。Wealthfront 隨後於 8 月突破 1000 億美元大關，月底達到 1009 億美元。
• 投資顧問資產年增 30% 至 541 億美元，現金管理資產則年減 4% 至 449 億美元。單季淨存款總計 11 億美元，全部來自投資顧問業務。
• 營收年增 1% 至 9,190 萬美元。投資顧問營收成長 31%，抵銷了現金管理營收 10% 的下滑。
• 調整後 EBITDA 下降 15% 至 3,810 萬美元，利潤率縮減 8 個百分點至 41%，反映出現金管理營收下降、客戶獎勵方案支出以及對 Wealthfront Home Lending 的持續投資。
• 該公司計劃於 10 月將其股票投資帳戶轉換為 Wealthfront 證券交割帳戶，提供更多訂單類型和更廣泛的可投資證券範圍。
• 管理層表示，短期內利潤率將面臨 Home Lending 投資帶來的壓力，但仍相信長期而言調整後 EBITDA 利潤率可超過 40%。

核心財務數據

業務與營運表現

投資顧問是主要的成長引擎。平均顧問資產餘額年增 35% 至 529 億美元，推動顧問營收成長 31%。年化顧問費率下降 1 個基點至 22 個基點，主要是與推出託管帳戶 (Custodial Account) 相關的單次獎勵方案所致。

現金管理業務持續承壓。平均餘額下滑 1% 至 449 億美元，而年化現金管理費率則下降 6 個基點至 55 個基點。管理層將此下滑歸因於在較低的聯邦基金利率下，將年收益率 (APY) 轉換為年利率 (APR)，以及促銷 APY 提高活動的影響。截至 8 月底，動態費率 (run-rate fee rate) 維持在 55 個基點。

管理層特別指出，在透過獎勵方案與新產品鎖定 2023 年及 2024 年客戶群後，7 月與 8 月的現金存款趨勢有所改善。這些客戶群是在利率高點時加入的，採用 Wealthfront 投資產品的速度慢於其他族群。8 月淨存款達到 6.05 億美元，為 2025 年 8 月以來最強勁的單月總額，而現金淨存款則創下 3 月以來表現最好的一個月。

8 月資產加權跨產品採用率增加約半個百分點，略低於 64%。管理層表示，獎勵方案帶來了約 7,500 個額外開戶，且與參與的新客戶中更高的平均現金餘額、更多的推薦活動以及略大的投資存款相關。

Wealthfront 證券交割帳戶預計將於 10 月透過該公司的經紀交易商推出。管理層預期該帳戶將提供更多訂單類型、擴大可投資證券範圍，並支援整合持有於 Wealthfront 外部的自選資產。該產品仍將專注於長期買入並持有 (buy-and-hold) 的投資策略。

Wealthfront 於 6 月推出了託管帳戶 (Custodial Account)。該帳戶利用資本利得賦稅採集 (tax gain harvesting)，旨在每年實現高達 1,350 美元的免稅成長，且無需申報聯邦所得稅。管理層將該產品定位為深化家庭關係的方式，而非短期內主要的資產成長驅動力。

繼在科羅拉多州上線後，Wealthfront Home Lending 於 5 月擴展至德克薩斯州，並於 8 月擴展至加利福尼亞州。該公司計劃在未來幾個月進入華盛頓州、佛羅里達州、伊利諾州和俄勒岡州。管理層表示，透過該產品提供的平均房貸利率實現了比全國平均水準至少低 50 個基點的目標。新推出的自動化功能包括自助貸款情境模擬、受限股票單位 (RSU) 收入驗證以及預填申請表格欄位。

該公司還開始限量測試一款 AI 工具，協助客戶在 App 內確定並設定緊急預備金水準。管理層表示，更廣泛的推廣將取決於建立足夠的客戶信任。

管理層指引

管理層預計下一季將產生約 300 萬至 350 萬美元的一次性雇主稅捐費用，這與前員工在 9 月截止日期前行使期權有關。

對 Home Lending 的投資預計仍將是短期利潤率的阻力。然而管理層表示，該公司的自動化模式與有限的實體營運據點應能支撐長期調整後 EBITDA 利潤率保持在 40% 以上。本次未提供具體的營收或全年盈餘展望。

管理層指出，每升息 25 個基點，透過 APY 轉 APR 的效應，現金管理費率大約可改善 1 個基點。更好的資金歸集存款 (sweep deposit) 定價也有所幫助，而客戶獎勵方案的更廣泛採用則可能在短期內產生抵銷壓力。

風險與觀察重點

• 隨著利率下降與促銷 APY 提高活動壓縮了費率，現金管理營收出現下滑。
• 2023 年與 2024 年客戶群對投資產品的採用較為疲弱，且也透過外部券商進行投資，儘管管理層報告近期情況有所改善。
• 較高的房貸利率降低了購屋負擔能力，並為 Wealthfront Home Lending 帶來全行業業務量的逆風。
• Home Lending 的開辦成本、新增人員以及產品開發投資正加重短期費用與利潤率的負擔。
• 存款行為對利率、股市表現、季度稅款支付以及現金相較於投資產品的相對吸引力依然敏感。
• 獎勵方案可以加速帳戶採用並深化客戶關係，但可能會降低短期的現金管理與顧問費率。

分析師問答重點

管理層表示，近期現金存款的改善反映出 2023 年與 2024 年客戶群留存率及跨產品採用率的提高。管理層警示夏天通常是淡季，未來的存款趨勢仍將取決於更廣泛的總體經濟狀況。

針對潛在的升息，管理層指出過往升息週期對現金存款有所支撐。然而管理層強調，股市表現以及投資人對現金與投資的相對需求，可能會產生與 2022–2023 年週期不同的結果。

關於顧問定價，管理層將本季費率下降主要歸因於託管帳戶的獎勵方案。管理層預期自動化的 Wealthfront 投資組合仍將是顧問資產的最大組成部分，支撐相對穩定的長期顧問費率。

管理層表示，多空賦稅意識投資 (long-short tax-aware investing) 仍是感興趣的領域，但未提供具體的產品推出計劃。虧損扣抵稅額 (tax-loss harvesting)、直接指數化 (direct indexing) 和其他低成本賦稅意識產品仍將是投資產品策略的核心。

在競爭方面，管理層認為潛在客戶對優質金融產品的使用不足是主要的機會所在。客戶推薦仍是關鍵的獲客管道，而大型語言模型 (LLM) 的主動推薦也對客戶成長有所貢獻。

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完整財報電話會議逐字稿

管理層陳述

Operator

[Operator Instructions] As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Matthew Moon, Vice President, Investor Relations. Please go ahead, sir.

Matthew Moon

Good afternoon, everyone, and thank you for joining us today to discuss Wealthfront's fiscal second quarter 2027 financial results, which, like the quarter, ended July 31, 2026. On the line are David Fortunato, our Chief Executive Officer and President, and Alan Imberman, our Chief Financial Officer and Treasurer. After prepared remarks, we will open the line for Q&A. During the course of today's call, you may make forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties. The company can give no assurance that they will prove to be correct. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents at Wealthfront Files of the Securities and Exchange Commission, including our most recent form.

Our discussion today will include certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute or in isolation from, GAAP measures. Reconciliations of non-GAAP financial measures to comparable GAAP measures can be found in our press release accompanying this call, which is posted to our investor relations website at ir.wealthfront.com. I will now turn the call over to David. Good afternoon, everyone. In our fiscal second quarter 2027, we continue to deliver on our objective of becoming the leading tech-driven platform for digital natives seeking to turn their savings into wealth. Before I get into a review of our last quarter, I want to remind everyone of our unique business model and development philosophy. We believe we make the best practices of personal finance accessible at low fees through automation and intuitive and convenient through user-friendly design.

At scale, this drives high margins, allowing us to share savings with clients, creating trust, which drives add-on deposits, new product adoption, and low-cost word-of-mouth growth, which once again drives high margins. This flywheel enables us to enhance our core cash management and investment advisory product offerings and build new products like Wealthfront Home Lending, which helps our clients save more, earn higher returns on their savings, and borrow at lower rates. In other words, grow their wealth. We continue to believe that the best way to build deep, long-term client relationships is to delight clients by offering them more value than they can find anywhere else and focusing on their long-term financial outcomes. This informs our product development strategy and keeps us focused on our roadmap regardless of short-term market conditions. For example, this past quarter, we expanded availability of Wealthfront Home Lending and further automated key parts of the flow. We added Custodial Accounts to our broad suite of family wealth management offerings and started select client testing of an initial AI solution that helps clients size and set their emergency funds.

We don't attempt to time the market or build products that take advantage of speculative fads. And each year, we continue to increase the value we provide to clients. I'm proud to announce this focus allowed us to surpass $100 billion in total platform assets as of the end of August. As I reflect on this achievement, I could not be more grateful for our clients who have entrusted us to help them achieve their financial goals and proud of our team that have been instrumental in getting us to this point. Digital natives, defined as those born after 1980, have faced significant economic headwinds throughout the years, like the 2008 financial crisis and the COVID-19 pandemic. And they continue to navigate inflation, housing affordability, and a changing labor market. Despite these challenges, we both advised and observed our clients remain resilient and focused on intelligent savings and investing strategies.

An analysis of clients who have been saving and investing with Wealthfront from January 1, 2021 to January 1, 2026 showed impressive growth across their accounts. Of these clients, millennials have on average nearly tripled their wealth held on our platform over that timeframe. And Gen Z clients have on average quintupled their wealth held on our platform over that timeframe. Across the same cohort of clients, the number of millennial clients who have over $1 million on our platform has increased by over 500%. We aspire to be the modern wealth manager for digital natives, replacing financial uncertainty with best practice investing, automated habits, and tax strategies that maximize what clients keep. By continuing to ship products aligned with our clients' interests, we remain confident in our ability to deliver on this aspiration. Turning to the quarter, total platform assets grew 2% quarter-over-quarter and 12% year-over-year to $99 billion at quarter end, driven by investment advisory assets up 5% quarter-over-quarter and up 30% year-over-year to $54.1 billion.

Overall net deposits were $1.1 billion in the quarter, including $1.1 billion from investment advisory, which incorporated the second best quarter of net cross-account transfers from cash to invest in the company's history. This is a continuation of our intentional strategy to drive cross-product flows during transition environments like the one we are in today. This reflects the intentionally hedged business model we constructed that should drive client asset growth through most, if not all, macro environments. Transition environments are periods where prospect and client sentiment shift, often driven by changes in the macro environment and investing sentiment. This transition environment began during the rate cuts towards the end of calendar year 2025 and has persisted due to continued strong market performance. Helping clients adopt a broader range of products is vital to continuing asset growth through any environment, including during transition environments like the one we are in today. Most of our annual client cohorts have shown broad-based investment account adoption, supporting year-to-date net asset growth on the platform, but our 2023 and 2024 annual cohorts have lagged behind. The behavior of the 2023 and 2024 annual client cohorts is not entirely a surprise, as a large majority of these clients hired us during the recent period where rates peaked and the cash account was particularly attractive.

We had a shorter period of time to drive cross-product adoption for these cohorts and have been focused on doing so over the past year. We've been quite successful in driving cross-product adoption. However, these client cohorts have been investing at external brokerages as well. The result has been cash asset flows in a dynamic equilibrium, with these two client cohorts underperforming, but more than offset by the remaining client cohorts performing better and contributing to overall asset growth. We have focused our recent incentives and new product offerings on improving adoption of investing products and specifically focused on the 2023 and 2024 client cohorts. Our cross-product adoption incentives have shifted the behavior of some clients and new account types like our tax-aware Custodial Account have helped broaden client relationships. These efforts have helped improve the 2023 and 2024 annual cohort performance, and the current year client cohort performance has been consistently strong. The result has been improving cash net deposits in July and August, including the best month for cash net deposits since March of this year.

There's more for us to do, and we will be better positioned in the future. I'm happy to share that in October, we will complete the transition of the stock investing account to the broker dealer and rename it the Wealthfront Brokerage Account. This enhancement has been in the work for some time, and we expect the Wealthfront Brokerage Account to benefit us in periods of elevated, self-directed investing sentiment like the one we are in today by providing a familiar experience to beginner investors and increasing asset consolidation from our existing clients. We shipped a variety of other new products and feature enhancements in the quarter as well. We launched the Custodial Account in June, an expansion of our suite of family-oriented wealth management offerings that complement our existing 529, joint, and trust account offerings. Our Custodial Account provides a flexible way for parents to save for their child's future and is one of the only custodial accounts in market designed to automatically lower a child's future tax burden through tax gain harvesting. Tax gain harvesting is designed to take advantage of the favorable federal tax treatment available to children, helping them realize up to $1,350 in tax-free growth each year without requiring a federal tax return filing, increasing their cost basis, thereby reducing the amount of realized gain when the investment is later sold. Due to this strategy, when the funds are eventually withdrawn by the child years later, they have less taxes to pay so they can keep more of their returns.

We continue to see our digital native clients progress into the home buying phases of their lives. In May, we launched general availability of Wealthfront Home Lending in Texas. And in August, we launched general availability in California. We plan to enter Washington, Florida, Illinois, and Oregon in the coming months as we continue our measured rollout. Recall, Wealthfront Home Lending intends to deliver a better digital home mortgage experience with mortgage rates at least 50 basis points below the national average. We're proud to have delivered on this mortgage rate objective of our value proposition on an average basis and have made excellent progress on improving the digital home mortgage experience. We launched a self-service scenarios tool that allows borrowers to explore custom loan configurations and lock in their new rate autonomously online, all without the back and forth with a loan officer. We launched a smarter restricted stock unit income verification process that improves loan officer efficiency and allows borrowers to get an accurate rate quote much more quickly and allows home buyers to get a faster pre-qualification.

We also automated the pre-fill of application intake fields using both Wealthfront and linked account data. These enhancements have led to improved automated decisioning. We have more to improve upon and automate, but they reflect strong progress towards our vision of delivering the first mortgage product designed to be handled entirely in a mobile app. In the long term, we expect to see many more examples of clients executing on self-service loans. As signaled last quarter, we recently began testing our own AI solutions with current client experimentation centered on an LLM tool that's initially focused on helping select clients choose the appropriate amount and then subsequently set or adjust an emergency fund directly in-app. We ultimately envision clients coming to Wealthfront and using AI tools such as this one to answer all of their financial questions. In order for us to achieve that goal, we must ensure that the solution builds trust to reach that critical point of client confidence. We expect to have more to share with you on this in coming quarters as we progress towards this goal. With that, I'll turn it over to Alan to go over the financials.

Thanks, David.

Alan Imberman

Starting with our end of quarter asset and client data, total platform assets grew 12% year-over-year to $99 billion, with investment advisory assets up $54.1 billion, up 30% year-over-year, and cash management assets up $44.9 billion, down 4% year-over-year. We ended the quarter at 1.1 million funded clients, up 14% year-over-year, and 1.97 million funded accounts, up 15% year-over-year, reflecting 1.3 funded accounts per funded client. Moving to the income statement, revenue for the last quarter came in at $91.9 million, up 1% year-over-year. Cash management revenue was $61.8 million, down 10% year-over-year, primarily due to a lower annualized cash management fee rate of 55 basis points, down 6 basis points year-over-year. Average cash management balances measured as the simple average of beginning and end of quarter figures was also down 1% year-over-year to $44.9 billion. The year-over-year decline in the annualized cash management fee rate was driven primarily by the fee rate loss in converting APYs to an APR given the lower Fed funds rate, as well as higher overall impact of APY boosts from client incentives. To help inform your models, the run rate annualized cash management fee rate at the end of August was 55 basis points.

Investment advisory revenue was $28.8 million, up 31% year-over-year, primarily due to average investment advisory balances of $52.9 billion, up 35% year-over-year, while the annualized investment advisory fee rate of 22 basis points was down 1 basis point versus the same period last year due to the impact of one-time client incentives tied to the launch of Custodial Accounts. Asset growth was driven by both strong market and net deposits over the trailing 12-month timeframe. Gross profit was $81.1 million, down 1% year-over-year, reflecting a gross profit margin of 88%, down roughly 1 percentage point year-over-year, due in part to the higher data costs, higher money movement costs, and startup expenses associated with Wealthfront Home Lending. Total GAAP expenses of $75.1 million were up 45% year-over-year, which recall does not incorporate an apples-to-apples comparison of share-based compensation, as share-based compensation prior to the IPO did not incorporate dual trigger RSU expense, given that the second of the two dual triggers conditions was not satisfied until the IPO occurred. Adjusted operating expenses, that is expenses excluding share-based compensation, were $58.7 million, up 17% year-over-year, due primarily to higher adjusted product development expense. Increase in adjusted product development expense was due to higher personnel-related expenses, including from increased headcount associated with the launch of Wealthfront Home Lending. Looking to next quarter, we expect roughly $3 million to $3.5 million in one-time employer tax expense tied to option exercises for former employees ahead of their exercise deadline in September. The September deadline was contractually set for nine months after our IPO, which, recall, occurred back in December 2017 for 2025.

Adjusted EBITDA of $38.1 million was down 15% year-over-year and reflected an adjusted EBITDA margin of 41% down eight percentage points year-over-year, primarily reflecting lower cash management revenue due to a lower cash management fee rate given the previously noted APY to APR conversion and higher client incentives, as well as continued investments, including into the measured rollout of Wealthfront Home Lending. Despite these investments, we continue to demonstrate significant operational and financial discipline, delivering a rule of 40 metric of 42 for the quarter. This is our 16th consecutive quarter exceeding the rule of 40 and underscores a business model designed to successfully and consistently balance top-line growth with the structural efficiencies of our automated platform. GAAP diluted net income was $17.6 million, and GAAP diluted earnings per share was 10 cents per share. Net cash provided by operating activities was $47.3 million, and adjusted free cash flow was $28.3 million in the quarter, with the difference in values driven by the change in temporary client funding receivables related to our initial funding of clients' early direct deposits and instant withdrawals between the two reporting dates. Recall, this adjustment to our free cash flow normalizes for the change in these receivables from period to period, as these end of period balances can fluctuate due to factors such as the day of the week, quarter ends. Importantly, these actions provide clients access to their funds more quickly and in the case of early direct deposit, generates additional days of interest income for our clients.

Adjusted free cash flow conversion ratio, that is, adjusted free cash flow as a percentage of adjusted EBITDA, was 74%. Recall, we pay out 35% of accrued annual bonuses, cash bonuses, to our employees each July with the remainder paid each January. Our trailing 12-month adjusted free cash flow conversion ratio, which normalizes for seasonality, was 88%. During the fiscal second quarter of 2027, we repurchased 3.3 million shares in the open market for approximately $30 million as part of our share repurchase program. We're comfortable deploying our cash for share repurchases because of our robust free cash flow generation, our debt-free capital structure, as well as the multi-decade opportunity to compound wealth with new and existing clients who are in the wealth accumulation phase of their lives. Even with the strong repurchase activity, we ended the quarter with cash and cash equivalents of $453 million, which excludes the receipt of temporary client funding receivables we just mentioned as a part of the Adjusted Free Cash Flow reconciliation. As a reminder, our long-term capital priorities are to invest in organic, product-led growth, including infrastructure, and automation to evaluate opportunities to repurchase shares and to assess M&A with the preference to build versus buy.

Any remaining capital would be added to our surplus reserves in order to enhance resilience and durability. Looking to recent trends, as David mentioned, we surpassed $100 billion in total platform assets for the first time in August, doubling total platform assets in less than three years. We ended August at $100.9 billion in total platform assets, including $55.8 billion in investment advisory assets and $45.1 billion in cash management assets. Total net deposits in August were $605 million, which includes the impact of five full weekends in a month versus the typical four full weekends in a month. That's important because we only recognize withdrawals on weekends to satisfy client spending needs and instant withdrawals, which drives client delight but does impact monthly cash net deposit figures on the margins. Also, as David mentioned, August was the best month for cash net deposits since March of this year, and August was the best month for total net deposits since August of 2025. Asset-weighted cross-product adoption continued increasing up a half a percentage point month-over-month to under 64%, reflecting our continued success in driving cross-product adoption.

While we remain in a dynamic macro backdrop, we have built a diverse product suite that allows our clients to build wealth through a multitude of environments. We make money when our clients do, and our product suite, as well as our continued investments, put us in a strong position to continue to grow with our clients over the long term.

Operator

With that, let's move to Q&A. Certainly. And our first question for today comes from the line. Devin Ryan from Citizens JMP. Your question, please.

分析師問答

Devin Ryan

First question just on the cash deposit momentum. You're seeing obviously nice to see some improvement in July and then further in August and then I know summer can kind of be a heavier cash spending period and then you also mentioned a couple things that maybe could in theory be headwinds, but you saw some momentum there. So be good to get a sense of kind of what's driving that, or if you can just give us a little more granularity on what you were seeing in the last couple of months here, what you're seeing kind of with customer behavior, kind of the competitive dynamic, and then just anything else you can share just on expectations broadly for cash management moving forward in terms of deposits.

Matthew Moon

Yes, thanks for the question. In the script I talked a little bit about the 2023 and 2024 cohorts. So we noticed something interesting recently in the cohort analysis, which was the 2023 and 2024 cohorts, which hired us during a kind of peak interest rate period. We're adopting investing with Wealthfront at a slightly lower rate than other cohorts. We focused our incentives on those cohorts. We focused some of the new product launch merchandising at those cohorts. We have seen improvement in cross-product adoption, which has helped keep those assets on the platform and retain more of those assets. So I think what I said was, we've kind of been in a dynamic equilibrium with some cash outflows from the 2023 and 2024 cohorts, and then inflows from both the 2023 and 2024 new client cohort and other cohorts roughly breaking even. We've seen a little bit of improvement in the 2023 and 2024 cohort as the new product launches and incentives have worked and that's led to an improving backdrop in July and August. I don't think we're always going to share kind of the cohort analysis, but do think that it's useful to help underscore the sort of trend differences that we saw over the summer, which you're right is not normally a period of kind of large deposit or withdrawal movement, which tends to be a slower period.

Devin Ryan

Yes, got it. Really interesting. And maybe this is related, but just on the Wealthfront Brokerage Account, and kind of the launch in October. And obviously I know that's intended to capture more self-directed assets currently held elsewhere. Are there capabilities with that that will be different from the existing stock investing today? And what client behavior should we think about with that offering relative to maybe what you're currently seeing, I guess, and also just other capabilities you expect to maybe add on over time?

Matthew Moon

Yes, sure. So right at the beginning, it gives us the opportunity to offer more order types and a larger list of investable securities, which we think is important and sort of moves us closer to what this generation has come to expect of self-directed offerings. There's different constraints on the account that we have to put if it's an advisory product. And so putting it in the broker-dealer and making them kind of pure brokerage accounts, I think, gives us the opportunity to really present the product, an account type that's more what these types of investors are used to. You know, in periods of strong self-directed interest, the reason we built stock investing in the first place is because we wanted to have a credible product offering in the space to help those folks. The way that we're thinking about it is a little bit different than others are thinking about it. So we're really focused on long-term investing outcomes. And I think that'll inform the products that are relevant in the space that we want to add to our account and might differ a little bit from other products in the space. We want to build the best place for buy-and-hold investing generally across our managed offerings and self-directed offerings.

And so we will continue to add to the Wealthfront Brokerage Account for a lot of time going forward in the future. It's going to be an area of continued investment for us. But it is going to have sort of a different priority set than you might see from other digital brokers.

Devin Ryan

Yep, understood. Okay, great. I'll leave it there.

Operator

Thank you. And our next question comes from the line of Ken Worthington from J.P. Morgan. Your question, please.

Unknown Speaker

Hi, good afternoon, guys. This is Michael Chilin for Ken. I just wanted to touch on mortgage. Dave, you talked through the rollout and you listed another three states coming in the next few months. If you could just provide any thoughts or color on recent volume trends or exit trends that you're seeing in August and any sort of early economics that you might be able to share with us as the mortgage rollout continues.

Matthew Moon

Yes, so thanks for the question. You know, I think we're pleased with the early progress of the rollouts in Colorado, Texas, and California. The sort of next priorities that we discussed, I think four states, Washington, Oregon, Illinois, You know, the core goal of the mortgage product is really to use technology to build a better experience and deliver a lower rate to our clients. I think we've been successful at doing that. There's a lot left for us to do. We're going to focus our investments on continuing to deliver the best client experience. So one of the things that I guess I would say is as volume – I think this is supported by industry data – as volume in the industry declines, the sort of median buyer of a home tends to get a little bit older and a little bit wealthier because as rates go up, housing affordability becomes tighter. What we've seen is as we expand in states, we've still been able to grow volume, mostly through eligibility.

But we are sort of working against a headwind of higher rates mean less housing affordability. What we really see is an opportunity to take a long-term perspective and invest in the digital experience at better margins, being able to share that savings with clients and fight against that kind of rate housing unaffordability dynamic. I think we're starting to see the progress of this automation already. We've been able to automate away some of the third-party vendors to own more parts of our flow and improve the efficiency that'll help us continue to bring rates down over time. The dynamic scenarios feature as an example of having clients do more self-service, which actually leads to both a better client experience as well as lower operational costs. So we're going to stay kind of laser focused on those dynamics and continuing to build a better experience. We think that as we expand, we'll have the best pricing offering in the space for our target clients, and that'll give us an advantage in the future. But obviously, you know, we are impacted by the larger rate dynamic, and that's one of the reasons we like having a business model that includes cash and includes investing, and we can build a larger relationship there with clients and be there for them when they are ready to buy a home.

Unknown Speaker

Great. Just to follow up a separate topic, you talked through the new product pipeline and you got the brokerage launch coming as well. The industry headlines have been taking effect with tax-aware investing. It's been making quite a bit of headlines. Wealthfront has been doing direct indexing, tax loss harvesting for many years. I'm just kind of curious, you know, I don't know if you'd consider it or if it's in the pipeline in terms of maybe there's a long, short product you might consider for your pipeline from a tax-aware perspective.

Matthew Moon

Yeah, a great question. Long short is certainly something we're interested in and continue to look into. I don't have anything specific to share at this time, but I will say that tax-aware investing is one of the things and, you know, through direct indexing and tax loss harvesting, the Custodial Account tax optimization that exists has been a core focus for us and a core value driver to clients. So building that offering or building tax-aware related offerings at low cost and being able to provide them to clients with low minimums is sort of how we built our investing business. And I would expect us to remain continued, continue our focus on that as our investment product offerings and cash management offerings expand over time. It's certainly an area of interest, but nothing specific to say at this time.

Operator

Great, thank you. [Operator Instructions] Our next question comes from the line of Ryan Tomasello from KBW. Your question, please.

Ryan Tomasello

With the market pricing in higher odds of a rate cut here over the near term, I was hoping you can talk about how you would expect your user base to respond to a potential potential cut here of 25 bps if that's meaningful enough. Sorry, a hike of 25 bps and if that's meaningful enough you think to drive a material change in the deposit trends on the cash side of the business? And on a related topic, if you can just talk about how you're thinking about promotions and incentives in the back half of the year, particularly to capitalize on a potential re-hike.

Matthew Moon

Yes, thanks for the question. History has told us that rate increases have been beneficial for our cash net deposit trajectory. That said, it's not only the direction, but also larger macro conditions that can influence cash net deposit flows, and the comparative interest in cash versus investing. So, you know, in the last significant rate increase cycle of 2022, 2023, the U.S. equity market performed less well than it has in recent history. And so we'll have to see how that plays out this time. On sort of trends moving forward, like June, September is a quarterly income tax payment month. For some of our clients, that can impact figures on the margins as well. So, you know, I think sort of my summary would be history tells us that rate hikes are good for cash net deposits, but there are some other factors that will be different.

We don't know exactly how that's going to play out, and we've stayed focused on building a hedged business model that can grow with cash, grow with investing, and now grow with mortgage, sort of regardless of where the macro environment goes. And then on the cross-product adoption incentives, we've had roughly 7,500 new account openings attributable to the incentive. The strongest benefit that we've seen is from new to Wealthfront clients who've adopted the incentive and really broadened and deepened their relationship with Wealthfront more quickly than prior cohorts. We think that's a benefit to the clients because it helps them build wealth for both cash and investing and in a more automated way. And it's obviously a benefit to Wealthfront because we get to help them manage more of their money. The subset of clients that have adopted this incentive is quite attractive. The unit economics of the incentive are very good.

We see higher average cash balances, higher propensity to refer new clients to our platform, and slightly larger investment net deposits when compared to similar new clients that have not adopted the cross-product adoption incentives that we've had. So we're pleased with the early results. It's an area that we're going to continue investing in and see if we can continue to drive new client adoption of these incentives to grow relationships more quickly.

Ryan Tomasello

And then looking at the investment advisory fee rate, I realize you disclose the fee rate in the press release, but if I calculate that using a monthly on a monthly average asset basis, it implies about a 2% decrease in the fee rate from last quarter from 21.7 bps to 21.3. That's an acceleration from the rate of decline that we've been seeing in recent quarters. So can you just talk about the drivers there, I assume from incentives and maybe adoption of lower fee rate products? And just overall how you're thinking about the trajectory of the investment advisory fee rate over time as option of other products in that bucket widens.

Alan Imberman

Hey, Ryan, it's Alan. I'll take this one. So what we talked about in the prepared remarks around the fee rate was there was a special one-time incentive that went along with the launch of the Custodial Account that was a $100 deposit into a Custodial Account. And so that's mainly what you're seeing in terms of the fee rate decline for this quarter. And, you know, on a go-forward basis, I would say that, you know, our — our philosophy is it's still the best interest of our clients to be in our Wealthfront portfolio, the automated index investing account. And so regardless of what kind of door clients come in, I think, one, they'll most likely have some type of perhaps experience with individual stocks that would lead them to decide to automate and diversify. And or as they become more sophisticated, they'll also self-select that. So we see that continuing to be the primary weighting of our assets over the long term and keeping that fee pretty stable on the investment advisory side.

So that's our go-forward plan. And that's what we've seen. It's been fairly stable. And we launched stock investing, direct indexing, bond ladders, all these things over the last three years. And we've still seen a pretty stable investment advisory fee rate due to the fact that, again, a majority of our clients still the Wealthfront portfolio or eventually, you know, get their money in there.

Operator

Great, thank you. [Operator Instructions] Our next question comes from the line of Dan Perlin from RBC Capital Markets. Your question, please.

Daniel Perlin

I wanted to just revisit the cross-asset adoption here again. I think it seems like it's been trending on a 50 bps kind of from the first quarter to the June update and to kind of what I think I just heard and I think I think I also heard you guys talk about adding, I don't know, 7,500 new accounts as a result of the incentives. So like how much, is that about half of the incremental account growth? And if it is, like what else is driving that as you see it within your platform?

Matthew Moon

So, I'll start them and see if Alan wants to add anything. When we talk about new account growth associated with the incentive, we're talking about folks who already have Wealthfront accounts adding an additional account. So that'll be different than the new clients that are taking the Wealthfront account disclosed in the monthly metrics. I think, yeah, I don't think we disclose the total new or total account numbers. What we're seeing is it's a really good way to get the types of clients that we want to serve and our best clients to both set up some type of recurring deposit or direct deposit into the platform and to diversify the relationship that we have with them. We've seen that take different forms over the course of the quarter as the macro environment has shifted a little bit. So we've seen some elevated inflows into bond products in the last month or two.

As the yield curve has normalized, the bond products have become net slightly more attractive, and getting an additional adoption of those products has been helpful. We've also seen S&P 500 Direct do well, and the kind of core leader of our diversified Wealthfront portfolio has been a consistent kind of high asset product and an area of focus. So I think you can't do the kind of straight comparison of new accounts to new clients, but the cross-product adoption has been good. The one thing I would say about our asset-weighted cross-product adoption numbers is it's gotten better in the last quarter, but it actually is because investment assets have increased, the percentage of assets in investment only products has also increased. So those are clients that tend to be tenured clients and only have adopted investment accounts from Wealthfront. And as those clients continue to add to their accounts and grow with the market, we've actually seen the percentage of invest-only assets grow as well. So asset-weighted cross-product adoption for both cash and invest has gone up in the quarter, but maybe less than you might expect because invest-only has grown too.

Daniel Perlin

Yep, that's a good point of distinction. Just quickly on the competitive environment, anything that you would call out relative to what you've seen over the past several months? I know in prior quarters you kind of alluded to the fact that it felt like maybe it had picked up a little bit, but I'm not sure if that's a trend that you're continuing to see from here.

Matthew Moon

Yes, thanks. I mean, the primary competitor that we have for new clients is the sort of underconsumption of high-quality financial products. These might be folks that have a bank account but aren't doing much else with their money. And so helping them earn more on their savings and invest for the long term is really the focus. You know, we've benefited from primarily client referrals as a way to grow new clients, but we've also benefited, as we've talked about in past quarters, from, you know, positive recommendations or referrals from large language models that are unsolicited, unadvertised, and that's been beneficial. And what we've seen, I think, is, you know, the summer is normally a quiet period. We've seen the effects of the quality of the products and the distribution that we have that's focused on our clients fighting against what's normally a summer slowdown. It's something that we'll continue to watch and see how it evolves, but we've been, I think, pleased with the new client ads over what's normally a quiet summer period.

Operator

That's great. [Operator Instructions] Our next question comes from the line of Alex Markgraf from KBCM. Your question, please.

Alexander Markgraff

First, great to see the Custodial Account launch. I guess just, David, I'm curious if you have any sort of data points you might be able to share about sizing the opportunity within the existing base or any observations on early interaction with that account would be helpful that I would follow.

Matthew Moon

Yes, I think the sort of biggest surprise for us was the number of folks that opened multiple Custodial Accounts. Maybe we shouldn't have been surprised. We did see a number of clients open more than one Custodial Account for multiple children. I think the interest was relatively broad-based. The incentive that Alan talked about, I think got that product in front of a lot of clients. And we saw relatively sophisticated clients adopt the product because of their understanding of the value of the product, the favorable tax treatment for doing tax gain harvesting to be able to reduce the cost of, or taxes that the client ultimately pays when their child needs the money in the future. You know, I don't think that Custodial Accounts is ever going to be a significant asset growth driver, but it's a really important, I think, broadening of relationship.

And when you look at sort of the range of products that we've built over the last number of years to support families growing their wealth, I think it shows a broader strategy, right? You can go back to to joint accounts and trust accounts, the joint cash experience, the shared views, where couples can view their finances together and choose what to share with each other, depending on how they personally arrange their finances. I think you can look at 529 accounts, you can look at Custodial Accounts, as ways of sort of helping save for the future of the family. And mortgage, I think, is another product that works well with the sort of narrative of growing with clients as they have kids and their financial lives become more complicated, being there to support them. Support them through those transitions. There's a lot more for us to do as we build out more to support clients going through everything from getting their first job out of school, getting married, having kids, and forward in the future. But it's an area of focus for us and Custodial Accounts is one step along that journey.

Alexander Markgraff

That's great. And then maybe just sort of on a related note, as you think about addressing more of the client wallet, if you will, and some of the monetization opportunities around that, does that, and just sort of translating to potentially higher LTV, does that allow you all to sort of lean in on the marketing side more so than in the public? past, you know, be more aggressive or competitive with incentives.

Matthew Moon

I mean, we've seen some success with incentives, and I would expect that we continue to deploy incentives where it makes sense to do so. You know, we've done everything from existing client incentives to drive behavior as well as new client incentives, new account type incentives, where it makes sense to do that. That's one of the things that we've talked about for some time as a use of capital that we're interested in is deploying incentives to broaden and deepen our relationship with existing clients and attract new clients to the platform. The referral incentive has obviously been vital to growth in an area that we've really focused both our product offering on doing well on referrals, but also capitalizing of putting our clients who are referring their friends, family, and co-workers with the best possible offer in hand to be able to go recognize them, the product that they use and like to their folks that they know. I think that our payback periods on our incentives are among the lowest of the marketing stack that we have. And so we continue to experiment with new incentives and update our incentive offers for both behavioral characteristics and new client offers as we see opportunities in the marketplace.

Operator

Thank you. And our next question comes from the line of James Yaro from Goldman Sachs. Your question, please.

James Yaro

You talked about a 55 basis points cash management fee rate at the end of August. I was hoping you might be able to comment generally on the outlook for the cash management fee rate and more specifically how the cash management fee rate could evolve potentially if we see if we were to see higher rates.

Alan Imberman

Hey, James. Alan here. I'll take that. So, I think it's obviously something difficult for us to, you know, opine on in terms of how it will evolve with different rates. We do, as we mentioned before, think that a rate increase is obviously a very nice organic moment of delight for clients. And we've seen historically that that does lead to a slight bump in deposits. However, as we mentioned as well, September is a month, I'm sorry, of taxes, payment for some clients, but and then there's the AP, to APR conversion, which helps us in this case, very slightly. So that could be around a basis point with every 25 basis point increase roughly. So that would obviously be beneficial.

The market for sweep deposits has become a little more favorable for us. So we're getting a little better pricing as well again on the margins. But then again, if, you know, we're very successful with the incentive, we could see near-term pressure on fee rate because, obviously that has a payback to it. So, you know, there's a lot of puts and takes there. We've given what was at the end of August as just kind of a guide. And what I think that says is on the incentive is we're seeing gradual uptake of the incentive, and some of that is by design as we've been doing it in a measured way to really look at the behavior and make sure that it has good unit economics, and we'll look at ways to explore doing more of that over the back half of the year. So there's a lot of, you know, puts and takes there and, you know, I think for us, we're going to have to see how it plays out, but I can't give you specific guidance for the rest of the year or into the future.

James Yaro

Okay, understood. You've mentioned a target for a 40% adjusted EBITDA margin in the near term and you put up over a 41% margin this quarter. Any thoughts that you might be able to offer on the longer term margin profile of the company?

Alan Imberman

Sure. I mean, I still think that in the long term, you know, we can be over 40%. I think what, you know, is going to happen in the near term is there will be a headwind from home lending. However, the kind of higher rates has given us more time to invest, and as David mentioned, become more efficient, both in terms of, you know, building in-house products that make our people more efficient in designing out vendors. But it is something that's going to take a lot of scale in order to really start seeing the incremental margin improvements. But, you know, with a business like ours that is from a headcount footprint, extremely small from a physical footprint, almost non-existent over the long term with our ability to develop, automate, and all those things, we're going to have a very high EBITDA margin. But there's near-term headwinds as we invest. And we think that that is a good trade because it just opens up a very large total addressable market.

It helps our clients in different parts of their lives and provides a really good hedge for the business to be able to grow really in most, if not all, environments.

Operator

Understood. Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to David for any further remarks.

Matthew Moon

Thanks. I want to thank everyone for joining the call and for your continued interest in Wealthfront. I look forward to staying in touch and updating you on our progress in the months ahead. Thanks all. Bye.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect.