Swiss private banking giant UBS has signed a deal to buy US-based automated wealth management provider Wealthfront for $1.4bn in cash.

The move comes more than two months after a Bloomberg report said that Wealthfront is mulling business divestment at a valuation of about $1.5bn.

The transaction is currently expected to close in the second half of the year, subject to regulatory approvals and other conditions.

Wealthfront manages over $27bn assets on behalf of its more than 470,000 clients in the US. It primarily caters to millennial and Gen Z investors.

The company’s platform provides users with access to financial planning capabilities, banking services and investment management solutions.

The acquisition will help UBS to bolster its presence in the US and expand distribution and capabilities.

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Wealthfront’s capabilities will also help UBS to pioneer its new digital offering which will comprise access to remote human advice.

Additionally, Wealthfront will expand UBS’s existing offering through its Wealth Advice Center and Workplace Wealth Solutions business.

In turn, UBS will offer Wealthfront and its clients access to its wealth management capabilities.

UBS Group CEO Ralph Hamers said: “Wealthfront complements our core business in the US providing wealth management to high net worth and ultra-high-net-worth (UHNW) investors through trusted relationships with financial advisors, and will enhance our long-term ambition to deliver a scalable, digital-led wealth management solution to affluent investors.”

Following the close of the deal, Wealthfront will operate as a wholly-owned subsidiary of UBS and will be part of its UBS Global Wealth Management Americas.

There will be no immediate change in Wealthfront services. The customers will continue to have access to automated investing, personalised financial planning as well as its banking services.

Wealthfront CEO David Fortunato said: “Partnering with UBS will allow Wealthfront to offer our clients additional value-added services and best in class research that will help accelerate our vision to make growing wealth delightfully easy.”