Helping Gen Y Manage Its Millions

“I know this doesn’t sound like rocket science,” says Adam Nash, slowly working through a huge cup of coffee in a cafe off Central Park in New York City. “But nobody else out there does it.” Nash is chief executive officer of Wealthfront, a startup that uses automated software to invest customers’ money for low fees (0.25 percent on balances of $10,000 or more). He is talking about a new product Wealthfront calls “the single-stock diversification service.” Available only to Twitter shareholders, the Web-based program helps customers unload their stakes slowly, avoiding one-day price crashes like the 18 percent hit the social network took on May 6, a day after a trading restriction on stock held by employees and early investors was lifted and about 480 million shares of Twitter hit the market.

Lockup expiration days are typically volatile, as insiders rush to sell. It’s the kind of impulsive investing move that Wealthfront is trying to correct. The startup says more than 10 percent of Twitter’s 3,000 employees have signed up, with more than $300 million in current and future stock grants between them; 60 percent have chosen to diversify their holdings over a period of two years or longer. “People assume employees are eager to sell on the first day,” Nash says. “We were really impressed. … It reflects some prudence in the market, which is different than previous booms.”