Wealthfront / Robo-Advisor and Holistic Approach to Investments

  • Wealthfront Invest Robo-advisor helps you do less and earn more using tech to manage investments to achieve your financial goals.
  • Minimum $500. Low management fee.
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Wealthfront helps you do less and earn more using technology to manage your investments to achieve your financial goals. Access personalized investing portfolios, cash management, portfolio line of credit.

What is Wealthfront?

Wealth is a Robo-advisor using algorithms to recommend an investment portfolio that fits your risk tolerance, current financial situation, and time horizon. With Wealthfront, you get help to maximize your returns, lower your taxes, and build wealth.

As part of a comprehensive investment strategy, Wealthfront offers a suite of financial products from taxable accounts to retirement accounts to a college savings plan. Additionally, members gain access to cash management options, line of credit, and interactive tools along with access to financial advisors.

Wealthfront is a pioneer among other Robo-advisor options and is located in Palo Alto, CA. The firm manages $26 billion in client funds. It’s able to offer low-cost investment management through technology and automation.

Read our list of best Robo-advisors to help you reach your goals.

How Does Wealthfront Work

Wealthfront does its job the minute your click “start investing.” You’ll first start by choosing what type of account you’d like to open. The options are:

  • General Investing – a taxable investment account but designed with the flexibility to build wealth over time.
  • Retirement – tax-advantaged accounts for money when you’re in your 60s and beyond. These include traditional IRA, Roth IRA, SEP IRA, and 401k rollovers.
  • Education – account with tax advantages for qualified education expenses.

The Robo-advisor will ask you a series of questions from ownership–individual or joint or trust–to your personal information such as your age, income, and existing financial accounts. Just answer a few questions and the algorithms will assess your risk score to offer a portfolio option catered to your profile.

Through the Robo-advisor, you get:

  • Automated investments into a diversified portfolio matching your risk score.
  • Managing trades, dividend reinvestment, and tax efficiency.
  • Choose the classic portfolio, Socially Responsible portfolio, or create your own choosing between hundreds of funds across categories from clean energy, healthcare, tech, crypto, and more.
  • Banking features to spend, save and organize your cash.
  • Borrow through a portfolio line of credit without the hassle of an application or credit check.
  • Access big picture view of your finances to track your progress.

Wealthfront was founded in 2008 as an alternative to expensive investment management firms with large minimum investment requirements.

Your investments are insured by the Securities Investor Protection Corporation (SIPC). This protects assets up to $500,000 (including $250,000 in claims for cash). As with all securities firms, this coverage provides protection against the failure of a broker-dealer, not against a decline in the market value of your securities.

Wealthfront Review

Wealthfront Portfolio Options

Wealthfront follows Modern Portfolio Theory (MPT), an investment philosophy followed by other Robo-advisors, in creating the asset allocation of its diversified investment portfolio. Based on risk scores, it chooses low-cost exchange-traded funds (ETFs) to cover 12 assets classes from stocks to bonds to real estate. Similar to other Robo-advisors you do not get to pick individual stocks as part of your portfolio. You can only choose from low-cost index funds.

You can choose your personalized portfolio or customize a portfolio from scratch. There are also additional portfolio options like Socially Responsible Investing (SRI) that focuses on investing in social impact companies focused on issues, not just financial return.

Features and Benefits

Wealthfront offers you the following features:

  • Automation: no need to make manual trades as it’s done for you along with dividend reinvesting.
  • Automatic rebalancing: your portfolio is rebalanced when they drift significantly from the target asset allocation strategy.
  • Tax benefit: minimize short-term capital gains and avoid wash sales. From daily tax-loss harvesting to advanced stock-level tax-loss harvesting to risk parity.
  • Banking: get a checking account and debit card to spend and save with no overdraft or account fees.
  • Borrow: the hassle-free way to borrow against your portfolio without having to sell your investments through lines of credit.

Minimum Requirements

  • Be 18 years or older
  • Valid Social Security Number
  • Legal resident of the United States

What is the minimum investment?

You will need a minimum deposit of $500 to open an account.

Wealthfront Fees

  • Management fees: 0.25% per year on your invested balance (assets under management).
  • Trading fee: $0
  • Investment fees: are charged based on the expense ratio embedded in the ETFs and mutual funds you own. For example, portfolios that include the Wealthfront Risk Parity Fund have an average expense ratio of 0.11%.

Additional fees may apply to cash management accounts and college education plans.

Who is it best for?

Wealthfront is best for beginners and cost-conscious investors who wish to make only a few financial decisions about their investments. Whether you’re new to investing or experienced, the Robo-advisor has many benefits for investors not offered by self-directed investing accounts.

Wealthfront Invest Review

Wealthfront Review

Wealthfront is a legit company and service. The Wealthsimple app has a 4.8 out of 5-star rating with 14.2k reviews in the App Store. The majority of reviews share the peace of mind gained from the advice, portfolio recommended, and automation features.

In our Wealthfront review, the Robo-advisor shines with its all-in-one design that merges investing, spending, and borrowing into a great app. They’ve worked hard to deliver on the promise of “investing that does the investing for you.” It’s a robust app that gives you the big financial picture necessary for peace of mind.

The investment management service can appeal to new and experienced investors alike. The minimum investment of $500 may be a lot to some people, but the account benefits may be worth saving the amount.

Keep in mind that Wealthfront does not provide financial advice or planning. It’s all done within the app using algorithms and technology to assist you with investments. The reason given by the company is how less human interaction allows for lower fees and better yields.

Read our list of the best Robo-advisors for just about anyone.

Pros and Cons

Pros

  • User-friendly interface and onboarding
  • Low management fees
  • Tax-efficient strategies

Cons

  • No financial advisor access.
  • Higher minimum investment compared to others.

How to start a Wealthfront account

The time needed: 5 minutes.

Step-by-Step to open an account

  1. Get started
    • Create an account through the website.
  2. Enter your information 
    • Provide your first and last name, social security number, and address.
    • Share your financial goals and why you’re investing and your time horizon.
  3. Account verification
    • Identity is verified electronically otherwise additional documents may be requested.

Wealthfront Alternatives

There are alternatives to Wealthfront, such as Betterment for Robo-advisor (read our Betterment review) and Personal Capital to access human advisors (read our Personal Capital Wealth review).

Additionally, you can learn about M1 Finance, a self-directed DIY investing platform with Robo-advisor features. Read the M1 Finance review.

For more read our 5 best Robo-advisor platforms or shop the marketplace.

What is Path Financial Planning Tool?

Built by a team of PhDs at Wealthfront, Path is the financial engine behind all the personal financial planning tools. Once you link your financial accounts, Path aggregates what you currently have and calculates what you’ll be able to achieve in the future.

With Path’s new automatic financial modeling capabilities, it calculates the cost of exploring every scenario from start to finish so you know exactly where you stand at any given time.

Through Path, you can plan for:

  • Homeownership: get help to buy the right home without putting your other goals at risk.
  • Retirement: plan for your later years in life using tax-advantaged accounts.
  • Travel experience: see how long you can travel while maintaining financial security.
  • College: advice for college planning taking into consideration college costs and utilizing 529 plans.

Does Wealthfront offer financial advice?

Wealthfront offers technical support with its product specialists, not portfolio advice. They do not provide investment advice on an individual basis. The Robo-advisors and help center is designed to give you all the information you need. The Path feature serves the purpose of helping you with financial planning.

How to Reach Wealthfront Customer Service

Wealthfront’s customer service is available via phone or email in the event you can’t find your answer in the Help Center. The company states “general requests are typically answered within 24 business hours, but some requests require significant research that may delay our response to you.”

Additional Wealthfront Products

  • Wealthfront Cash Account: no monthly account fees, overdraft fees, or transfer fees. Get a checking account and debit card with direct deposit, bill pay, and access to 19,000+ free ATMs. Earn 0.1% APY on all your cash. FDIC insured up to $1 million through partner banks. $1 minimum.
  • Wealthfront Retirement: an all-in-one retirement planner that starts with linking all your accounts and having them analyzed to predict your financial future. Get expert guidance on how much to invest and which retirement accounts are best. Open a Traditional and Roth IRA, SEP IRA for business owners, and 401(k) Rollover from a previous employer.
  • Wealthfront Borrow: access cash quickly with a portfolio line of credit without impacting your long-term investing goals. The line is secured by your investments with no application nor credit check. Because it’s secured with your investments the rates are lower than traditional financial services.

Additional information

Fees

0.25%/yr Management Fee, No Minimum Fees, No Trading Fees

Minimum Deposit

$500

Investing Type

Automated Investing, Managed Portfolio, Robo-advisor

Key Features

Automatic Deposits, Automatic Rebalancing, College Planning, Dividend Reinvestment, Financial Planning, Retirement Planning, Tax Loss Harvesting

Investments Available

Bond ETFs, ETFs, Stock ETFs

Investment Portfolio

Modern Portfolio Theory (MPT), Socially Responsible Portfolio

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Wealthfront / Robo-Advisor and Holistic Approach to Investments