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Wealthfront review: Is automated investing right for you?

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Designed with millennials in mind, this robo-advisor builds an automated investment plan around your life and goals.

Founded in 2011 in California’s Silicon Valley, Wealthfront is an investment firm that removes the guesswork from investing. It helps you build a financial plan and reach your goals with the help of automated investments.

0.25%

Annual fee

$500

Minimum deposit to open

Details

Account typesRetirement, Robo-Advisor
Minimum deposit to open$500
Annual fee0.25%
Asset typesETFs

How does automated investing with Wealthfront work?

Automated investing tools take the guesswork out of the investment process — a particularly helpful resource for those new to investing or who prefer hands-off portfolio management. Wealthfront offers a variety of tools and features designed to simplify investing, including:

  • Investing on autopilot. Investing your money with Wealthfront will allow you to set up your investment and forget it. You won’t need to manage your portfolio, make trades or anything else.
  • Calculated strategies. Wealthfront uses industry-leading Smart Beta technology in its PassivePlus investment suite for accounts with $500,000 or more to build a personalized portfolio that will maximize growth potential through intelligent weighting of stocks. For an additional 0.03%, it also uses Risk Parity for accounts of $100,000 or more to minimize risk by diversifying across multiple asset classes.
  • Portfolio rebalancing. Whatever your personal tolerance for risk, Wealthfront will constantly rebalance your portfolio to match it.
  • Tax strategies. Wealthfront’s PassivePlus uses a strategy called tax-loss harvesting to keep your taxes to a minimum. This involves strategically selling some exchange-traded funds (ETFs) at a loss so you can offset income on your tax return. If you have at least $100,000 in your account, you’ll qualify for Stock-Level Tax-Loss Harvesting, which is a more advanced version of tax-loss harvesting.
  • Self-driving money. Wealthfront’s autopilot feature acts as a free financial assistant, monitoring your account daily for excess cash to invest. With this feature equipped, any extra cash you have on hand will be automatically rolled into your investments.

How much does Wealthfront cost?

While the minimum deposit is $500, it’s free to open a Wealthfront account. Plus, you won’t pay fees for withdrawals, account closure, account transfer or trades.

Wealthfront charges an annual advisory fee of 0.25% — lower than the industry average of 1%, and it doesn’t charge trading commissions.

What are the benefits of Wealthfront?

  • Free financial planning. Wealthfront’s Path tool will analyze your financial data — everything from bank accounts to credit cards, loans, your home’s value and even Social Security — and assemble a custom plan to grow your money. Use it to save for a house, college, retirement and more, or get instant answers to more than 10,000 financial questions.
  • High-yield cash account. With the Wealthfront Cash Account, your money can earn a 0.35% APY with no fees and FDIC insurance up to $1 million.
  • Simple — and low — fees. Wealthfront charges an annual advisory fee of just 0.25%.
  • Automatic deposits and easy transfers. You can schedule free weekly, biweekly, monthly or quarterly deposits into your Wealthfront account, and transfers of cash or stock into or out of your account are fast and free.
  • Fast, flexible line of credit. If your account contains at least $100,000 and isn’t a tax-advantaged retirement account, you get automatic access to a Portfolio Line of Credit that lets you borrow up to 30% of your account value without any paperwork or credit check, and often within 24 hours.
  • Automated investing. Wealthfront’s automated investing tools simplify the investment process with personalized portfolios, automatic rebalancing, tax-loss harvesting and more.

Compare with other robo-advisors

Name Product Minimum deposit to open Available asset types Annual fee
Titan
$100
Stocks
1% on balances of $10,000+
Titan Invest offers portfolios that seek to outperform the market while hedging against market downturns.
SoFi automated investing
$1
Stocks, ETFs
0%
Put your money to work. Let SoFi build and manage a portfolio for you. Pay zero SoFi management fees.
Acorns
$0
ETFs
$1 per month
Invest your spare change. Anyone can grow wealth.
Betterment
$0
Stocks
0.25% on balances up to $99,999

0.4% on balances of $100,000+
Betterment's automatic investment site aims to improve your returns and support good financial habits with passive investing and financial planning support.
Blooom
Stocks, Bonds
$45 per year
After an analysis, Blooom will place the trades within your 401k, 403b, 401a, 457 or TSP plan account for a low flat fee.
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Compare up to 4 providers

What to watch out for

It’s your money, and you want to protect it. Before signing up, understand what Wealthfront is all about and what downsides you should look out for:

  • Software-based investment decisions. Wealthfront uses algorithms and software to invest your money, so you won’t get human advice or management like you would with a bank-issued investment portfolio.
  • No physical branches. If you prefer a traditional banking experience, you might be disappointed to learn that Wealthfront doesn’t have any physical branches you can visit or certified financial planners you can call up.
  • No fractional shares. Wealthfront invests your money in ETFs, which must be purchased as a whole. And since ETFs generally range from $30 to $100 per, some of your money could be left as cash sitting in your portfolio and not growing.
  • Fund management fees. While Wealthfront only charges a 0.25% annual fee, the underlying ETFs will have management fees that you’ll be responsible for.
  • Relatively high minimum deposit. Wealthfront’s $500 minimum deposit is on the high end compared to what other robo-advisors require. For example, Betterment — one of Wealthfront’s closest competitors — has no minimum deposit.

Wealthfront reviews and complaints

There aren’t many user reviews for Wealthfront out there, but what we found was generally negative. The company is not accredited by the Better Business Bureau (BBB), which gave it an “F” or its lowest rating. The BBB generally based this decision on Welthfront’s failure to respond to four complaints filed against it.

However, the BBB website displays only three total reviews and five complaints. As of November 2020, the negative reviews criticized Wealthfront for its customer service. The one publicly available complaint dealt with a money transfer issue. Reviews on Yelp as of November 2020 are generally negative as well. Many users also claim Wealthfront lacks good customer service and their investment options tend to underperform. The few positive ones, however, praised Wealthfront for its digital tools. As of November 2020, Trustpilot offers only two reviews, one negative and one positive. But even the positive one noted that setup takes a long time.

Reviews on Reddit as of November 2020 are a bit more mixed. The positive one highlighted Wealthfront for its interface and tools. The negative ones mainly point out that Wealthfront’s services aren’t as good as firms like Vanguard or Charles Schwab.

How to get started

  1. Visit the Wealthfront website and click Invest Now.
  2. Complete the questionnaire, which includes questions such as why you want to invest, what kind of financial advisor you want, your pre-tax income, your tax filing status and your risk tolerance. After completing the questionnaire, you’ll receive a diversified investment plan. Click Open My Account to continue.
  3. Create an account by entering your name and email address and creating a password.
  4. Enter your mobile phone number for security verification.

Eligibility

In order to open a Wealthfront account, you’ll need to meet a few eligibility requirements:

  • Have a valid Social Security number
  • Have a US residential address
  • Be a US citizen
  • Make an initial deposit of at least $500

Required information

Throughout the application process, you’ll be asked to provide to provide the following information:

  • Name and date of birth
  • Address
  • Mobile number
  • Email
  • Employment information
  • SSN
  • Financial goals
  • Employment information
  • Risk tolerance

I’ve signed up. Now what?

Now that you’ve signed up and established your profile and risk tolerance, you should take advantage of everything Wealthfront has to offer.

  • Manage your preferences. After you sign up, you’ll have the option to add more information so that Wealthfront can provide more accurate investment recommendations.
  • Set up new accounts. While you can choose which account you’d like to open when you first sign up, consider setting up new accounts for different financial goals.
  • Monitor your portfolio. Use the app or dashboard to track progress and monitor your portfolio over time.
  • Read the blog. Check the Wealthfront blog for helpful investment information, interesting tips and more.

How to get help

If you need to get in touch with customer service, you can send an email through the Wealthfront website or log in to your account to set up a phone call.

Bottom line

Wealthfront is an innovative company that’s built on passive investing, a strategy that’s praised by many. In fact, legendary investor Warren Buffet, advises most consumers to invest in index funds — a common form of passive investing. With low fees and automated portfolio management, it’s no surprise why millennials and many other beginner investors choose Wealthfront. But if you’re looking for a more traditional or hands-on approach to investing, this company might not be right for you. Compare your options to find a robo-advisor that can help you meet your financial goals.

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