Wealthfront review: Is automated investing right for you?
This millennial-focused robo-advisor builds an automated investment plan around your life and goals.
Wealthfront alleviates the hassle of building a portfolio by hand with automated investing. But you’ll need at least $500 to get started and more competitive management fees can be found elsewhere.
How does automated investing with Wealthfront work?
Wealthfront is a robo-advisor: you answer questions about your investment goals when you sign up, and it creates an investment portfolio on your behalf with the money you use to fund your account. The answers you provide are what Betterment uses to determine your risk tolerance, and your risk tolerance is what it uses to keep your portfolio in line.
There’s no person behind the curtain here — Wealthfront’s robo-advisor relies on a sophisticated algorithm to keep your portfolio on track through a process called automated rebalancing. This is what allows you to “set it and forget it.” You don’t need to monitor stocks, make trades or worry about what the market is doing. Wealthfront tracks it all and moves investments in and out of your portfolio to maximize your return.
You need a minimum deposit of $500 to get started and can fund your account by linking an external bank account or by transferring funds from an existing investment account. And you’re free to withdraw a minimum of $250 as often as you’d like as long as there’s at least $500 in your account.
How much does Wealthfront cost?
Wealthfront’s 0.25% annual advisory fee is fairly competitive, putting it squarely in the company of platforms like Betterment, J.P. Morgan and TD Ameritrade. But here’s the thing: not all robo-advisors charge fees. M1 Finance, SoFi and Worthy all offer their automated investment services for free. Even Fidelity’s robo-advisor is free for portfolios under $10,000.
Now, if fees were the only factor worth considering, a free robo-advisor might be the way to go. But Wealthfront’s 0.25% annual management fee isn’t outrageously high — it works out to $2.50 per year on a $1,000 portfolio. That said, every penny counts towards your investment return, especially when reinvesting your returns to continue growing your portfolio.
|Minimum opening deposit||$500|
|Annual management fee||0.25%|
|Account transfer fee||$0|
In addition to an annual management fee, you’ll also pay expense ratios on any ETFs in your portfolio. ETF expense ratios are charged by the companies that run the fund, not Wealthfront. They typically range from 0.06% to 0.15%.
What are the benefits of Wealthfront?
Wealthfront has plenty going for it: financial planning tools, a wide variety of accounts and tax-loss harvesting — which not all robo-advisors can do. And while you don’t need to talk to a human for any part of the signup or investment process, advisers are only a phone call away if you need help. It’s a well-rounded platform with practical features for those new to investing or who want to have their portfolio managed for them.
- Tax-loss harvesting. Wealthfront’s robo-advisor is equipped with tax-loss harvesting: the strategic sale of some exchange-traded funds (ETFs) at a loss so you can offset income on your tax return.
- Account selection. Wealthfront’s comprehensive account lineup includes individual accounts, joint accounts, trust accounts, traditional IRAs, Roth IRAs, SEP IRAs, 529 college savings accounts and 401(k) rollover accounts.
- 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.
- Human advisers. Wealthfront’s product specialists are registered with FINRA, and many hold certifications as chartered financial analysts, certified financial planners and certified public accountants. These financial professionals are available by phone and can help you navigate the Wealthfront platform and answer technical questions.
- Portfolio 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 line of credit that lets you borrow up to 30% of your account value without any paperwork or credit check — often within 24 hours.
- High-yield cash account. With the Wealthfront Cash Account, your money can earn a 0.1% APY with no fees and FDIC insurance up to $1 million.
- PassivePlus. Wealthfront’s bundle of PassivePlus investment strategies kick in for portfolios of $100,000 or more and include stock-level tax-loss harvesting and risk parity trading strategies to minimize risk by spreading your investments across multiple asset classes.
- Smart Beta. For portfolios of $500,000 or more, Wealthfront uses industry-leading Smart Beta technology to build a personalized portfolio that will maximize growth potential through the intelligent weighting of stocks.
Compare with other robo-advisors
Compare your options by features, fees, account minimums and customer support to find the best place for your portfolio.
What to watch out for
If you prefer the human touch, Wealthfront may not be for you. It has advisers available by phone but no brick-and-mortar branches for you to connect with. Plus, Wealthfront’s $500 minimum may frustrate investors who would prefer to get started with a smaller portfolio.
- No physical branches. If you prefer a traditional banking experience, Wealthfront likely isn’t for you: It doesn’t have any physical branches to visit for an in-person chat.
- 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 investment, some of your money might be left sitting idle in your portfolio.
- Annual management fees. Wealthfront’s 0.25% annual fee simply can’t compete with the likes of a free robo-advisor, like SoFi‘s.
- Minimum deposit. You’ll need at least $500 to fund your Wealthfront account, while some robo-advisors, like Betterment, have no minimum deposit.
Wealthfront reviews and complaints
Wealthfront reviews are lukewarm but limited. As of April 2021, the platform isn’t accredited by the Better Business Bureau (BBB) and receives an F rating for failing to respond to three complaints.
Wealthfront only has three reviews on Trustpilot, earning a TrustScore of 3.4 out of 5. Negative reviews criticize Wealthfront for its customer service and the one publicly available BBB complaint identifies a money transfer issue. Positive reviews praise Wealthfront for its digital tools.
On the upside, investors seem to like Wealthfront’s mobile app. It scores 4.6 out of 5 after 4,026 reviews on Google Play and 4.9 out of 5 after 12,769 reviews in the Apple App Store. Investors report that the app is clear and easy to navigate.
How to get started
- Visit the Wealthfront website and select Invest Now.
- Answer Wealthfront’s questionnaire, which includes questions about why you want to invest, your pretax income, your tax filing status and your risk tolerance. After completing the questionnaire, you’ll receive a diversified investment plan.
- Choose Open My Account to continue.
- Create an account by entering your name and email address and creating a password.
- Enter your mobile phone number for security verification.
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
Throughout the application process, you’ll be asked to provide the following information:
- Name and date of birth
- Mobile number
- Employment information
- Financial goals
- Employment information
- Risk tolerance
I’ve signed up. Now what?
Once you fund your account, Wealthfront will build your investment portfolio for you. While Wealthfront takes care of your investments, feel free to explore the following:
- Manage your preferences. After you sign up, you’ll have the option to add more information so that Wealthfront can provide more personalized 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 have two options.
- Email. Send an email through the Wealthfront website for a response within one business day.
- Phone. Log in to your account to set up a phone call with one Wealthfront’s product specialists.
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.