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.
What I think of Wealthfront
Wealthfront is a well-equipped robo-advisor suitable for investors new and experienced — if you want your portfolio managed for you. And as long as you don’t mind that it won’t be a person overseeing your investments: it’ll be an algorithm.
Let me break down the benefits real quick: Wealthfront is equipped with automated rebalancing, tax-loss harvesting, a sweeping selection of accounts, tiered perks for larger portfolios and a well-reviewed mobile app. Oh, and there are human advisers on staff — many of them certified financial planners — available for account support.
Honestly? There’s not a whole lot to criticize about this investment app. Outside its $500 minimum deposit requirement and 0.25% management fee, I think Wealthfront has a lot going for it.
Of course, it likely won’t appeal to active traders since it does the buying and selling for you. And for those who prefer the human touch, its advisers are only available by phone and don’t manage portfolios: they’re primarily on hand to answer questions.
But for investors seeking a straightforward robo-advisor, Wealthfront is a solid candidate.
The platform is simple and easy to use
Wealthfront is a robo-advisor — and the investment process doesn’t differ much from most of the other robo-advisors on the market.
- You answer a financial questionnaire.
- Wealthfront puts together an investment portfolio.
- You approve the portfolio and fund the account.
- Wealthfront invests your money.
There’s no person behind the curtain here — Wealthfront’s robo-advisor relies on a sophisticated algorithm to keep your portfolio on track. That’s what automated rebalancing is — and what the financial questionnaire is for.
Your responses are used to determine your risk tolerance and portfolio makeup. 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 — simply sign in to the online dashboard or mobile app to see how your investments are 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. Also, 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.
If your financial circumstances change, update your preferences or add information to your account for a more personalized experience at any time.
The 0.25% fee is competitive
|Minimum opening deposit||$500|
|Annual management fee||0.25%|
|Account transfer fee||$0|
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.
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%.
7 perks to using 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. Benefit from the strategic sale of exchange-traded funds (ETFs) at a loss so you can offset income on your tax return.
- Account selection. Choose from individual, joint and trust accounts, traditional IRAs, Roth IRAs, SEP IRAs, 529 plans and 401(k) rollover accounts.
- Free financial planning. Analyze your finances to assemble a custom plan to grow your money and explore investment tips on the Wealthfront blog.
- Human advisers. Speak to FINRA-registered advisers to better help you navigate the Wealthfront platform and answer technical questions.
- Portfolio line of credit. Borrow up to 30% of your account value so long as your account contains at least $100,000 and isn’t a tax-advantaged retirement account.
- PassivePlus. Unlock stock-level tax-loss harvesting and risk parity trading strategies with a portfolio of $100,000 or more.
- Smart Beta. Build a personalized portfolio that will maximize growth potential with Smart Beta technology for portfolios of $500,000 or more.
4 Wealthfront drawbacks
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’d prefer to start 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 are mixed
Wealthfront reviews are lukewarm but limited. As of June 2021, the platform isn’t accredited by the Better Business Bureau (BBB) and receives an F rating for failing to respond to two 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 4.5 out of 5 after 4,279 reviews on Google Play and 4.9 out of 5 after 13,320 reviews in the Apple App Store. Investors report that the app is clear and easy to navigate.
What to expect of the application process
- 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
Get help via phone or email
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 of Wealthfront’s product specialists.
Alternatives to Wealthfront
Wealthfront has plenty of robo-advisor standards, including automated rebalancing, tax-loss harvesting — even human advisers on hand to act as account support. But there are a few places it misses the mark, and it won’t be a sensible fit for everyone.
Take its $500 minimum deposit requirement, for example. If you’re just starting out and can’t meet the minimum, look for a platform that doesn’t impose a minimum deposit requirement, like Betterment.
Or maybe you want a platform that takes automated investing a step further with transactional round-ups. If that’s the case, you’ll want to look at a service like Acorns.
There are plenty of platforms to consider, so weigh your options by comparing features, investor feedback and trading fees to find the account best suited to your financial goals.