Wealthfront review
Discover more about Wealthfront, the robo-advisor firm, including its fees, pros and cons, minimum account size, and investment strategies. Decide if it’s the right fit for you.
Summary
Wealthfront is an automated investment platform that offers low-cost, passive portfolio management.
It provides tax-efficient strategies, automated rebalancing, and financial planning tools.
The platform has a flat 0.25% annual advisory fee and requires a $500 minimum investment.
It does not offer any access to human financial advisors, so it is best suited for hands-off investors who want a tech-driven approach to wealth management.
Wealthfront: who are they?
Wealthfront is a robo-advisor that automates investment management using technology and financial algorithms.
Founded in 2008 under the name KaChing, it relaunched in 2010 under the name Wealthfront.
The company specializes in helping “young professionals build long-term wealth in any market condition.”
Since its inception, it’s grown into one of the leading platforms for passive investing, helping clients build diversified portfolios with minimal effort.
What does Wealthfront do?
Wealthfront provides numerous financial planning tools aimed at investors of all levels, including:
Cash accounts
Retirement planning
Investment planning
It provides automated portfolio management using Modern Portfolio Theory (MPT), a mathematical framework for assembling a portfolio with the expected return based on the specified risk level.
Using this approach, the firm creates personalized investment plans based on an investor’s risk tolerance and financial goals. Features include:
Automated rebalancing to maintain an optimized portfolio
Tax-loss harvesting to improve tax efficiency
Smart savings tools for better cash management
Stock-level tax-loss harvesting for accounts over $100,000
Wealthfront: fees
Wealthfront’s fees vary depending on the type of account and features you use. The platform is known for its low-cost structure, offering automated investing at competitive rates.
| Service | Fee |
|---|---|
| Service | Fee |
| Annual advisory fee | 0.25% |
| ETF expense ratios | Varies (~0.06% - 0.15%) |
| Account minimum | $500 for automated investment accounts & $1 for cash and stock investing accounts |
| Account fees | $0 |
Below is a breakdown of the fees associated with the firm’s different investment accounts:
Automated Index Investing Accounts: 0.25% annual advisory fee
Automated Bond Portfolio: 0.25% annual advisory fee
Automated Bond Ladder: 0.25% annual advisory fee
S&P 500 Direct Portfolio: 0.09% annual advisory fee
Stock Investing Account: No fees. Wealthfront does not charge commissions or account fees or accept Payment for Order Flow (PFOF).
For example, for an Automated Investing Account with an average monthly balance of $100,000, the monthly advisory fee would be $20.55.
Wealthfront deducts the advisory fee monthly from the total assets in the account. The platform does not charge:
Account opening fees
Withdrawal or account closing fees
Trading or commission fees
Account transfer fees
What is Wealthfront’s minimum account size?
Wealthfront requires a minimum investment of $500 to open an account, which is relatively low compared to traditional financial advisors.
However, certain advanced features have higher minimum investment requirements:
US Direct Indexing: $100,000 minimum investment
Smart Beta: $500,000 minimum investment
S&P 500 Direct Portfolio: $20,000 minimum investment
These thresholds allow Wealthfront to implement more sophisticated investment strategies tailored to higher-net-worth individuals.
What are the pros and cons of Wealthfront?
Before opening any type of financial account, it’s important to weigh up the pros and cons, ensuring it’s the right decision for you.
Here is a breakdown of just some of the pros and cons associated with Wealthfront.
Pros of Wealthfront:
Low 0.25% management fee
Automated tax-loss harvesting for taxable accounts
Diversified ETF portfolios with rebalancing
Integrated financial planning and savings tools
Cons of Wealthfront:
No access to human financial advisors
Limited customization for advanced investors
Requires a $500 minimum investment
If you want to see how Wealthfront compares to other financial advisory companies, check out our reviews:
Wealthfront: is it secure?
Wealthfront uses bank-level encryption and two-factor authentication (2FA) to protect client data.
Accounts are insured by SIPC (up to $500,000, including $250,000 for cash) and held with trusted custodians, ensuring safety and reliability.
It is SEC-registered and operates under FINRA regulations. Additionally, customer funds are held by reputable custodians, and investments are SIPC-insured for up to $500,000.
Wealthfront: customer service
Wealthfront offers online customer support via a help center and email.
Unlike some competitors, it does not provide phone support or direct human financial advisory services.
Support hours are limited to weekdays, making it less accessible for urgent inquiries.
Is Wealthfront worth it?
Wealthfront is worth it for investors looking for low-cost, automated investing with advanced tax strategies.
It provides diversified portfolios, tax-loss harvesting, and smart savings tools, making it a strong choice for passive investors. However, those seeking personalized financial advice may find other platforms more suitable.
Wealthfront: additional investment options
Alongside its investment accounts, Wealthfront offers other investment options for its users.
Retirement
Wealthfront offers Roth IRAs as part of its retirement account options. It automates contributions, rebalancing, and tax-loss harvesting to optimize retirement savings.
Additionally, its Path financial planning tool helps users estimate future retirement income based on their current savings.
College
The firm also offers 529s accounts, which is a tax-advantaged account specifically designed to help save for your child’s third-level education.
This is a hands-off approach, with Wealthfront managing the trades and automatically adjusting your account in line with your risk over time.
ESG
Environment, social, and government (ESG) conscious investing has grown in prominence in recent years. Wealthfront offers its users the option to build a socially responsible investment portfolio.
Again, this is a hands-off way to manage your money while also sticking to your beliefs, with Wealthfront handling the rebalancing and tax-loss harvesting for you.
While robo-advisors like Wealthfront offer an excellent low-cost solution for passive investing, they may not be the best fit for everyone.
If you’re looking for personalized financial advice, customized investment strategies, or hands-on financial planning, working with a professional advisor can be beneficial.
Writers
Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.