Wealthfront Review: Is It the Right Robo-Advisor for You?

GOBankingRates Score

4.7
Our Take: Wealthfront is part of a growing group of robo-advisors that aim to make investing easier and more accessible. The company has figured out how to offer significantly more FDIC insurance on your bank deposits than a traditional bank will, and it has built the software infrastructure to guide you through checking and savings accounts, investing and the creation of a sound financial plan. Most impressively, Wealthfront will help you assess the biggest financial moves you're likely to make — from buying a home to saving for college, retirement and even travel.
  • Customer Experience
    4.8
  • Breadth of Products
    4.5
  • Innovation
    4.8
  • Trustworthiness
    4.6
How did we calculate this?

    Pros

    • One-stop-shop capabilities spanning checking, savings, investing and retirement accounts, along with 529 plans
    • $1 million in FDIC insurance via partner banks or up to $2 million for joint cash accounts
    • Automated portfolio rebalancing process
    • Daily tax-loss harvesting is available in all portfolios
    • Both phone and email support are available

    Cons

    • You'll need at least $500 to begin investing and $100,000 to pursue stock-level tax-loss harvesting
    • You won't be able to purchase individual stocks
    • Fractional shares are not available
    • Beneficiaries and custodial accounts are not currently supported
    • Not available to customers outside the U.S.

    What Is Wealthfront?

    Wealthfront is a robo-advisor, or a digital platform that tries to automate the process of investing. The company offers end-to-end financial management, starting with an interest-bearing checking account as a baseline.

    From there, users can categorize savings goals and schedule money to deposit into those earmarked buckets. Those interested in investing can open a brokerage account, a 529 or an individual retirement account.

    Who Is Wealthfront Best For?

    Like other robo-advisors, Wealthfront caters to those who need or want to save, invest and plan for the future without the overhead of paying a financial advisor. By offering a full suite of accounts and automating the oversight process, Wealthfront provides an expert-led, seemingly fuss-free path to financial health and progress.

    Wealthfront Features

    At Wealthfront, financial planning is powered by a proprietary software called Path. Using the information you provide, as well as the accounts you link to Wealthfront, Path updates daily to assess your current financial state, help you gauge the impact of potentially significant money decisions you’re considering, and provide projections about your future.

    Estimating Home Affordability

    Thinking of buying a home? You may want to wait until we’re back in a buyer’s market, but whenever you’re ready, Wealthfront’s financial planning software will help you figure out what you can afford. The system is programmed to predict how tight money will be and the impact that buying your desired home will have on your other financial goals.

    Planning Time Off for Travel

    This feature shows that Wealthfront understands that its customers are seeking a more flexible lifestyle when they choose to invest in a more secure future. For users interested in long-term travel, the site offers a feature that will factor the details of your intended trip against your current financial state and long-term goals to give you an affordability rating for the desired travel experience.

    Planning for College

    It can be hard to know whether your college savings fund is on track or in need of a lift. It gets easier with Wealthfront, which uses real-world statistics on tuition, inflation, financial aid and 529 returns. Wealthfront will estimate the cost of college for your child and what you’ll be able to afford once it’s time to enroll.

    Putting Retirement in Motion

    Wealthfront makes retirement tangible by estimating what your net worth will be at retirement and projecting the amount of money you’ll be able to spend each month to be comfortable. You’ll be able to tweak the projected outcome by playing with the variables, such as retirement age and anticipated spending in your retirement years.

    Borrowing Against Your Portfolio

    If you have at least $25,000 in a taxable investment account with Wealthfront, you’re eligible to borrow money via a Portfolio Line of Credit. You can borrow an amount roughly equivalent to 30% of your portfolio’s value, with minimal exclusions, up to $1.5 million.

    Is Wealthfront Right for You?

    If you typically lack the confidence to invest or routinely fall short on time to do enough financial tracking and performance management, Wealthfront could be a great tool for you. What’s particularly interesting about Wealthfront is that you don’t just have to hand over your money and trust the experts.

    It provides you with a suite of banking and investing accounts, paired with the ability to create a free financial plan and evaluate major financial choices and opportunities before they become a part of your portfolio.

    A Serious Step Toward Financial Literacy

    Wealthfront has chosen to bet on consumers’ willingness and ability to educate themselves on how to build, maintain and improve upon financial health. Although its chops as a robo-advisor are solid, its best facet is the bet on education.

    It’s easy, and very pleasant, to imagine a future in which all of us have access to the sophisticated financial analysis that will point us toward or away from the money choices that have the potential to make or break us. Wealthfront has imagined that future and is marching toward it.

    Wealthfront FAQ

    Here are some answers to commonly asked questions about Wealthfront.
    • What are the fees for investment accounts?
      • Wealthfront charges an advisory fee of 0.25%, which is deducted monthly. The company also earns a 0.25% expense ratio for its Wealthfront Risk Parity mutual fund, which can comprise up to 20% of your portfolio.
    • Who's monitoring my portfolio?
      • Wealthfront keeps fees manageable because you don't need to pay a financial advisor. Assets under management are overseen by compliance systems and professionals, who watch for issues and make sure that the company's investment strategy is running smoothly.
    • What is tax-loss harvesting?
      • It's a strategy for taxable investment accounts that aims to reduce and defer your tax bill by selling declining investments at a loss, thus lowering your future tax bill and leaving you with more money to invest now. Wealthfront offers this service daily, but do your research before signing up — tax-loss harvesting can be a complex process.

    About the Author

    Kelli Francis is a writer and content strategist. She started her career with a degree in journalism from the University of Oregon and went on to work in some of the industry’s busiest newsrooms, from The Seattle Times to MSN.com, WebMD and Yahoo. In nearly a decade at Yahoo, she worked as an assistant managing editor at Yahoo Finance, specializing in personal finance content; a producer for Yahoo News; and a managing editor on Yahoo’s home page team. A perennial seeker, Kelli is currently expanding her knowledge of all things finance as a student at The American College of Financial Services. She is also the very proud mom of a wonderful and unstoppable 7-year-old with Autism Spectrum Disorder.  

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