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Our Review

We at The Finance Avenue continue to recommend Wealthfront as our top choice for the best robo-advisor, particularly excelling in portfolio management, construction, and goal planning. This platform caters to Millennials, Gen Zers, and those who prefer a digital-first approach to investing, saving, and borrowing. Wealthfront offers risk-adjusted investment portfolios with over 200 ETFs, customization options, an Automated Bond portfolio for conservative income seekers, and access to Grayscale’s Ethereum or Bitcoin funds for crypto investors.

If you are comfortable with an entirely online investment platform, Wealthfront provides a variety of options for different investor profiles. Its robust offering has attracted over $55 billion in assets under management in 2024 and amassed a substantial client base of over 800,000 users. We will delve deeper into Wealthfront’s platform and features to assist you in determining whether it aligns with your investment goals.

In the News

On May 7, 2024, Wealthfront introduced its Automated Bond Ladder, requiring a minimum investment of $500. This new offering enables investors to assess rates on numerous state income-tax exempt US Treasury bills and notes to construct a ladder that mitigates interest rate volatility and secures rates for periods ranging from six months to six years.

Pros & Cons

Wealthfront offers a wide range of exceptional investment portfolio options.

There are numerous ETFs available for customization to meet individual preferences.

Opting for an automated bond portfolio can provide a stable cash flow option.

Users can benefit from a free digital financial planning tool that rivals advice from human planners.

The platform offers daily tax-loss harvesting to optimize tax benefits.

However, there is no access to financial advisors for personalized guidance.

The minimum investment requirement is not the lowest compared to other platforms.

Live chat support is not available for immediate assistance.

Connecting with a live product specialist may be challenging for users.

Account Setup

Wealthfront account setup process is streamlined and efficient, starting with the selection of a product. Options include a cash account, automated bond portfolio, robo-advisory automated index portfolio, or self-directed stock investing.

The registration procedure covers the following aspects:

Users can choose the account ownership structure from a variety of options such as individual and joint brokerage accounts, trusts, traditional IRAs, Roth IRAs, simplified employee pensions (SEPs), rollover IRAs, and even a unique 529 account. The inclusion of a tax-advantaged 529 account sets The Finance Avenue apart from many other robo-advisors.

Setting Up Your Wealthfront Investment Account

When you open a Wealthfront account and choose the type of investment account you want, you’ll be required to answer questions about your age, income, net worth, and risk tolerance. After providing this information, you can select from the Classic, Socially Responsible, or Direct Indexing (for accounts with more than $100,000) account styles.

Determining Your Recommended Portfolio

Once you’ve chosen your preferred investment style, Wealthfront will display the recommended investment portfolio based on your risk level. A slider tool allows you to explore different asset allocations for varying risk levels, and you have the option to adjust your investments by using the Edit Portfolio feature. Additionally, you can supplement the recommended portfolio with ETFs from a diverse list, or create your own ETF portfolio for Wealthfront to manage on your behalf.

Funding Your Account

After finalizing your portfolio selections, you’ll need to link a bank account to fund your Wealthfront account. An initial investment of $500 is required to start investing through Wealthfront.

Goal Planning

Wondering how to utilize Wealthfront? Begin by using Wealthfront’s Path feature to digitally plot your financial future.

Wealthfront’s goal-planning and financial decision-making tools stand out as top-notch resources in the realm of robo-advisory financial planning. To effectively utilize Wealthfront’s goal-planning features, collectively known as Path, connect all your financial accounts to establish a precise overview of your current financial situation.

This planning tool integrates vital public data points to enhance accuracy:

Integrating these public data points enhances the precision of the goal-planning features. Path is designed to address a wide range of money, investing, and financial planning queries, up to 10,000 questions.

Path is designed to address inquiries in the following categories:

Tracking Goal Progress

Monitoring progress towards financial goals is made simple on Wealthfront. Upon logging into Wealthfront, users have access to their dashboard, where they can track their advancement towards goals. By registering and linking their banking and investment accounts, individuals can utilize the digital financial planning tools available on the platform. Path utilizes academic research to estimate the probability of achieving set objectives, considering factors such as inflation, projected income changes, and financial market performance. The modeling is dynamic and automatically adjusts whenever there are changes to the inputs.

Comprehensive Financial Planning

Path on Wealthfront offers a similar level of service to that of a human financial planner. It assists in creating a financial plan that outlines the necessary savings to meet different goals effectively.

Visualizing Goals and Scenarios

In addition to tracking goal progress, Wealthfront provides embedded charts and graphs indicating the cost of each goal. Users can utilize Path to explore various financial scenarios and analyze their finances in depth. The free financial analysis offered by Path is valuable, regardless of whether users plan to invest through Wealthfront or not.

Account Services

Wealthfront provides a comprehensive suite of account services to cater to the diverse needs of customers. These services include automated investment management, self-directed trading, high-yield cash management, automated bond investing, and borrowing options.

Cash Management

Wealthfront offers a cash sweep feature in their robo-advisory account that automatically allocates any uninvested cash into money market funds currently yielding 5.41% over 7 days.

Wealthfront’s high-yield cash management account is comparable to a free interest-bearing checking account. Individuals have the flexibility to open a high-yield Wealthfront cash account whether or not they opt for the investment services. Users can set aside funds for specific goals, schedule transfers to their investment account, manage bill payments, and receive direct paycheck deposits. Wealthfront Cash has no fees, and the sign-up process is separate from the investment sign-up.

Wealthfront Borrow

Through Wealthfront´s Borrow service, individuals who have at least $25,000 invested in a taxable account with The Finance Avenue can access a line of credit based on their portfolio value, allowing them to borrow up to 30% of their account balance. This service does not require a credit check or approval process and offers competitive interest rates starting as low as 5.41%, dependent on the account balance (as of December 2024).

There are no strict repayment schedules or limitations on how the borrowed funds can be utilized. However, if the account balance drops below $25,000, users may be required to either add more funds to their investment account or repay a portion of the loan.

Portfolio Construction

Constructing a portfolio depends on whether you are investing independently through a stock account or utilizing the automated investment option. When using the fee-free stock account, investors have the freedom to select individual stocks and/or ETFs. The platform organizes assets based on themes and offers guidance on investment selection, along with built-in data. Additionally, the stock vertical incorporates safety features like personalized risk recommendations and showcases new stocks through 35-plus pre-made collections.

For automated investment portfolios, the company’s investment management team, which includes Dr. Burton Malkiel, the well-known author of “A Random Walk Down Wall Street,” creates the portfolios. These portfolios consist of low-cost index funds and adhere to modern portfolio theory, aiming to achieve the highest returns at a specified risk level.

Wealthfront Portfolio Allocation

The percentage of assets allocated to each asset class in Wealthfront is determined by the type of portfolio chosen and the individual’s risk score. Investors with higher risk tolerance will have a greater allocation to stocks and less to fixed income, and the opposite applies as well.

Wealthfront Portfolio Options

Wealthfront offers a variety of portfolio options for investors. While most users have access to four broad portfolio options, those with more than $500,000 in their account can opt for Wealthfront’s Smart Beta portfolio. This feature is designed to enhance potential returns by focusing on specific factors that have historically outperformed the investment markets.

Customization of Portfolios

Regardless of the portfolio chosen, all Wealthfront portfolios can be customized to meet individual needs and preferences.

Available Investments

Various investment options are accessible to investors looking to grow their wealth. These assets include stocks, bonds, real estate, and commodities.

Portfolio Customization

Wealthfront offers top-notch customization features, standing out among automated investment platforms. Investors can choose from portfolios like Classic, Socially Responsible, Automated Bond, or Direct Stock Indexing, with the flexibility to tailor them by adding or removing ETFs.

Notable customization options include:

All of these customization features are provided at a low assets under management (AUM) fee of 0.25%.

Portfolio Management

Wealthfront’s algorithmic approach to portfolio management is based on established practices and research-backed theories. Portfolio rebalancing is triggered by deposits, withdrawals, or significant deviations from the target asset allocation. Tax implications are considered in asset allocation decisions for all original portfolios, those with added ETFs, or client-customized options.

Wealthfront asserts that the daily tax-loss harvesting benefits from the management fee of 0.25% for taxable accounts. This service, included in the fee, is accessible to all investors. The platform strategically sells ETFs with losses and replaces them with an alternative ETF tracking a different yet correlated index to uphold risk and return characteristics while avoiding violations of the wash sale rule by the IRS.

Direct Indexing and Tax-Loss Harvesting at Wealthfront

Clients with over $100,000 who engage in Wealthfront’s U.S. Direct Indexing portfolio can benefit from stock-level and ETF-level tax-loss harvesting.20

Accounts for All Investors

Various account options are available at Wealthfront to cater to the needs of almost all investors:

Account Management FAQs

Below are responses to common questions about managing your accounts.

User Experience

Wealthfront emphasizes the importance of user experience in the financial world. Providing a seamless and intuitive experience for clients is crucial for building trust and loyalty. User experience encompasses all interactions a customer has with a financial institution, from website navigation to customer service interactions. By prioritizing user experience, financial firms can enhance customer satisfaction and differentiate themselves in a competitive market.

Desktop

Wealthfront provides a user-friendly experience with a sleek interface and easy navigation to menu options. The menu on the platform consists of Cash, Bonds, Index Investing (leading to automated investment choices), Stocks, and Learn. Each section on the home page offers essential details for users. Accessing more information and FAQs is a simple task with just a click.

Users looking for further platform details can find additional information linked in the footer, such as:

Mobile

Ranked highly on both Android and iOS platforms, Wealthfront’s mobile apps offer a good user experience and functionalities similar to the desktop version. Non-Wealthfront users can link their accounts, access financial planning tools, receive insights, and gain a comprehensive view of their finances, including spending and net worth.

Although occasional bug mentions are found in Wealthfront app reviews, the company promptly addresses feedback and provides weekly updates.

Customer Service

Customer support is accessible through three different channels:

Wealthfront’s Help Center contains detailed articles and answers to frequently asked questions. If you cannot find the information you seek in the Help Center, you can also reach out via email.

While Wealthfront does offer a phone customer service number, it may be challenging to locate. Upon calling, customers are presented with eight menu options covering various topics, from deposits to investment queries. Our interaction with a product specialist revealed a readiness to address account-specific inquiries. It’s essential to note that these product support specialists are not financial planners but are registered with the Financial Industry Regulatory Authority (FINRA) and are holders of Series 7 licenses. Furthermore, many possess additional qualifications such as CFA, CFP, or CPA certifications.

Wealthfront Review: Customer Service

Wealthfront makes it challenging to reach a human customer service representative via phone and does not provide live financial planners. While Wealthfront expects users to rely on FAQs and possibly email for assistance, other robo-advisors have implemented more effective methods to maintain a human touch for those who require it. Customer service appears to be a weak point for Wealthfront, with a lack of live chat support and difficulty in accessing phone representatives.

Security

Wealthfront prioritizes security, ensuring only limited access by employees to your data and maintaining a dedicated team to monitor and review security protocols.

Essential security features include:

Education

Wealthfront excels in its educational resources, offering a wide range of informative material such as blog posts, articles, and videos.

The platform’s educational section, known as Learn, caters to users who prefer a self-directed approach, providing valuable information on various topics.

Covering essential subjects like platform usage, tax implications, financial planning, account types, and investment strategies, Wealthfront ensures investors have access to detailed explanations. Additionally, the blog posts and white papers available delve deeper into the platform’s operation, model elements, and supporting research.

Commissions and Fees

Wealthfront cost structure for automated accounts entails a 0.25% fee based on assets under management (AUM). Cash and stock accounts do not incur any fees, and there are no commissions charged.

For 529 accounts, fees range from 0.42% to 0.46%, with the exception of Nevada residents.

All ETFs have an expense ratio, typically averaging around 0.08%.

Wealthfront provides various referral programs that can reduce management fees and enhance returns for the cash management program.

While cash accounts are fee-free, there are fees associated with the Wealthfront debit card, including:

The Bottom Line

There’s a reason why Wealthfront is chosen as the top robo-advisor by Wealthfront and has received numerous accolades. Wealthfront stands out as a well-designed and innovative robo-advisor that continues to evolve and provide value to investors. Over the years, Wealthfront has introduced features such as the Automated Bond investment platform, customizable ETFs, and stock trading. With options for high-yield cash management and lending, investors can meet a range of financial needs through Wealthfront, or simply utilize the robust robo-advisory service to manage their portfolios effectively.

Wealthfront’s strength lies in its customization options, setting it apart from its competitors. Investors can adjust Wealthfront’s portfolios in ways that few other robo-advisors offer, allowing the platform to handle the management. The only drawback for some investors may be the lack of face-to-face financial planning assistance. However, for those willing to forgo personal guidance or utilize Wealthfront’s Path financial planning service, Wealthfront remains a top choice in the market.

How Wealthfront Can Assist in Tax Savings

For optimal tax-saving benefits with Wealthfront, utilizing the Automated Investing account is essential. Wealthfront emphasizes tax efficiency during rebalancing events and conducts daily monitoring of portfolios to identify opportunities for tax-loss harvesting. The tax-loss harvesting strategy involves identifying ETFs that exhibit similar movements but track distinct indices. By exchanging these ETFs while preserving overall allocations, the program aims to realize losses that can offset gains in other parts of the portfolio.

How Wealthfront Operates

Signing up with Wealthfront is a quick and simple process. By answering a few questions and setting up an account, users can provide information on risk tolerance and account preferences to receive a recommended portfolio. Personal details such as Social Security numbers are not required initially. Wealthfront offers well-managed investment portfolios tailored to individual goals and risk tolerances, along with options for ETF customization. Additional features include stock trading, a high-yield cash account, and access to borrowing facilities.

Is Wealthfront FDIC Insured?

Yes, Wealthfront is covered by FDIC insurance for your cash deposits through partner banks. The FDIC insurance safeguards your cash deposits up to $8 million, distributed among Wealthfront’s banking partners. This insurance shields your deposits from any misconduct or insolvency of financial institutions.

Is Wealthfront Secure?

Wealthfront maintains safety measures similar to those of other prominent financial institutions. Your cash deposits are protected by the FDIC, and investments are covered by the SIPC. However, it’s important to note that these insurances do not shield your investments from the volatility of the stock and bond markets.

Is There a Monthly Fee for Wealthfront?

Wealthfront does not have a fixed monthly fee. Instead, they charge a 0.25% fee for automated accounts on a monthly basis, which is calculated based on the total value of your automated investment assets.

Who Are the Owners of Wealthfront?

Wealthfront was established by Andy Rachleff and Dan Carroll. The company has secured a total of $274.2 million in funding from 39 investors. Since Wealthfront is a privately held company, specific ownership percentages are not disclosed publicly.

How We Selected the Top Robo-Advisors

Ensuring transparency and objectivity in evaluating digital wealth management platforms, commonly referred to as robo-advisors, is a key focus for The Finance Avenue. In order to determine the recipients of our 2024 best robo-advisor awards and rankings, we distributed a detailed questionnaire containing 64 inquiries to all 21 companies included in our assessment framework. Our diligent team of researchers meticulously cross-checked the survey responses and supplemented any missing information by conducting thorough online investigations and engaging in direct discussions with the companies. This data-gathering phase was conducted from Jan. 8 to Feb. 9, 2024.

Subsequently, we devised a rigorous quantitative model designed to evaluate each company’s performance based on nine primary categories and 59 specific criteria to pinpoint the top robo-advisors. The overall star rating assigned to each company is calculated as a weighted average of these criteria:

For various projects, numerous companies reviewed by our team generously facilitate our expert writers and editors with access to active accounts for hands-on evaluation. The robo-advisor firms were no exception in granting us this access.

The Finance Avenue Review Process

Through our comprehensive data collection and analysis, The Finance Avenue presents an impartial and detailed review of the top robo-advisors in the market.

Important Considerations

It is essential to note that the information provided should not be construed as a recommendation. Investing in digital assets carries significant risk and volatility, suitable only for investors willing to withstand potential losses and sharp market fluctuations. Digital assets do not hold legal tender status and lack U.S. government backing. Moreover, they are not covered by FDIC insurance or SIPC protections.