Wealthfront review 2023
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Wealthfront: Best for
- Sophisticated portfolio management
- Cost-conscious investors
- All-in-one financial accounts
Wealthfront’s broad range of features – sophisticated portfolio management, a wide selection of low-cost investments and premium features such as tax-loss harvesting – put the robo-advisor among the best robo-advisors. Wealthfront scores well in virtually every area, and yet it charges no more than other robo-advisors offering less.
The robo will build you a customized portfolio, from core funds as well as socially responsible funds, cryptocurrency funds and others, depending on your needs. You’ll get features such as a capable cash management account and a robust planning tool that make Wealthfront feel like a place where you can run your financial life, and that’s beside what the company calls Self-Driving Money, a feature that lets you automate bills, investments and more. Wealthfront also lets you buy individual stocks, including fractional shares.
Wealthfront does not offer access to human advisors, however, so if those are vital to you, take a look at Betterment or Schwab Intelligent Portfolios, which have that feature, but only if you have a large balance. Or consider Ellevest, which offers access to human advisors on an à la carte basis at a discounted price for its clients.
Wealthfront: In the details
Pros: Where Wealthfront stands out
Wealthfront distinguishes itself in how it manages your portfolio, offering features that are atypical among robo-advisors. You can quickly sign up for an account, and you’ll run through a few questions on your risk tolerance and timeline, and then Wealthfront builds you a portfolio. You can move on or change your responses to the questions and receive a new portfolio or otherwise adjust the allocations in the portfolio to your own preferences.
Wealthfront has expanded the range of investments that clients can buy, and it’s well beyond what most robo-advisors offer. Where clients were previously limited to a solid core selection of low-cost funds within an expert-built portfolio, Wealthfront now allows clients to invest in the following:
- Low-cost funds in a professional portfolio
- Socially responsible, or ESG, funds
- Cryptocurrency funds
- A range of other sector or niche funds (such as commodity and tech ETFs)
- Individual stocks
You can even bring your portfolio over from a traditional broker, and Wealthfront will manage that. It also now allows clients to buy individual stocks in a stock account, and you’ll be able to purchase fractional shares of them, too.
If you have more than $100,000 with Wealthfront, you can gain access to the robo-advisor’s in-house risk-parity fund. The fund’s goal is to achieve better returns for the risks you’re taking. It costs 0.25 percent annually, or $25 for every $10,000 invested, and Wealthfront may put up to 20 percent of larger portfolios in the fund. Wealthfront estimates that it raises a portfolio’s average expense ratio by about 0.03 percent annually, or $3 on every $10,000 invested. While the fund creates a conflict of interest for Wealthfront, clients can opt out of the proprietary fund when they sign up or at any time.
If your taxable portfolio has more than $500,000, you’ll be able to access Wealthfront’s smart beta feature. This strategy weighs the stocks in your portfolio to increase your return, based on a variety of factors that may drive higher gains. There’s no extra charge for this service.
Given the complexity of the strategies, Wealthfront’s website does a great job of disclosing how they work and why you might want them, so you know exactly what the robo-advisor is doing.
Wealthfront recently introduced the ability to trade individual stocks and ETFs at no commission, giving you yet another reason to consolidate your financial life with the company. The ability to trade stocks is a less common feature for a robo-advisor, and positions the company somewhere between robo-advisor and stock broker, meaning you’ll be able to get the best of both worlds. And with individual stocks, you’ll be able to buy fractional shares, as noted.
You can easily mix and match your investments, if you want to own both. For example, if you’d like Wealthfront to manage most of your money, you could set aside, say, 10 percent to buy individual stocks, while the robo-advisor manages the remainder. You’ll have total flexibility to adjust the portfolio how you see fit.
Robust cash management account
With robo-advisors, it’s easy to focus on the fact that they manage your investment accounts. But the better ones also add in a cash management account, and the very best make it as fully featured as the best fintech banking apps. That’s the case with Wealthfront’s cash management account.
Wealthfront’s seems to do it all – so much so that you might consider relinquishing your traditional bank account:
- Earn interest on your cash
- Bill pay, check deposit and writing
- Debit card and more than 19,000 no-fee ATMs
- Access to your direct-deposit paycheck up to two days in advance
- No monthly account or overdraft fees
- Unlimited free transfers
You’ll also receive FDIC insurance for up to $5 million in cash through Wealthfront’s partner banks in individual accounts, or $10 million in joint accounts. Following some instability in the banking industry, the robo raised these limits twice in 2023, ensuring that those holding a large amount of cash at Wealthfront are protected well beyond the traditional FDIC limits. Wealthfront’s cash management account is at the top among robo-advisors.
It’s worth noting that Wealthfront’s cash management account is regularly one of the best accounts for those looking for top interest rates on their money. If the Federal Reserve raises interest rates, Wealthfront regularly adjusts its rates higher, too. Of course, the same goes if the central bank lowers its rates. The upshot for clients, however, is that you don’t have to run around searching for the best savings accounts and can rest easier knowing you’re receiving among the best rates out there.
Wealthfront’s tax-loss harvesting may be the best in the industry, and the company touts its ability to recoup the advisory fee for 96 percent of its clients in the form of tax savings. Tax-loss harvesting is available for any taxable account, not just those with a certain balance.
As a refresher, tax-loss harvesting is when you sell a losing investment to gain a tax advantage and offset other gains. It’s a time-tested (and legal) method of reducing your tax bill, and having a computer optimize your portfolio is much more efficient than having a human manage it.
Wealthfront says that the estimated median after-tax benefit is 4.7 times the advisory fee. So if you’re investing in an aggressive portfolio, you’re likely to recoup your 0.25 percent fee by four times or more.
Wealthfront also offers a more sophisticated form of harvesting for portfolios between $100,000 and $500,000. It’s called stock-level tax-loss harvesting. In its portfolios, Wealthfront replaces the U.S. stock fund with its constituent stocks, so it can take tax losses on the individual stocks rather than on the fund as a whole. (Larger portfolios have access to its smart beta program.)
Want to remove the stress of paying bills and never miss a payment deadline? What about having your investments take care of themselves? Wealthfront has a solution – what it calls Self-Driving Money. You’ll need a Wealthfront cash account set up with direct deposit and your outside accounts linked, but then the robo-advisor can automate your financial life.
You could have Self-Driving Money route money from your cash account to bills and then into various savings or investment accounts. You set it up how you want your money managed, including having different goals such as an emergency fund or a down payment. You can specify how much you want to move into your investment account, and then it’s routed instantly to the account and invested immediately. You automate it all and then sit back.
It’s a neat feature that keeps your financial life in order, and by automating your investing it even helps keep your emotions out of the process, theoretically improving your returns.
Generous portfolio line of credit
Another great feature is Wealthfront’s portfolio line of credit, which allows you to take a margin loan against a portfolio’s value, much as you could at a typical brokerage. You’ll need at least $25,000 in a taxable individual, joint or trust portfolio to take advantage. You can access up to 30 percent of your account’s value and have the money deposited in one business day.
The rates are surprisingly good — based on the federal funds rate plus a markup. If your net balance (deposits minus withdrawals) is less than $500,000, you’ll pay a markup of 3.6 percent. But the rate falls as your net balance grows, with the markup declining to 2.35 percent for loans of more than $1 million.
You won’t need a credit check or see a hit to your credit score, and you’ll know in less than a minute. Like a margin loan, you can pay back the line of credit as you see fit, with no fixed repayment schedule. But if the value of your portfolio falls significantly, you’ll need to repay some of the loan or Wealthfront will liquidate some of your positions, as is typical in the industry.
Comprehensive wealth-planning tool
Whether you become a paying Wealthfront customer or not, you’ll be able to access its Path financial planning tool. You can start building your financial plan and getting your financial accounts in order.
You can use the tool to automatically load all the information from your accounts into the planner. That’s not only brokerage accounts or retirement accounts, but also bank accounts, credit cards and even your mortgage. You won’t have to manually update anything either.
You’ll be able to project your net worth over time, establish financial goals (a house, college tuition, retirement) and see how financial decisions may affect each of these goals. Will you have enough to retire? How will buying that new car affect your overall financial picture? You don’t just get a “yes” or “no,” so you’ll see the effects on your wealth in a graphic.
To measure your potential future financial position, the planning tool pulls in third-party data on retirement spending, earnings growth, property prices and estimated college costs. Then you’ll get detailed estimates of future costs so you can make informed decisions about how to act.
It’s a spiffy tool that allows you to easily make adjustments and see the results of your decision.
Cons: Where Wealthfront could improve
Access to human advisors
Wealthfront’s customer support is available by phone from 11 a.m. to 8 p.m. Eastern and typically responds to emails within one business day. Team members all have Series 7 licenses, and several hold further designations such as the chartered financial analyst (CFA) or certified financial planner (CFP), the latter of which is a fiduciary tasked with acting in your best interest.
If there’s a downside, it’s that Wealthfront doesn’t offer unlimited access to planning from a human advisor. (A growing number of robo-advisors do – but often at much higher prices.) That said, most clients will have absolutely no concerns, and a useful online help center can walk you through the vast majority of issues. For all those non-routine tasks, you do still have the customer support team.
Wealthfront requires an initial $500 to get started with its robo-advisor – and that is higher than many rivals who allow you to get in for no account minimum. That’s a small negative and it’s nitpicking, given the range of Wealthfront services offered at a reasonable price. But it is lower than comparable robo-advisors such as Schwab Intelligent Portfolios, which requires an initial $5,000 for its base level service and even more for its premium tier.
That said, you can access Wealthfront’s planning tool at no cost or establish a Wealthfront cash management account for just a $1 deposit, and then build toward the robo-advisor account.
No fractional shares in managed portfolios
Wealthfront doesn’t let you buy fractional shares of ETFs in your managed portfolio, meaning you may not get fully invested right away. That may matter less if you have a lot of money in the account, but when you’re just starting out it can take a while to build up enough cash to be meaningfully invested. You want your money working for you as long as you possibly can, and fractional shares help.
The lack of fractional shares in managed portfolios at Wealthfront is a demerit when several other major robos offer this feature. However, you still can buy fractional shares of stocks in your Wealthfront stock account.
Betterment5.0 Bankrate Score
Betterment offers a high level of service and features across every aspect of its robo-advisor, from its core investment management to low-cost funds to premium features such as tax-loss harvesting. You can also upgrade your service if you need unlimited access to human advisors, and get access to a feature-rich cash management account, too.
Axos Invest3.0 Bankrate Score
Axos Managed Portfolios offers a strong robo-advisor service with some premium features, all at a reasonable price. Clients also receive a wide choice of funds, including socially responsible funds, though the associated cash management account forces clients to jump through some hoops to receive what is only a mediocre interest rate.
Interactive Advisors4.5 Bankrate Score
Interactive Advisors has upped its game this year, with new features such as tax-loss harvesting that put it among the top robo-advisors. That’s on top of one of the widest range of investing choices, low-cost funds and low overall fees. As strong as all these features are, though, the robo-advisor doesn’t offer access to human advisors, not unusual among robo-advisors.
SigFig3.0 Bankrate Score
SigFig keeps costs low whether it’s account fees, fund fees or the annual management fee. You’ll also get access to human advisors and benefit from automatic rebalancing and tax-loss harvesting. But the lack of a cash management account and relatively high account minimums may cause some investors to look elsewhere.
E-Trade Core Portfolios3.5 Bankrate Score
E-Trade Core Portfolios offers a capable robo-advisor, one that may work best for customers looking to keep their accounts with the broker while having someone do the investing for them. Clients will get low-cost funds as well as less-common choices such as socially responsible funds, though the service doesn’t offer tax-loss harvesting or many tools.
Titan Invest3.0 Bankrate Score
Titan offers something unusual in the robo-advisor space: Titan combines its own actively managed investments with passively managed ETFs, something no other major robo-advisor does. It also hedges those portfolios, does not charge a management fee for the passive funds – a rarity among rivals – and has a low minimum, making it easy to get started.
Morgan Stanley Access Investing3.5 Bankrate Score
For younger investors looking to invest based on their values or certain themes, Morgan Stanley’s Access Investing provides a suitable option among robo-advisors. Investors can choose between impact portfolios that focus on environmental, social and corporate governance (ESG) issues, market-tracking portfolios that minimize fees and performance-based portfolios that attempt to outperform through active management.
J.P. Morgan Automated Investing3.0 Bankrate Score
J.P. Morgan Automated Investing provides portfolio management services with automatic rebalancing and may be a good fit for existing J.P. Morgan customers. But you’ll also pay above-average management fees and have limited account types to choose from. There’s also no tax strategy included in the offering.
Vanguard Digital Advisor3.0 Bankrate Score
Vanguard Digital Advisors keeps it simple: an investment portfolio comprised of four funds at a low all-in price, and then adds on helpful tools and educational components. The combination should do well for clients who don’t need a robo-advisor to provide everything under the sun but want competent investment management from a proven and knowledgeable leader.
Fidelity Go4.5 Bankrate Score
Fidelity Go offers a solid robo-advisor offering that beginning and cost-conscious investors will especially appreciate. However, investors looking for features such as tax-loss harvesting or comprehensive goal planning may be disappointed.
Personal Capital4.0 Bankrate Score
Personal Capital customers will get an experience that more closely resembles that of a traditional financial advisor than a robo-advisor, but you’ll need at least $100,000 to get started. You’ll also get a comprehensive tax strategy to help minimize what you owe to Uncle Sam. But this higher level of service does come at an above average cost compared to the rest of the robo-advisor industry.
Stash3.5 Bankrate Score
Stash’s managed portfolios might appeal to small investors who are looking to save as they spend, but the monthly fees can be high for investors who don’t have a large balance built up and there are only a few types of accounts available.
M1 Finance4.5 Bankrate Score
M1 Finance takes some of the best of what brokers and robo-advisors do and mixes it into a new service that provides automated investing in a fully customizable portfolio – all for no cost. If you want to take it up a notch, you can pay an additional fee and receive a host of upgraded features, including one of the best cash management accounts out there.
Ellevest3.5 Bankrate Score
Ellevest brings a competent and well-considered robo-advisor, pitching itself to women, whose financial needs are traditionally underserved. But don’t think it won’t work for anyone who needs nuanced investment management, since it offers low-cost funds, socially responsible funds and – unlike most rivals – a flat monthly fee, making it advantageous for those with more to invest.
Schwab Intelligent Portfolios5.0 Bankrate Score
Schwab Intelligent Portfolios provides a top robo-advisor experience that should be a good fit for many investors. The basic plan comes with no management fee and a low-cost portfolio, plus you’ll get Schwab’s top-notch customer support and easy-to-use platform. The premium plan comes with unlimited access to human financial advisors, but both plans come with above-average account minimums and tax-loss harvesting isn’t an option until you reach at least $50,000 in assets.
Acorns3.5 Bankrate Score
Acorns is a good choice for new investors who are starting with small sums of money, allowing customers to build a diversified portfolio with just a few dollars. However, the fees are above average for small account values, though they’ll decline as your portfolio grows, and you won’t find any tax strategy as part of the robo-advisor offering.
Wells Fargo Intuitive Investor4.0 Bankrate Score
Wells Fargo Intuitive Investor is a solid robo offering that gives customers easy access to human financial advisors at no additional cost along with tax-loss harvesting that can help you save on taxes. However, the management fee is above average unless you’re an existing Wells Fargo banking customer.
Ally Invest Managed Portfolios4.0 Bankrate Score
Ally Invest Robo Portfolios are a good option for new investors who pay particular attention to costs. Existing Ally clients may also appreciate having all their finances in one place. Unfortunately, Ally doesn’t offer tax-loss harvesting or provide human advisors to help with those especially difficult questions.
Merrill Guided Investing3.5 Bankrate Score
Merrill Guided Investing offers a credible investing service for Bank of America customers, but its high management fee makes it less attractive among a competitive field of robo-advisors. Merrill offers several positives, including access to human advisors and low-cost investment funds, but premium features such as tax-loss harvesting are missing.
SoFi Automated Investing4.5 Bankrate Score
SoFi Automated Investing gives cost-conscious investors a solid robo-advisor offering that comes with access to human financial advisors at no additional cost. But the lack of tax-loss harvesting and no socially responsible investing options may cause more sophisticated investors to look elsewhere.
Marcus Invest4.0 Bankrate Score
Marcus Invest offers the core feature of a robo-advisor – portfolio management – and then adds some twists, such as several portfolio types, all for a cost-competitive fee. It’s a great add-on for current Marcus customers, though some features of higher-end robo-advisors such as tax-loss harvesting and an expansive toolset are missing.