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Wealthfront is one of the best robo-advisors for investing in ESG funds and low-cost automated portfolio management. Wealthfront also provides features like tax-loss harvesting, US direct indexing, and crypto trusts. But if you want access to financial advisors, you'll need to look elsewhere.
Business Insider's personal finance team compared Wealthfront to the best stock trading apps and robo-advisors and found it to be a strong enough product to make both lists.
Introduction to Wealthfront
Wealthfront is an automated investing platform offering multiple brokerage account options, including IRAs and 529 plans with curated portfolios designed by financial experts. Passive investors can trade ETFs, index funds, crypto trusts, portfolio lines of credit, and low-cost bond ETFs for low-risk investing.
Wealthfront's tax-loss harvesting effectiveness is one of its best features. Other notable features include auto-rebalancing, risk parity, US direct indexing, and smart beta tools. However, the online brokerage does require a $500 minimum, which is higher than some of the other top robo-advisors (such as SoFi and Fidelity).
While it's great for socially responsible investing and hands-off investors who don't want to trade independently, Wealthfront is also a great platform for investors wanting more control over their portfolio's asset allocation. However, it only has investment options for crypto trusts (not the coins or tokens themselves), and these trusts are not eligible for certain features like tax-loss harvesting.
Wealthfront is great for hands-off investors, retirement-focused individuals, and socially responsible investing. Although the robo-advisor is more expensive than similar automated platforms, it provides users with a strong selection of account tools and features, like tax-loss harvesting.
It's not a good choice for active investors.
How Wealthfront Works
Wealthfront Brokerage Accounts
You can start investing with an individual brokerage account or another person for a joint brokerage account. And though its minimum deposit is higher than many other robo-advisors (such as Betterment, or Ellevest), you'll get access to automated financial planning with Wealthfront, in addition to other features:
- Tax-loss harvesting: Wealthfront replaces any securities that have suffered loss with this strategy and reinvests the funds into other assets that match your portfolio's target. You can then write off those losses on your tax return, lowering your tax bill. However, crypto trusts are not eligible for tax-loss harvesting.
- US direct indexing (formerly called stock-level tax-loss harvesting): Wealthfront says it works to harvest even more losses by searching for price changes within individual stocks in the US stock index. You'll need a minimum of $100,000 to use direct indexing.
- Risk parity: This approach uses an asset allocation strategy to boost your risk-adjusted returns. As with US direct indexing, you'll also need a minimum of $100,000 for this strategy.
- Smart beta: Wealthfront focuses on increasing your returns by strategically weighing your investment portfolio's assets. You'll need at least $500,000 in your account to use this feature.
Wealthfront allows you to allocate crypto trusts of up to 10% of your portfolio to protect against risk and volatility. While its crypto offering is uncommon for robo-advisors, investors who want to focus solely on crypto should consider other platforms.
Wealthfront Retirement Savings Accounts
Wealthfront offers a suite of retirement savings account options like traditional IRAs, Roth IRAs, SEP IRAs, and Rollover IRAs. All Wealthfront retirement accounts are equipped with automated portfolio rebalancing to keep you on track to meet your goals while maximizing your returns.
Customized your IRA from hundreds of retirement fund options, including crypto trusts and tech stocks.
Wealthfront Socially Responsible Portfolios
Wealthfront's socially responsible option is best for investors with long-term goals and who want to make an impact with their money. These portfolios rely on Blackrock funds that track socially responsible indexes defined by MSCI. Depending on your risk tolerance, Wealthfront's robo-advisor will create a diverse portfolio of municipal bonds, US stocks, TIPS, foreign-developed stocks, emerging market stocks, and US bonds.
Wealthfront Stock Investing Account
With the 100% self-managed Stock Investing Account, which is for advanced traders looking for DIY stock trading, you can design your own investment portfolio. With DIY stock trading, you can invest in fractional shares (not available for automated investing), dividend blue chip stocks, and pre-built stock collections.
Weakthfront 529 College Savings Plans
Like the best 529 plans, you can save toward higher education for dependents with Wealthfront's college savings account. The robo-advisor simplifies this process in three steps:
- Cost layout: This 529 plan account uses the Department of Education data to display how much your desired college will cost when your dependent is expected to start school. Wealthfront also says this projection accounts for inflation, including tuition, expenses, and how much financial aid may be available.
- Goal-setting: Wealthfront helps you set a monthly savings goal that aligns with your expected future education costs.
- Recommendations: If you have other goals beyond saving for education, Wealthfront will offer advice on how to work toward both while staying on track financially.
Wealthfront High-Yield Bond Portfolio
Wealthfront's high-yield bond portfolio invests a personalized blend of low-cost bond ETFs. The account focuses on recommending valuable assets and maximizing after-tax earnings. The bond ETFs blend corporate bonds, floating-rate bonds, and tax-advantaged treasuries.
It pays a 5.50% yield, which is higher than Wealthfront's own cash account that pays 4.50% APY (Annual Percentage Yield). The 5.50% yield is the 30-day blended SEC yield after you pay any fees.
Wealthfront Fees
Wealthfront investment account minimums include a $500 minimum deposit requirement and an annual 0.25% account management fee. But if you want to dodge these fees, Wealthfront's stock investing account (which is not an automated account) only requires a $1 account minimum and doesn't charge a management fee or commissions.
With Wealthfront's 529 plan, you won't have to pay any federal taxes on withdrawals as long as they're for qualified education expenses. However, underlying fees (such as commissions and portfolio management) may increase to 0.46%.
Some account features require much higher account minimums. Both risk parity and US direct indexing require a minimum of $100,000, and smart beta requires at least $500,000 in your account.
Wealthfront Pros and Cons
Wealthfront Pros
- Multiple account and investment options, including an automated bond portfolio for less volatile investing options
- Hundreds of investment fund options
- Features like auto-rebalancing and tax-loss harvesting
Wealthfront Cons
- Higher minimum fee ($500) than most robo-advisors
- Only offers cryptocurrency trusts for Bitcoin and Ether
- No ongoing human advisors
Wealthfront Trustworthiness
The Better Business Bureau gives Wealthfront an F rating to reflect its opinion of how well the robo-advisor interacts with its customers. According to the BBB website, Wealthfront has an F because of multiple customer complaints against the company.
The BBB considers several factors when evaluating companies. These include licensing and government actions, bankruptcy, advertising issues, and more.
Wealthfront does not have any recent public controversies.
Wealthfront vs. Other Investment Apps
Wealthfront vs. Betterment
Wealthfront and Betterment have both been in business since 2008. Both primarily offer robo-advice and support for several account types, including individual and joint accounts, trusts, IRAs, and cash accounts.
One big difference to note is that Wealthfront offers more investment types. You can invest in ETFs, index funds, and crypto trusts (it currently offers the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE)). Betterment also offers ETFs, giving you direct exposure to cryptocurrencies by offering four crypto portfolios.
Wealthfront also offers DIY trading for stocks, but you'll need to open a separate stock investment account from the automated investing account.
Since you can invest in up to 23 different cryptocurrencies with some of its portfolios, Betterment is the stronger choice for crypto investors.
Betterment also has Wealthfront beat when it comes to financial advisor guidance. It offers ongoing Certified Financial Planner (CFP) access with its premium account, and digital plan users can even buy a one-time CFP consultation package if needed. Wealthfront doesn't offer advisor guidance.
Wealthfront vs. Vanguard
Wealthfront and Vanguard serve different purposes. Though it offers an ETF portfolio customization option, Wealthfront is mainly for hands-off investors who want a computer algorithm to manage their portfolios (unless you open a separate stock investment account). Vanguard, however, offers both a variety of self-directed brokerage accounts and automated accounts.
You'll need less money to set up an automated account with Wealthfront than you would with either of Vanguard's automated accounts; Vanguard Personal Advisor requires a $50,000 minimum, and Vanguard Personal Advisor Select requires a $500,000 minimum.
Vanguard could be the better choice for those who want to work one-on-one with financial advisors. Its Vanguard Personal Advisor Services account gives you access to automated investing and guidance from a Vanguard Fiduciary advisor.
Methodology: How We Reviewed Wealthfront
We examined Wealthfront automated investing using Business Insider's rating methodology for investing platforms to compare the platform's account options, fees, investment options, and overall customer experience when reviewing investing platforms. Platforms are given a rating between 1 to 5.
Business Insider's Overall Wealthfront Rating
| Feature | Business Insider rating (out of 5) |
| Fees | 3.95 |
| Investment selection | 5.00 |
| Access | 4.90 |
| Ethics | 3.00 |
| Customer service | 4.00 |
| Overall rating | 4.17 |
Wealthfront FAQs
Wealthfront mainly offers automated investment services for trading and managing, including personalized portfolio management, auto-rebalancing, and financial planning resources. Other investment services offered through Wealthfront are tax-loss harvesting, risk parity, US direct indexing, and smart beta portfolios. Users can also open a Stock Investment Account for DIY trading and increased control over their account.
Wealthfront is a transparent robo-advisor that provides a cost-effective investment strategy for beginners and passive investors. It charges a 0.25% annual management fee and requires a $500 minimum investment to get started. Wealthfront does not charge commissions, but it does charge an expense ratio on all ETFs.
Wealthfront vs. traditional financial advisors provides ease-of-use and simplified trading on mobile and desktop. While Wealthfront's automated investment advice and portfolio management offers an accessible brokerage platform for beginners, it can't replace a human financial advisor for complex financial situations. Depending on your financial situation, you may need to seek a financial planner or expert for personalized advice.
Wealthfront is a suitable online brokerage for investing beginners. Robo-advisors like Wealthfront offer hands-off investment strategies ideal for beginners seeking low-cost ETF portfolios, simplified trading techniques, and education resources.
Wealthfront is a secure investment platform equipped with features like active fraud monitoring, and two-factor authentication. Users also get up to $500,000 in SIPC insurance.
