Fees and Deposit Limits9/10
Ease of Use10/10
Account Types and Services10/10
- No fees for accounts under $15,000 (with our link)
- Fixed 0.25% management fee is very reasonable
- New 529 college savings plan
- Direct Indexing available to accounts over $100,000
- Most features are available to all accounts
- Doesn't work with existing brokerage accounts
- No reduced management fee for larger balances
- Little flexibility for active trading
Wealthfront is now one of the biggest and well-established Robo Advisors in the market, with just over $4 billion investments under management as of 2016. In this 2017 Wealthfront review, we will reveal if this fully-automated robo advisor is the best service for your investment activities.
Wealthfront is a prime example of a fully automated investing service
Wealthfront started life as kaChing, which was a mutual-fund analysis company in 2008. Wealthfront founders Andy Rachleff and Dan Carrol slowly pivoted to wealth management after receiving funding from Benchmark Capital and DAG Ventures among others.
Fees and Deposit Limits
Let’s begin our 2017 Wealthfront review by looking at the fees and deposit limits. Wealthfront’s $500 deposit limit is very low indeed. In fact, it is one of the lowest among Robo Advisors that also impose a minimum investment amount. This makes it perfect for beginners or first-time investors.
Wealthfront will apply an annual advisory fee of 0.25% which is assessed if your account balance is over $10,000 (or $15,000 if you use our link). That figure is extremely reasonable, and stacks up well against other charges levied by most of Wealthfront’s competitors – considering the fact that Wealthfront will manage your first $10,000 investment free of charge.
As an added bonus, that $10,000 threshold can be raised to $15,000 if you use our link here.
up to $15,000
Wealthfront is a prime example of a fully automated investing service that provides an almost completely hands-off wealth management experience. This makes it extremely attractive to investors who simply don’t have the time, inclination, or ability to manage their investments.
It isn’t perfect, though. During this part of our Wealthfront review for 2017, we discovered that the service lacks flexibility in personally managing your accounts. It doesn’t offer much leeway to investors who want to get involved, or those who prefer a hands-on approach.
The service cannot work with or within existing brokerage accounts. This means that you don’t have the option of sticking with a provider that you trust. The service doesn’t have the facility to invest in mutual funds, individual stocks or bonds either. What this means is you will have to sell your holdings before transferring to Wealthfront – unless you have at least $500 minimum deposit available to invest.
This is obviously not a weakness, as the general purpose of Wealthfront is to offer an automated investment service. But if you wish to be more involved in managing your portfolio then Wealthfront may not be the best option for you.
Check out these videos for an overview of how Wealthfront works:
Ease of Use
One of the main selling points of an automated investment service is the ease at which they provide wealth management services, even to the average Joe. In this regard, Wealthfront is at the top of the heap.
Opening an account and getting started with Wealthfront is quick and easy. You simply answer a few questions regarding your finances, and then provide some personal allocations if so desired. From that point on, all of the management of the portfolio is created, including rebalancing, reinvestment and tax loss harvesting is entirely handled by Wealthfront.
It is in this regard that we declare Wealthfront to be one of the simplest and easiest to use, though not as flexible as some may want it to be.
Account and Investment Types and Services
Similar to the vast majority of Robo Advisors, Wealthfront will generally allocate your money between a selection of stocks and bond ETFs. While this is fairly standard, the service’s provision for both account types and features is nothing short of exceptional.
The Wealthfront Robo Advisor offers both individual and joint taxable accounts, as well as trusts and traditional, Roth, SEP and rollover IRAs. That is arguably the most diverse selection of account types to be found anywhere. We find Wealthfront’s range of account features to be equally impressive.
Every portfolio managed by Wealthfront benefits from automated rebalancing and reinvestment to maintain profit potential, and they are also all subject to tax loss harvesting services to further improve the efficiency of investments.
The provision for tax loss harvesting is a huge plus, but Wealthfront goes one step further by offering Direct Indexing to accounts worth more than $100,000. Direct Indexing is an even more focused and optimized version of tax loss harvesting. It involves the purchasing of individual securities rather than a single ETF or index fund. This can make a huge difference to the value of any portfolio.
New for 2017
New for 2017 is the 529 college savings plan. This service makes it easier for doting parents to open and manage a college savings account for a 0.43% to 0.46% fee, which will vary on the investment expense ratio. The first $10,000 will be managed for free as well.
Wealthfront also introduced the Portfolio Line of Credit this 2017. This service is available for taxable accounts of $100,000 or more. This service will allow you to borrow cash without upsetting your investment strategy. This service is available for all eligible accounts with no application required. The best part is that you can easily get the cash you need in just 1 business day.
Suitability for Different Investment Budgets
With a minimum investment amount of $500, Wealthfront is an excellent Robo Advisor that is perfect for any type of budget. Unlike many of their competitors, Wealthfront provide a full range of account features – including tax loss harvesting – to all accounts regardless of the account balance, making it even more attractive to those with lower budgets.
The very reasonable 0.25% advisory fee will also please investors of varying budgets. While wealthier investors may complain about the lack of reduction in fees for larger accounts, they can benefit from Direct Indexing if their portfolio is worth more than $100,000. Add to that the fact that Wealthfront will manage your first $10,000 (or $15,000) investment for free, and it is easy to see why this Robo Advisor is an interesting proposition for all types of investors.
Since its inception in 2008, Wealthfront has grown to be the second largest Robo Advisor in the world. As long as you meet the low account minimum of just $500, you can select from one of the most diverse collections of account types in a Robo Advisor, aside from a plethora of outstanding wealth management features.
This includes automated rebalancing, automatic reinvestment, and tax loss harvesting (if it is relevant to the account). Wealthfront makes their service even more impressive by offering their unique Direct Indexing feature to accounts worth over $100,000, making a potentially huge difference to the profit potential of any portfolio.
All of those great features and beneficial services are provided at a very reasonable 0.25% advisory fee (which is not applied to the first $15,000 of any account when using our link), which compares well with the charges levied by other Robo Advisors.