Founded jointly by benchmark cofounder Andy Rachleff and Dan Carroll back in 2008, Wealthfront is amongst the most wellestablished Robo advisors on the market. As of December 2014, the automated investing service was found to have over $1.7 billion in investments under its management and that is expected to have risen to closer to $3 billion this year. That makes it the second largest Robo financial advisor around and certainly one that investors should consider, and the following Wealthfront review should help to better inform that consideration.
Fees and Deposit Limits
As we always do, we will begin our Wealthfront review by looking at the deposit limit imposed by the service and the fees which the service charges investors. Wealthfront’s $500 deposit limit is very low compared with other Robo advisors that also impose a minimum investment amount, and shouldn’t put off any real potential users
Wealthfront’s charges come in the form of an annual advisory fee which is assessed as 0.25% of any account balance. That figure is extremely reasonable and stacks up well against the charges levied by most of Wealthfront’s competitors, especially when you consider that the provider also manage an investor’s first $10,000 free of charge. What’s more, that $10,000 threshold can be raised to $15,000 if the client refers a friend to Wealthfront and that friend funds an account.
Wealthfront is a prime example of a fully automated investing service that provides almost completely hands off wealth management and which will be extremely attractive to those investors who don’t have the time, inclination or ability to manage their investments themselves.
It is fair to say in this part of our Wealthfront review therefore, that the service is a little lacking in flexibility and doesn’t offer much leeway for investors to get personally involved in the day-to-day management of their funds. The service cannot work with or within existing brokerage accounts, meaning that an investor doesn’t have the option of sticking with a provider they trust. They also don’t have facility to invest in mutual funds, individual stocks or bonds so have to sell these holdings before transferring to Wealthfront
This is obviously not necessarily a weakness of the Wealthfront Robo advisor, as its general purpose is to offer an automated service but it is important for any investors who may wish to be more actively involved to realize at this point of our Wealthfront review that this may not be the best option for them.
Ease of Use
As we have touched upon above, one of the main positives of fully automated investing services is the ease at which they provide wealth management features to investors who otherwise may not have been able to benefit from them.
Opening an account and getting started with Wealthfront is quick and simple, involves answering a few financial questions and then provides the possibility to tinker with some allocations if desired. From that point on, all of the management of the portfolio created, including rebalancing, reinvestment and tax loss harvesting is entirely handled on the investor’s behalf, making Wealthfront one of the simplest and easiest Robo advisors for anybody to use.
Account and Investment Types and Services
Similar to the vast majority of Robo financial advisors around, Wealthfront generally allocate investors’ money between a selection of stocks and bonds ETFs. Whilst this is fairly standard, the service’s provision of 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 represents arguably the most diverse selection of account types to be found anywhere and our Wealthfront review has found the service’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. That provision of tax loss harvesting to all is a huge plus in of itself but Wealthfront also go one step further in offering Direct Indexing to accounts worth more than $100,000. Direct Indexing is an even more focused and optimized version of tax loss harvesting that involves the purchasing of individual securities rather than a single ETF or index fund and which can make a huge difference to the value of any portfolio.
Suitability for Different Investment Budgets
With a minimum investment amount of just $500, Wealthfront is generally speaking an excellent Robo advisor option for investors of any budget. Unlike many of their competitors, Wealthfront provide a full range of account features – including tax loss harvesting – to all accounts, regardless of 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 and whilst wealthier investors may be a little perturbed by a lack of reduction in that fee for larger accounts, they can benefit from potentially very beneficial Direct Indexing if their portfolio is worth more than $100,000. Add to all of that the fact that Wealthfront manages an investor’s first $10,000 free of charge and you find an automated investing service that is hugely attractive to all manner of investors.
Since their foundation in 2008, Wealthfront have grown to be the second largest Robo advisor in the world and to manage close to $3 billion worth of investments, and it is easy to see why when you look at what they offer to their investors, as revealed in our Wealthfront review.
As long as they meet the comparatively low account minimum of just $500, investors can select from one of the most diverse collections of account types around and whichever type of account they hold, will benefit from a whole raft of outstanding wealth management features. Those features include the ubiquitous automated rebalancing and reinvestment but also always incorporate tax loss harvesting if it is relevant to the account. Wealthfront then make 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 for what is a very reasonable 0.25% advisory fee that compares well with the charges levied by other Robo financial advisors and which is not even applied to the first $15,000 of an account.Invest Now for up to $15,000 Managed Free!