Wealthfront is one of the leading robo-advisors helping people invest their money. The platform targets Millennials who don’t have the time or money to devote to hands-on investment accounts but still want to save.
Robo-advisors are often geared toward young investors who don’t have loads of cash set aside to both invest and pay a broker. Like other robo-investing platforms, you complete a questionnaire on Wealthfront’s site to determine the type of investor you are. Platforms like Wealthfront are good for anyone who has some cash to spare and knows the importance of investing for long-term goals, but doesn’t know the intricacies of trading on the stock market.
Who should consider Wealthfront?
The ease of robo-advisors is enticing for anyone who wants to invest but doesn’t want the hassle of talking to someone. While it’s helpful for some, it’s not necessary for everyone, and that’s what sets Wealthfront apart.
This is an excellent platform for beginners, young investors and anyone who is trying to invest with a little bit of extra cash after they’ve socked away an emergency fund. It’s also an excellent tool for goal-oriented investors — that is, for those saving for things like retirement, future college for kids or buying a home.
Wealthfront fees and features
|Amount minimum to open account|
|Account fees (annual, transfer, inactivity)|
|Tax loss harvesting|
|Tax loss harvesting detail||Wealthfront offers daily tax loss harvesting for taxable accounts for no additional charge.|
|Offers fractional shares|
|Ease of use|
|Mobile app||iOS, Android|
|Customer support||Phone , 24/7 live support, Email|
Strengths of Wealthfront
- Low fees: Wealthfront charges just 0.25% for its annual advisory fee. If you have $10,000 invested, that adds up to about $24 a year. There’s also an expense ratio that doesn’t go over 0.16%. Low fees come from low-cost exchange-traded funds (ETFs).Fees are a major turn-off for any platform you use, but they’re necessary. Some companies have higher fees because they pay a staff of financial advisors. But with robo-advisors, more of your money can go towards your investments.
- Instant diversification: Since Wealthfront offers low-cost ETFs, your portfolio is instantly diversified. Not putting all your money into one type of asset or company helps to lower your investment risk. The goal is to save over a long period, and diversification is essential to meeting that goal.
- Various accounts and planning: From Wealthfront’s IRAs to 529 college plans, there are different accounts for different life priorities. Wherever you are in your investment goals, Wealthfront has a slew of different options from which to choose.You also have an opportunity to build a financial plan. If you’re struggling to get your budget and finances in order but crave structure, Wealthfront offers financial planning at no extra cost.
- App use: While the desktop site is functional enough, you can check in on the app for Apple or Android devices. You can easily track investments and set goals all through your phone.
- Link other accounts: While Wealthfront only manages what you’ve invested through them, they allow you to add other investment accounts to the dashboard. This is a great way to watch all your accounts in one place to see how your investments are performing across the board.
Drawbacks of Wealthfront
- No human advisors: While you can talk to a professional about your investment account, you’re not going to be able to get hands-on advice. This is nice for some, but not for everyone.For novice investors, having a human to talk to you about your options can be a significant factor in what type of platform you choose. Wealthfront’s competitor, Betterment, has a type of hybrid approach: robo-investing with the help of a human advisor when you need it. If you don’t like the idea of never being able to chat with someone on the phone about your portfolio, this might not be the right option for you.
- No fractional shares: The less money you have invested, the less money you’ll earn. Fractional shares can help lower the amount of your uninvested cash, optimizing as much money as possible to can to give you the most return. Wealthfront doesn’t offer fractional shares as some other robo-advisors do.
- Minimum investment: While $500 isn’t a lot when it comes to investing, Wealthfront does require it. Some major competitors don’t require any minimum balance (although you’ll need something to get started, after all).If you only have a few extra dollars and don’t meet the $500 minimum, you might want to try another platform. Acorns, for instance, requires just $5 to start investing.
Is Wealthfront safe?
Though no investment can is guaranteed as “safe,” Wealthfront primarily focuses on investing in ETFs. These are index funds that are widely considered low-risk, even for the most conservative investors.
But what if a company like Wealthfront goes bankrupt? Does your money go away with them? Wealthfront is a member of SIPC, protecting your securities up to $500,000 for each account. They don’t have any complaints under the Consumer Financial Protection Bureau and have $10 billion in assets under management.
Wealthfront review: Final thoughts
Starting the journey of investing can be overwhelming, and that it might turn you off from it. But if you know the benefits of investing, long-term growth, and saving for your future, you know you need to start somewhere. And Wealthfront is a solid place to begin.
Not everyone has the investment know-how of the stock market, trading and the different roles of planners, advisors and brokers. Simple tools like Wealthfront make investing easier to manage. While the lack of a human advisor isn’t right for everyone, you still get easy-to-manage tools, advice and software to use. You can trust your money will be secure with your best interests in mind, with the robo-advisors do all the work for you so you don’t have to.