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Wealthfront Review: A Clear Robo-Advisor Champ

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Wealthfront offers some of the best parts of professional financial planning, such as a custom-designed investment portfolio, but without the high expense of hiring a human financial advisor. Its costs are low and its offerings don't suffer at that expense, rather, Wealthfront offers one of the most robust robo-advisors. In this Wealthfront review, we'll take a closer look at what the company does well, what the potential drawbacks are, and whether using Wealthfront for your investing needs could be the right move for you.

Ratings Methodology
Bottom Line

The low costs, tax loss harvesting, array of investing account types, and cash management options round out a packed feature set that is hard to beat.

Fees:

$0 per trade, management fee 0.25%, expense ratio 0.05%-0.29%

Account Minimum:

$500

Full Wealthfront review

This robo-advisor is a good fit for: Hands-off investors who are looking for a fully featured robo-advisor. Investors wanting occasional support from registered advisors will want to consider alternatives.

Pros

  • Low management fee and expense ratios
  • Cash management features
  • Diverse account types
  • Tax-loss harvesting

Cons

  • No human advisors

Top perks

Low management fee

Wealthfront charges a 0.25% annual management fee for its robo-advisory services. While this isn't the cheapest we've seen (there are a few top-rated robo-advisors with no management fees), it's certainly on the lower end of the spectrum.

Cheap investment expenses

Like most robo-advisors, Wealthfront uses exchange-traded funds to construct client portfolios, and these have their own investment expenses. With expense ratios ranging from 0.05%-0.29% per year, they are some of the cheapest funds we've found.

Cash account option

In addition to its automated investing services, Wealthfront also offers a cash account to its customers for their emergency funds or rainy day cash. Currently, the account pays 0.1% APY. Wealthfront also gives customers debit card access to their money at 19,000 fee-free ATMs.

Tax-loss harvesting

Wealthfront is one of the few robo-advisors to offer tax-loss harvesting to investors of all account sizes. The idea is that when one of your portfolio's investment funds declines in value, Wealthfront may strategically sell it at a loss and reinvest in a similar fund. This allows you to offset any capital gains in your account, which can dramatically reduce your tax bill. In fact, Wealthfront claims that for their average client, the tax-loss harvesting savings more than offsets the management fee. And for accounts with $100,000 or more, Wealthfront offers stock-level tax-loss harvesting, which can help take your tax efficiency to the next level.

Automatic rebalancing

This is a standard feature in the robo-advisor business, but rather than rebalancing at set times, Wealthfront differentiates itself by doing this whenever a portfolio's asset allocation gets out of balance.

Lots of account types

Wealthfront offers standard brokerage accounts (individual and joint), traditional and Roth IRAs, SEP IRAs, Rollover IRAs, and trust accounts. Wealthfront is also one of the only robo-advisors that offers a 529 college savings plan through its platform.

Line of credit

One of the most unique features of Wealthfront is the ability to borrow against your account. If you have at least $25,000 in your Wealthfront account, you can borrow as much as 30% of the value of your portfolio with no credit check and at a lower interest rate than you're likely to find from a personal loan.

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What could be improved

Account minimum

To be fair, Wealthfront's $500 new account minimum isn't exactly the highest, but there are several competitors with no minimums at all.

No human advisors

Some of Wealthfront's competitors provide clients with access to human financial advisors, but Wealthfront's advice is entirely automated. This is generally fine for the purposes of creating an investment portfolio but can be a drawback if you want financial guidance in other areas, like saving for college or buying your first home.

Some account types aren't supported

You currently can't open a SIMPLE IRA, Solo 401(k), Coverdell, partnership, or custodial (UGMA/UTMA) account through Wealthfront's platform.

RELATED: Best Robo-Advisors For Beginners

Alternatives to consider

If you want low costs and human advisors in one package: SoFi Automated Investing is among the lowest cost robo-advisors. It doesn't charge a management fee and the investment expense ratios are low. Plus, SoFi Automated Investing accountholders receive unlimited access to registered financial advisors.

RELATED: Check out The Ascent's comparison of Wealthfront vs. Robinhood.

If you want to compare with another top robo-advisor: Betterment and Wealthfront go toe to toe on many fronts, including low management fees and a diverse set of offerings.

How Wealthfront works

Like most robo-advisors, Wealthfront starts the investment process by giving new customers a questionnaire to help assess their risk tolerance. Then, a recommended asset allocation is achieved through exchange-traded funds or ETFs.

Services offered

When it comes to services, Wealthfront is one of the strongest robo-advisors we've seen.

We've already discussed the as-needed account rebalancing feature, as well as the fact that tax-loss harvesting is available for all taxable accounts. Plus, Wealthfront offers additional investment options and services to investors with larger accounts, such as a proprietary ETF that aims to produce superior risk-adjusted rewards.

The one area where Wealthfront's service falls short is the lack of guidance from human financial planners. Wealthfront certainly has an excellent assortment of financial planning tools that clients can use, but one thing it lacks is financial advice from a person.

Pricing and fees

The two main costs investors should be aware of before signing up with a robo-advisor are the account management fee and the investment fees. The account management fee is paid to the brokerage for their services. The investment fees are charged by the underlying investment funds that make up your portfolio. Your total (all-in) cost is the combination of these two fees.

SERVICE/ITEM WEALTHFRONT COST
Account management fee 0.25%
Investment fund fees 0.05%-0.29%
All-in fees 0.3%-0.54%
Other account charges None
Data source: Wealthfront.

Customer service and support

There are two types of support that clients of a robo-advisor might need -- investment advice from a human being and help with technical issues. So let's see how Wealthfront does in both areas.

As far as human financial advisors go, this is one of the biggest drawbacks of the platform. Unlike several of its competitors, Wealthfront does not give its customers access to real-live financial advisors.

However, when it comes to technical support for account issues, Wealthfront has phone support available from 10 a.m. to 8 p.m. EST, Monday through Thursday, and 10 a.m. to 7 p.m. EST on Friday, as well as support by email.

Wealthfront is right for you if:

  • You have at least $500 to invest.
  • You have a large account balance or are in a high tax bracket, as tax-loss harvesting can result in significant savings.
  • You aren't concerned with access to human financial planners.
  • You want the ability to borrow money against your account's value if you need to.
  • You want to open an individual or joint brokerage account, an IRA, or a trust.
  • You want to open a 529 college savings plan.

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