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Bottom line: Wealthfront Investing is a good robo-advisor option if you’re in search of low-cost automated portfolio management and access to features like tax-loss harvesting, US Direct Indexing, and crypto trusts. However, if you want access to financial advisors, you’ll want to look elsewhere.
Wealthfront Automated Investing: Overall Rating
FeatureInsider rating (out of 5)Fees4.25Investment selection4.50Access4.50Ethics4.00Customer service4.50Overall score4.34
Is Wealthfront Automated Investing Right for You?
Wealthfront is an automated investing platform offering ETFs, index funds, crypto trusts, portfolio lines of credit, socially responsible portfolio options, and more. While it’s best for hands-off investors who don’t want to trade on their own, it also gives you a bit more control by allowing you to customize your portfolio’s ETF allocation if you don’t like Wealthfront’s picks.
You’ll need at least $500 to get started, and you’ll incur a 0.25% annual fee (not including fund fees). A downside, however, is that you can’t utilize one-on-one advisor guidance like you’d be able to with SoFi or Betterment. Plus, if you’re more of a crypto-focused investor, you’ll only be able to allocate up to 10% of your portfolio in crypto trusts.
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Wealthfront vs. Betterment
Wealthfront
Betterment
Min. Investment
$500
Min. Investment
$0 or $100,000, depending on the account
Fees
0.25% (0.06% to 0.13% for fund fees)
Fees
0.25%/year or 0.40%/year
Investment choices
ETFs, index funds, and crypto trusts
Investment choices
ETFs and cryptocurrencies
Wealthfront InvestingBetterment
Wealthfront and Betterment have both been in business since 2008. Both primarily offer robo-advice, and both support 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, but it gives you direct exposure to cryptocurrencies by offering four crypto portfolios.
Wealthront also offers DIY trading for stocks, but you’ll need to open a stock investment account that is separate 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
Vanguard
Min. Investment
$500
Min. Investment
$0 ($3,000 for Vanguard Digital Advisor; $50,000 for Vanguard Personal Advisor Services)
Fees
0.25% (0.06% to 0.13% for fund fees)
Fees
0% (0.20% to 0.30% for professionally managed portfolios)
Investment choices
ETFs, index funds, and crypto trusts
Investment choices
Stocks, ETFs, options, bonds, mutual funds, and CDs
Wealthfront InvestingVanguard
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 for them (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 Digital Advisor and Vanguard Personal Advisor Services require $3,000 and $50,000 minimums, respectively.
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 both automated investing and guidance from a Vanguard Fiduciary advisor.
Ways to Invest With Wealthfront Automated Investing
Automated portfolios
Wealthfront offers a range of automated account types. These include individual accounts, joint accounts, trusts, and IRAs (it currently supports traditional IRAs, Roth IRAs, and SEP IRAs). And though its minimum is higher than many robo-advisors (Betterment, Ellevest, SoFi automated investing, and Ally Invest Managed Portfolios all have $0 minimums), it offers access to the following features:
Tax-loss harvesting: With this strategy, Wealthfront replaces any securities that have suffered loss and reinvests the profits into other assets that match your portfolio’s target. You can then write off those losses on your tax return, lowering your tax bill. 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 utilize direct indexing.Risk parity: This approach uses an asset allocation strategy that aims 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 weighting your portfolio’s assets more strategically. You’ll need at least $500,000 in your account to use this feature.
As for its other products, Wealthfront also offers a high-yield cash account and portfolio lines of credit that let you borrow up to 30% of your portfolio (its lines of credit are only available for those with at least $25,000 in their account).
And it currently allows for an allocation of crypto trusts of up to 10% of your portfolio to protect against risk. While its crypto offering is uncommon for robo-advisors, investors who want to solely focus on crypto should consider other platforms.
Socially responsible portfolios
Wealthfront’s socially responsible option is best for investors who want to make an impact with their money. These portfolios rely on Blackrock funds that track socially responsible indices defined by MSCI.
Note, though, that expense ratios for the funds can range from 0.05% to 0.29%.
529 college savings plans
You can also save toward higher education for dependents with Wealthfront Investing automated 529 plan. The robo-advisor simplifies this process in three steps:
Cost layout: It uses 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, while 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 successfully work toward both while staying on track financially.
You won’t have to pay any federal taxes on withdrawals you make, as long as they’re for qualified education expenses. Fees for this account range up to 0.46%.
Wealthfront: Is the Investment Platform Trustworthy?
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 there are nine customer complaints against the company, and it hasn’t responded to four of them.
While BBB ratings don’t guarantee a company’s reliability or performance, they take into account several factors, including licensing and government actions, bankruptcy, advertising issues, and more.
Wealthfront does not have any recent public controversies.
Wealthfront — Frequently Asked Questions (FAQ)
Is Wealthfront worth the fee?
That depends on what you’re looking for. You’ll need a minimum of $500 to get started, and you’ll be responsible for a 0.25% annual fee (including fund fees). But these fees give you access to multiple investment types (ETFs, index funds, and crypto trusts), tax-loss harvesting, US direct indexing, socially responsible portfolio options, and much more.
And although the robo-advisor doesn’t offer ongoing advisor guidance, you can still contact its product specialist team at any time. The team consists of certified financial planners (CFPs), chartered financial analysts (CFAs), and certified public accountants (CPAs).
Can you lose money with Wealthfront?
Yes. As with any investment platform, your investments’ value may increase or decrease due to market factors outside of Wealthfront’s control. See a full list of the potential risks here.
How trustworthy is Wealthfront?
Wealthfront is a reputable platform and has been in business since 2008. The platform currently has an F with the Better Business Bureau, but there are no recent public scandals.
Related Terms
ETFs: These funds contain a mix of assets like of stocks, bonds, commodities, and other securities. ETFs trade like stocks since you can easily buy and sell both at any point during the stock exchange’s normal trading hours. But ETFs are also less risky than stocks because they essentially contain a basket of different securities.Robo-advisor: These automated investing accounts typically use computer algorithms and/or advisor oversight to build personalized, self-managing portfolios for investors. Direct indexing: With this strategy, investors buy each stock that comprises an index, as opposed to investing in an index fund. This strategy can be more tax-efficient since you can apply tax-loss harvesting to each investment.Index funds: An index fund — whether an index ETF or index mutual fund — tracks and aims to mirror the performance of market indexes (e.g., the S&P 500).