Wealthfront is a robo-advisor firm that primarily offers investment management services. We review what you can expect from the company here.
Wealthfront is a robo-advisor firm based in Palo Alto, California. It assists clients with wealth and investment management, tax-loss harvesting, and financial advice. The company is a registered investment advisor (RIA) with the SEC and a member of FINRA as a broker.
In this review, we’ll break down the services you can expect from Wealthfront. This includes the types of clients it serves, as well as its fee structure. We’ll also outline key company information, such as contact methods and the firm’s disclosure history.
Assets Under Management
Number of Employees
261 Hamilton Avenue, Palo Alto, CA 94301
Pros and Cons of Wealthfront
- Low account minimums
- Can manage a wide range of accounts (e.g., IRAs, 529s, etc.)
- Complimentary financial planning
- Free automated savings program
- Upholds a fiduciary duty
- No help from a human advisor
- Primarily limited to investment management/advisory
- Portfolios are mainly made up of ETFs
Types of Clients
In general, robo-advisor products are built to be accessible to investors of all asset levels, from beginners to seasoned pros. Wealthfront’s minimums fit this bill, only requiring you to have $500 to open and hold an Automated Investing account or Automated Bond Portfolio.
It’s important to note that Wealthfront doesn’t offer clients access to a financial advisor in any capacity. When you sign up for the firm’s services, you’ll be purely interacting with software that works to build your portfolio based on the information you provide. For these reasons, those with more complex financial planning or wealth management needs may want to find an in-person advisor.
Services Wealthfront Offers
Wealthfront’s investment advisory and management services are exclusively through robo-advisor software. It offers a variety of account types you can open, such as Automated Investing and Automated Bond Portfolios. You can also gain access to financial planning via the company’s affiliate, Wealthfront Software.
Below is a detailed overview of what you can expect from the firm’s services:
Automated Investing is a discretionary model that gives the firm’s robo-advisor authority to buy and sell securities on your behalf. When you open one of these accounts, you’ll need to specify the type. Wealthfront gives you the choice of:
- Individualized taxable accounts.
- Individual retirement accounts (IRAs).
- 529 college savings accounts.
Once you open an Automated Investing account, Wealthfront will construct and implement an investment strategy that’s based on your goals, risk tolerance, and time horizon. Per the firm’s Form ADV Brochure 2A, here’s what you can expect one of these plans to emphasize:
- Proper asset allocation
- ETFs and/or other securities that fit this allocation
- Diversification among asset classes and securities
- Tax-loss harvesting techniques for taxable accounts
Automated Bond Portfolios
Wealthfront’s Automated Bond Portfolios is a discretionary program that offers clients the ability to have a personalized portfolio comprised of bond ETFs. The firm’s robo-advisor software automatically monitors and rebalances your investments. For any dividends you receive, it’ll typically re-invest them.
This is a free program in which you can let the firm’s robo-advisor software monitor your checking or Wealthfront Cash account for funds that exceed an amount over a pre-set maximum balance. When your account goes above the pre-set amount, the tool will transfer the excess funds to an investing account of your choice. Essentially, this service acts as a way you can automatically ensure you’re saving and investing money as necessary.
Stock Investing Accounts
Wealthfront offers taxable Stock Investing Accounts where you can invest in low-cost ETFs and stocks. In this arrangement, you will need to grant discretionary authority to the firm’s robo-advisor to dictate the following:
- Time of purchase
- Number of shares or units
Wealthfront also offers complimentary financial planning services via its affiliate, Wealthfront Software. It gives you the ability to explore various “scenarios,” such as retirement or education planning, as well as what you need to do to accomplish your goals. The firm does state, however, that this tool is not meant to replace a comprehensive plan that a real financial advisor would provide you.
Fee Structure and Cost
For its paid accounts, such as Automated Investing and Automated Bond Portfolios, Wealthfront charges a flat rate based on either the net market value of your account or a percentage of interest margin. Additionally, advisory fees are due each month, rather than annually. Below is a cost breakdown for each of the firm’s services:
|Product Name||Annual Fee|
|Automated Investing||0.10% of the net market value of the account|
|Automated Bond Portfolios||0.10% of the net market value of the account|
|Stock Investing Account||Up to 10% of the net margin of interest|
Keep in mind that, as the firm’s robo-advisor buys and sells securities on your behalf, you may be responsible for additional product fees. This relates to expenses for transactions or fund management. When you cover these fees, you’re paying a third party, not Wealthfront.
Wealthfront, like any other robo-advisor, requires you to dedicate a good amount of trust to a computer to manage your money. For many, this can be a challenge, especially when you don’t know how it works. Fortunately, firms must be transparent about their methodology and are required by the SEC to act as fiduciaries.
In its white paper regarding its investing methodology, Wealthfront explains that it recommends portfolios to each client based on their “risk tolerance.” The firm also takes on the task of continually monitoring and rebalancing a client’s portfolio, as well as investing in a tax-efficient way. Additionally, its robo-advisor utilizes these five steps in its investing strategies:
- Determine a “diverse” asset allocation strategy.
- Invest in a variety of ETFs that fit this strategy.
- Employ “Modern Portfolio Theory” to help “construct asset allocations” that mitigate risk and maximize returns.
- Implement an asset allocation strategy that fits your risk tolerance.
- Consistently monitor and rebalance your portfolio, ensuring it’s sticking to the strategy that’s in place.
Because Wealthfront is an RIA with the SEC, it must report any legal events it or any of its representatives are involved in as disclosures in its Form ADV filing. These are publicly available to clients via the SEC’s Investment Adviser Public Disclosure (IAPD) search tool.
Per its Form ADV, Wealthfront has only one disclosure of note. In 2016, the firm was fined $250,000 due to a civil violation regarding a lack of disclosures after compensating bloggers for client referrals and for “wash sales that could occur in client accounts.”
You have a few different options if you’d like to reach Wealthfront’s customer service. The method you choose largely depends on your reason for contacting the company. Below is a breakdown of each method:
- Through the firm’s Help Center, you can find helpful resources and narrow down a solution to your problem.
- For general questions – the contact page allows you to sort via the problem you’re encountering and use its contact form.
- By calling the firm directly at (855) 695-8437.
How to Start an Account
To open an account with Wealthfront, you can easily do so by visiting the company’s website and clicking “Get Started” in the top right corner of the page. After navigating to the sign-up page, the firm will ask you to select which type of account you’d like to open, as well as provide key information about yourself. This includes details like your name and who will own the account.
The information in this review is based on publicly available information directly from Wealthfront’s website and the SEC. Neither the firm nor its representatives have any say on what we’ve included on this page.
Frequently Asked Questions
Is Wealthfront a fiduciary?
Wealthfront is registered as an investment advisor with the SEC. For this reason, it must act as a fiduciary at all times. This includes its robo-advisor tools and software.
Is Wealthfront safe?
Because Wealthfront is a fiduciary, it must act in your best interest at all times. This includes investing your funds with your goals, risk tolerance, and time horizon in mind. However, be aware that there’s always a level of risk when you invest, even in low-cost ETFs.
How does Wealthfront make money?
Wealthfront makes money from advisory fees based on the net market value of your account, as well as the net interest margin for Stock Investing Accounts. The firm doesn’t take a commission for its services, which adheres to its duty as a fiduciary.
Is Wealthfront worth it?
The answer to this depends entirely on what you value from an investment management solution. Wealthfront customizes a portfolio for you based on your goals and risk tolerance. However, it doesn’t afford you access to a real advisor, even in a virtual capacity.
If you value receiving advice from a human, Wealthfront might not be the best choice for you. But if all you need is a turnkey solution to help you select investments according to your goals, this company may be a good fit.
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