Wealthfront Review: A Robo-Advisor That Invests For You

Wealthfront is a robo-advisor that offers excellent advice for professional financial planning and automated investment management. It appeals to beginners and experienced investors alike. The robo-advisor comes with several tools that help diversify the portfolio and provides efficient tax optimization strategies.

What is Wealthfront?

Wealthfront offers the best financial planning tools without the high expenditure of hiring an expert financial advisor. It is a platform that offers holistic financial advice and investment management tips that help with tax optimization, financial planning, and portfolio diversification. Founded in 2008, it has one of the most robust portfolios of robo-advisors.
Wealthfront is a user-friendly platform that offers the complete package of goal setting, banking, planning, and investing in one place. There is a sea of robo investors and Wealthfront is a big fish that stands out.
Wealthfront helps in setting a goal and achieving it keeping your financial position in mind. What sets Wealthfront apart from others is that it takes into account the entire financial picture and not just your income, savings, or expenses. Wealthfront has a huge appeal for young investors and for those who are keen on increasing their wealth through systematic, automated investing. The robo-advisor offers complete digital investing services without the intervention of humans.

How does Wealthfront work?

Wealthfront has a simple and straightforward process. You can choose to open an account or explore the free financial planning tool. Wealthfront offers different account types including retirement accounts.
If you want to open an account, you need to choose from the below.
  • Roth IRAs
  • Traditional IRAs
  • SEP IRAs
  • Rollover 401(k)
  • IRA transfers
  • Individual and joint taxable brokerage accounts
  • 529 plans for college
If you want to explore the free planning tool, answer the questions below and set your goal. The site will then take you through different ways you can save for the milestones and if you do not know where to start, the site recommends saving for retirement.
If you are ready to set up an account, you will have to complete a questionnaire that has four objective questions and six subjective ones. This questionnaire will help determine your risk tolerance to the asset allocations. Setting up an account provides access to Path, which is a free financial planning tool. It will integrate the account information and will use third-party data to meet the specific financial situation. It works in a simple manner: You invest the money into an account and the funds will be held in the brokerage account by the subsidiary of the company, Wealthfront Brokerage LLC. Wealthfront will allocate the investment into different exchange-traded funds. You can integrate all your accounts to get a complete financial view.
Wealthfront uses an automated approach to allocate assets by dividing the investments among ETFs as per your parameters. This is a passive approach towards investing that relies on technology and software to deliver the highest returns while keeping the risks and cost low. The company has a modern portfolio theory to build an automated asset allocation. This will help offer a personalized investment strategy based on the time horizon and risk tolerance of the client. It will take into account the user's financial needs and risk tolerance. The platform will ensure that the allocation is optimal and offers automatic rebalancing.
After establishment, the allocations continue to remain constant irrespective of the amount invested. Once specific thresholds have been crossed in the account, there will be an automatic adjustment of the portfolio to keep it in line with the asset mix.

How much does Wealthfront cost?

Wealthfront is completely free to use but to open an investment account, there is a $500 account minimum requirement. It does not charge any fees for account opening, account closing, account transfer, withdrawal, or trading. Wealthfront cash account will pay an interest rate of 0.35% and has a minimum balance requirement of $1. For an investment account, Wealthfront charges an annual advisory fee of 0.25% on all the assets under management. This fee will be deducted monthly. For example, an account balance of $10,000 will pay $25 a year.
For Wealthfront’s college plan, the management fee ranges between 0.42% and 0.46% including the expense ratios, administration fees, and advisory fees.
The line of credit requires a $25,000 minimum investment to access credit with an APR ranging between 2.40% and 3.65%.

Wealthfront features

Wealthfront has several excellent features that make it a popular tool for people looking to grow their wealth.

Free financial planning

Wealthfront provides free software-based financial planning and gives answers to your questions instantly. Path is an automated advice engine that will connect your outside bank and brokerage accounts to give an insight and real-time view of the finances.

Convenient transfers

Wealthfront allows easy transfers. If you need to transfer stock or cash in and out of Wealthfront, you can do it quickly and for free.

Automated rebalancing

The platform automatically rebalances the client portfolios based on the portfolio deviation from the specific percentages. It is very different from the time-based rebalancing strategy, where the portfolio is adjusted every month or quarter. Wealthfront portfolio is monitored regularly and the timing of automatic rebalancing can be anytime.

College savings plans

Wealthfront offers the platform in the form of a 529 college savings plan as well. The investment will be slightly different and will constitute municipal securities spread out across nine asset classes. It will help reduce the tax within the portfolio and provide diversification.

Cash management account

The cash management account offered by Wealthfront is an ideal combination of a traditional checking and savings account. There are no account fees and you can use the account for direct deposit of the paycheck, pay bills, use a debit card and earn interest on the balance. It is not mandatory to have an investment account and the minimum balance required for a cash management account is $1. Further, you get FDIC insurance of up to $1 million, active fraud monitoring, and unlimited free transfers.

Portfolio line of credit

Wealthfront has a feature that allows clients to borrow quicker, easier, and at a cheaper rate than from other providers. Any client with at least $100,000 invested in a taxable account can use the Portfolio line of credit. One can request cash up to 30% of the current value of the account with no credit check. You will receive the amount in one business day.

Passive Plus

Wealthfront’s collection of rule-based investment strategies is known as PassivePlus. It helps maximize return and minimize risk. PassivePlus will incorporate techniques like Smart Beta and risk parity for individuals, joint accounts, and Trust. Smart Beta is a method that is used to deliver high returns with low risk and is available for portfolios of at least $500,000. Risk parity is an enhanced asset allocation strategy and it will kick in only at the $100,000 level.

Socially responsible investing

Taxable investment accounts from $100,000 to $500,000 will qualify for stock-level tax-loss harvesting. These accounts will have a socially responsible investing strategy where you can single out individual stocks you do not want to own. The platform also offers the option of index funds to reduce taxes. Capital gain can be a headache for many and Wealthfront will minimize the capital gain and will help lower your tax bill. Wealthfront offers the service at three different levels:
  1. Wealthfront 100 - For taxable accounts with a minimum of $100,000.
  2. Wealthfront 500 - For taxable accounts with a minimum of $500,000.
  3. Wealthfront 1000 - For accounts with a minimum of $1 million.

Who should use Wealthfront?

Wealthfront offers a fine selection of features at a low cost which makes it a great investment platform.

Those who want to make minimum financial decisions

The robo-advisor, Wealthfront will make it easy and convenient for you to make financial decisions. It is ideal for those who enjoy a lot of features and want to invest in a variety of products without spending a lot of time and effort behind the research.

Those with a large account balance and are in a high tax bracket

Wealthfront will be beneficial for those who fall in a high tax bracket and have a large account balance as the tax-loss harvesting can lead to a significant reduction in tax.

Those seeking low costs

If you want to get hold of your finances and investment but do not want to incur a huge amount for human financial advisors, Wealthfront is perfect for you. It offers exceptional services at a low cost and uses technology and software to allocate your funds.


For individuals who do not know where to start from, Wealthfront is a great place. It has a simple process to create an account and allows you to have all your finances in one place. You can pay bills, use your debit card, and invest in ETFs and mutual funds from a single place.

Those who are not sure about their goals

An important part of Wealthfront’s account opening process is the questionnaire. The platform has a goal-centered approach and it will help identify your short-term and long-term goals. If you do not know what your goals are, the simple and straightforward questionnaire will help you get started. You will be able to make sense of your life and choose which areas of your life you want to save money for.

Who shouldn’t use Wealthfront?

While Wealthfront is a great platform, it’s not for everyone.

Hands-on investors

If you are someone who understands different investment products and has knowledge about the best ways to cut tax, Wealthfront might not be for you. You may not agree with the investment portfolio created by the robo-advisor and might prefer to make investment decisions yourself.

Those who want to work with a financial advisor

Wealthfront is not ideal for those who like human contact at all levels. There is a lot of customization available but you do not work with a financial expert. The decisions are made by robo-advisors. If you want a financial advisor for personal advice, this platform might not be the best option.

Pros & cons

  • See the big picture: Wealthfront offers outstanding financial planning which enables you to see the larger picture. It is perfect for getting an overall sense of how your finances are currently doing. It allows you to synchronize complete financial information and does not restrict itself to your income, savings account, or your expenses.
  • Goal-setting assistance: The platform goes in-depth for your goals like college savings and home purchases. You will be asked straightforward questions at the time of creating an account and the investment criteria are based on the goals you want to save and invest for.
  • Ideal for multiple goals: Those who have multiple goals can see the trade-offs you will face through Path.
  • Tax-loss harvesting: A major benefit of Wealthfront, tax-loss harvesting allows you to reduce the tax while maximizing returns.
  • No online chat option: There is no chat option for prospective customers or customers to get information about the platform.
  • No customization feature for small accounts: The portfolios below $100,000 are not customizable beyond the risk settings.
  • No fractional shares: Fractional shares enable you to own a small part of a large company without spending a huge amount. However, it is not possible to purchase fractional shares through Wealthfront.
  • No 401(k) assistance: A major drawback of Wealthfront is the lack of 401(k) assistance.

Wealthfront vs. Competitors

PlatformMinimum investmentAdviceAccount types
Wealthfront$500AutomatedSeveral account types including college savings plan accounts
M1$0AutomatedOnly 5 account options
Betterment$0Human assistedIndividual, retirement, trust, and high yield savings/ cash account.

Wealthfront vs. M1 Finance

M1 Finance is a flexible investing automation platform but it does not offer the comprehensive approach that can be incorporated into your financial goals. M1 has no minimum investment requirement but you’ll not get plenty of accounts to choose from. You get to pick from the basic five account options whereas Wealthfront offers an extensive range of account types to pick from. While both the platforms offer automated investment advice, M1 does not offer tax-loss harvesting. Further, Wealthfront has a wide range of investment products to consider from and M1 only has stocks, or ETFs.

Wealthfront vs. Betterment

Betterment has a $0 minimum investment requirement and offers human-assisted advice. It is significantly different from the robo advisors in the market today. However, Betterment only offers a few accounts to choose from. It does not have a college savings plan account and does not offer access to financial advisors. But for a fee, users can purchase an advice package that includes a consultation with an advisor. The prices start at $199, which makes it significantly expensive as compared to Wealthfront.


What is the cost of using Wealthfront?
Wealthfront is free to use but to open an investment account, you need to have an account balance of $500. For a Wealthfront cash account, you need only $1 to get started and you enjoy a 0.35% APY.
Is Wealthfront safe?
Wealthfront is a safe platform. You can link your external brokerage and bank accounts, and your financial data will remain protected.
What are the main features offered by Wealthfront?
Wealthfront offers a range of tools that help with financial planning and investment. It allows you to sync all your accounts and get rid of multiple apps. The platform will give a complete view of your finances. Its main features include a 529 college savings plan account and tax loss harvesting.

The bottom line

If you want to get a hold of your finances but have no idea how and where to start from, Wealthfront is a great platform. The robo-advisor will help you understand your goals better and will allow you to track your expenses while building a diversified portfolio. It will give a complete view of your finances and will let you focus on investments that will grow your money. It offers outstanding advice at minimum cost. Additionally, you will be able to reduce tax and consolidate all your brokerage and banking accounts in one place, making life and finances simpler.

Reclaim Up to $610/Year in Car Insurance

Here’s the thing: your current car insurance company is probably overcharging you. But, who has the time to look around for around a new company?

A website called CarInsurance.net makes it super easy to see if you’re getting the lowest price. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using CarInsurance.net, people have saved up to $610 a year.

It takes just a few minutes to see how much CarInsurance.net could put back in your pocket. And the best part? Because we’re driving less, some insurers are slashing prices this month.

Share this article

Stocks vs Bonds
September 19, 2021
Stocks vs Bonds
What is Dividend Growth Investing
September 09, 2021
What is Dividend Growth Investing
How to Invest in Art - A Beautiful Long-Term Investment
September 04, 2021
How to Invest in Art - A Beautiful Long-Term Investment
How to Buy Google Stock – The Giant Cash Cow of the Internet
July 28, 2021
How to Buy Google Stock – The Giant Cash Cow of the Internet
Start Making Money Moves