Wealthfront Review – Low-Cost Robo-Advisor With Free Planning Tools

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Wealthfront Wealth Management and Financial Planning
Wealthfront was one of the first robo-advisors to come onto the scene, and it’s remained a popular choice ever since. That’s for good reason – Wealthfront offers an abundance of tools and services for a reasonable fee. You can even use some of Wealthfront’s automatic financial-planning features for free, regardless of whether or not you…

Wealthfront was one of the first robo-advisors to come onto the scene, and it’s remained a popular choice ever since. That’s for good reason – Wealthfront offers an abundance of tools and services for a reasonable fee.

You can even use some of Wealthfront’s automatic financial-planning features for free, regardless of whether or not you keep your portfolio with the robo-advisor.

Robo-advisors offer a low-cost alternative to traditional investment management. They provide professional investment management services for a fraction of the cost of traditional advisors, and with far smaller minimum initial investments.

If you’re considering signing up for a robo-advisor service, Wealthfront should definitely make your shortlist. In this review, we’ll take an in-depth look at Wealthfront to help you decide if it’s the right service for you.

Wealthfront Logo

Product Name: Wealthfront

Product Description: Wealthfront is one of the biggest and most popular robo-advisors around. It offers a wealth of tools, investments, and account types. You can even use its app to track your financial goals for free. It's a great choice for anyone looking for hands-off investing, but keep in mind you need at least $500 to open an account.

  • Commissions & Fees
  • Account Options
  • Investment Options & Asset Allocation
  • Tools & Resources
  • Website / App / Ease of Use
  • Customer Service


When it comes to Commissions & Fees, Wealthfront is an affordable option. You can even use its online planning tools for free. However, there is a required minimum of $500 to start investing. Wealthfront offers plenty of Account Options to suit your needs, including a 529 plan for saving for college. In the Investment Options & Asset Allocation department, Wealthfront offers plenty but is definitely not for anyone who wants to DIY. This robo-advisor offers a wealth of Tools & Resources to make understanding your financial situation easy, even if you’re not an account holder. Wealthfront’s Website / App / Ease of Use makes investing easy for beginners. Customer Service can be reached five days a week by phone.

Wealthfront Features

Minimum Investment$500
Commissions & Fees0.25%
Types of InvestmentsStock, Bond, Real Estate, and Commodity Funds
Types of AccountsIndividual, Joint, Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, Trusts, 529s
Asset AllocationManaged Portfolios
Automatic Portfolio RebalancingYes, Daily
Human Advisor AvailabilityNone
Tax-Loss HarvestingYes
Banking ServicesSavings Accounts
App AvailabilityiOS, Android, Mobile Optimized Website
Customer ServiceEmail, Phone
FINRA CRD Number#148456
SEC Registration Number#801-69766

Additional Features

  • Free Financial-Planning Tools. Wealthfront offers tools that can help you get a better sense of your financial situation and savings goals. Best of all, you don’t need to be a paying account holder. All you have to do is download the app onto your phone.
  • 529 College Savings Account. Parents who want to save for their kids’ college education should be interested in Wealthfront’s 529 plan. However, check to make sure your own state-sponsored plan isn’t a better deal, especially considering tax benefits.
  • Cash Account. Wealthfront now offers an interest-paying cash savings account. The rate it pays is competitive with many online banks, and accounts are covered by the FDIC for up to $1 million.
  • Line of Credit. If you have at least $25,000 in your Wealthfront account balance, you can borrow up to 30% of your portfolio’s balance without the hassle of filling out a margin application. Of course, you’ll have to pay interest; check current rates if interested.
  • PassivePlus. This suite of investment strategies aims to give clients extra value in their portfolios. Included strategies are tax-loss harvesting, stock-level tax-loss harvesting, risk parity, and smart beta.

What Is Wealthfront?

Wealthfront is a robo-advisor that was founded in 2008 in Palo Alto, California. It was originally called kaChing and focused on mutual fund analysis. In 2011, the company rebranded and became an automated wealth management service.

Since then, Wealthfront has grown by leaps and bounds. It currently has more than $12 billion in assets under management, making it the second-largest independent robo-advisor after its close competitor Betterment.

However, unlike Betterment, there’s no option to receive advice from a human advisor. That’s because Wealthfront’s portfolios are based 100% on its computer algorithms. Some would say this is better – after all, human financial decisions can be negatively affected by emotions and sentiment.

How Does Wealthfront Work?

Wealthfront handles all of the investment management process for you. You simply need to fund your account with at least $500, and then Wealthfront will handle the investment selection, portfolio allocation, periodic rebalancing of your portfolio, tax management, and reporting.

Wealthfront Portfiolios

When you sign up with Wealthfront, the first thing you do is take a quiz that includes a series of questions that are designed to determine your risk tolerance. Wealthfront will use this determination, along with your age and other factors, as a basis for the portfolio they will construct for you.

For example, if your answers indicate that you are a conservative investor, your portfolio will be skewed more heavily in favor of income-based investments. If you have a great tolerance for risk, your portfolio will be invested more heavily in equities.

Wealthfront’s investment strategy is based on Modern Portfolio Theory, which holds that proper asset allocation is more important than individual security selection. That means Wealthfront will make sure that your portfolio is allocated in a mix of asset sectors that are most likely to achieve your investment goals.

To construct your diversified portfolio of ETFs, Wealthfront evaluates 11 different asset classes:

  • U.S. Stocks
  • Foreign Developed Stocks
  • Emerging Market Stocks
  • Dividend Growth Stocks
  • U.S. Government Bonds
  • Corporate Bonds
  • Emerging Market Bonds
  • Municipal Bonds
  • TIPS
  • Real Estate
  • Natural Resources

Traditionally, advisors allocate your portfolio across three asset classes. Wealthfront portfolios are constructed of seven to eight asset classes for greater diversification and therefore greater returns. Your money is allocated into each of these asset classes using an exchange-traded fund (ETF) for each class. The funds are index-based, which means that they have less trading – and therefore lower transaction costs – than actively managed funds.

If you have a taxable account with $100,000 or more, you can also take advantage of Wealthfront’s Risk Parity Fund. This fund, which has an expense ratio of 0.25%, seeks to achieve higher risk-adjusted returns. You can invest up to 20% of your portfolio in this fund.

Path by Wealthfront

Wealthfront recently launched Path, a financial planning service that helps users plan for their financial future. At its core, Path gives Wealthfront users access to financial planning without having to talk to someone. You don’t need to be an account holder at Wealthfront to use Path’s features, either.

It takes only five minutes to set up and link to all of your outside bank and brokerage accounts, and uses a rolling 12-month average of how much you’ve been saving and spending to run its calculations. Path can cover these financial areas:

  • Retirement Savings
  • College Planning
  • Home Purchase Planning
  • Time Off for Travel

Because Path links directly to all of your outside accounts, you have a complete and accurate picture of your finances as they are today and how far along you are to meet these goals.

Wealthfront’s team has handled the calculations on the back end for you so that you can get a visual idea of how increasing your savings, decreasing your spending, or changing your retirement age can impact your financial future.

Overall, this is a powerful service that helps you focus on the aspects of your financial plan that you can control. And you can do it all from your phone.

Wealthfront Cash

Like Betterment, Wealthfront has moved into the banking space with a cash savings account. The Wealthfront Cash account is fee-free and earns an interest rate competitive to what you’ll find at many online banks. However, it’s not as high as you can find from the highest-yield savings accounts.

Because Wealthfront spreads your cash account among several different third-party banks, it can offer FDIC insurance for up to $1 million, rather than the standard $250,000. You can transfer money out of your Cash account to an external account as many times as you like.

Wealthfront Fees

Wealthfront’s fee structure is one of the simplest in the investment industry. There is a flat annual management fee of 0.25% of your account value.

There are also no transaction fees, although there are small investment expenses that are charged within each individual ETF. However, that is common anytime you invest in funds, whether directly or through an investment platform.

If you don’t want to commit to investing with a Wealthfront account, you can also use the app’s financial planning tools for free.

Wealthfront Pros & Cons

Wealthfront Pros

  • Free Financial Planning App. Even if you don’t have a Wealthfront investing account, you can use its Path tools for free.
  • Tax-Loss Harvesting. One of the value-adding tools in the PassivePlus suite, tax-loss harvesting can help you recoup losses at tax time.
  • Reasonable Fees. Wealthfront’s flat fee is in line with what other robo-advisors charge. In addition, there are no hidden management costs.
  • Interest-Paying Cash Account. Wealthfront Cash offers an additional way to invest and save for the future.
  • Holistic Financial Planning. Wealthfront analyzes all of your accounts, not just those housed at the robo-advisor.
  • Lots of Options. Along with lots of investment options, Wealthfront also offers plenty of account types as well.

Wealthfront Cons

  • $500 Minimum Investment. Some of Wealthfront’s competitors don’t require a minimum investment to get started. In addition, some of Wealthfront’s features require accounts of at least $100,000.


If you aren’t interested in do-it-yourself investing, and you don’t have the portfolio size to meet the minimum requirements of traditional investment advisors, then Wealthfront could be the right way for you to invest your money. It’s also one of the very lowest-cost investment management services available, given both its very low fee structure and its tax-efficient investing.

If you entertain the idea of do-it-yourself investing, Wealthfront is not the right choice. But if you want a hybrid arrangement, in which part of your portfolio is professionally managed, while you do DIY the rest, you might consider having both a Wealthfront account and a self-directed account with a brokerage firm. At the very least, you can take advantage of Wealthfront’s Path tools for free.

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About Kevin Mercadante

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.

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