{"id":240299,"date":"2020-06-22T00:30:03","date_gmt":"2020-06-22T07:30:03","guid":{"rendered":"https:\/\/www.getrichslowly.org\/?p=240299"},"modified":"2023-12-05T14:14:29","modified_gmt":"2023-12-05T21:14:29","slug":"wealthfront-review","status":"publish","type":"post","link":"https:\/\/www.getrichslowly.org\/wealthfront-review\/","title":{"rendered":"Wealthfront Review"},"content":{"rendered":"<p>Robo advisors are still a relatively new product, and yet every year they seem to grow in popularity. One such advisor, called Wealthfront, is one of the largest automatic investment and financial planning services out there.<\/p>\n<p>It\u2019s also one of the most decorated, winning the \u201cBest Robo Advisor of 2019\u201d award, and the \u201cBest Robo Advisor, December 2019\u201d award.<\/p>\n<p>But robo advisors are a dime a dozen these days. Why <a href=\"https:\/\/www.getrichslowly.org\/betterment-review\/\">should you Wealthfront over another company like Betterment<\/a>?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"what-is-wealthfront\"><\/span>What is Wealthfront?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Formed in 2008 by Andy Rachleff, Wealthfront initially started as a mutual fund analysis company, \u201ckaChing\u201d, before moving into wealth management. It seems like it was a smart move, because as of 2019, they manage $11.4 billion in assets for their clients.<\/p>\n<p>Similar to other \u201crobo-advisers\u201d like Betterment, Wealthfront helps you save, invest, and manage your money, all automatically &#8211; so whether you\u2019re just starting to invest or have a large and diverse portfolio, anyone can take advantage of their automatic investment services. They also offer financial planning services for a handful of different needs, including retirement planning and college planning.<\/p>\n<p>While Wealthfront and Betterment work similarly to each other in many ways, including accounts offered, fees charged, etc., Wealthfront does offer some unique features that, depending on your financial goals, may give it a slight edge over Betterment.<\/p>\n<p>Let\u2019s get into the details.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"how-does-wealthfront-work\"><\/span>How does Wealthfront work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Wealthfront is a 100% software-based investment and financial planning platform. When you sign up for an account, you\u2019ll answer a series of questions to help identify your investing goals, your time to retirement and your risk tolerance. Using this data, Wealthfront will build you a diversified portfolio using low-cost, passive ETFs from a range of asset classes and markets. They will then manage this portfolio on your behalf, continuously monitoring and automatically rebalancing to meet your target asset allocation, and harvesting losses for tax benefits.<\/p>\n<p>Like many robo-advisers, Wealthfront uses \u201cModern Portfolio Theory\u201d, which attempts to identify the portfolio that has the maximum expected return for your chosen level of risk. Wealthfront invests with an emphasis on equities seeking to maximize long-term returns.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"what-does-wealthfront-invest-in\"><\/span>What does Wealthfront invest in?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Wealthfront uses a mix of Exchange Traded Funds (ETFs) to build your portfolio. While every customer will have a portfolio completely unique to them based on their risk tolerance and financial goals, every portfolio uses a mixture of the following 11 funds:<\/p>\n<p><strong>Stocks:<\/strong><\/p>\n<ul>\n<li>Vanguard Total Stock Market Index Fund (VTI)<\/li>\n<li>Vanguard FTSE Developed Markets ETF (VEA)<\/li>\n<li>Vanguard FTSE Emerging Markets ETF (VWO)<\/li>\n<li>Vanguard Dividend Appreciation (VIG)<\/li>\n<\/ul>\n<p><strong>Bonds:<\/strong><\/p>\n<ul>\n<li>Schwab U.S. TIPS ETF (SCHP)<\/li>\n<li>Vanguard Total Bond Market ETF (BND)<\/li>\n<li>iShares National Muni Bond ETF (MUB)<\/li>\n<li>iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)<\/li>\n<li>iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB)<\/li>\n<\/ul>\n<p><strong>Alternatives:<\/strong><\/p>\n<ul>\n<li>Vanguard Real Estate ETF (VNQ)<\/li>\n<li>Energy Select Sector SPDR\u00ae Fund (XLE)<\/li>\n<\/ul>\n<p>Wealthfront edges Betterment out just slightly in this category by offering two alternative asset classes.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"specialized-portfolio-strategies\"><\/span>Specialized portfolio strategies<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Wealthfront offers a few different investment options for those who have very specific goals or needs that can\u2019t be met with a standard portfolio &#8211; though these are generally only available to investors with larger investment accounts.<\/p>\n<ul>\n<li><strong>Socially Responsible Investing: <\/strong>While there isn\u2019t a portfolio designed specifically for socially responsible investing per se, using Wealthfront\u2019s Stock-level Tax-loss harvesting feature, you can decide if you want to include or exclude companies that profit from trades such as fossil fuels, deforestation, weapons and tobacco. Note that the Stock-level Tax-loss harvesting feature is only available to account holders with at least $100,000 in their accounts.<\/li>\n<\/ul>\n<ul>\n<li><strong>Risk Parity:<\/strong> This mutual fund option aims to increase your risk-adjusted returns in a wide range of market environments through an enhanced asset allocation strategy. This is only available to account holders with $100,000 or more in their accounts, and charges an additional 0.25% per year to manage (for a total management fee of .50%).<\/li>\n<\/ul>\n<ul>\n<li><strong>Smart Beta:<\/strong> This portfolio is designed to increase your expected return by weighting the stocks in your portfolio more fairly. While normal portfolios weight stocks by market capitalization, Smart Beta analyzes five other factors &#8211; value, momentum, dividend yield, market beta and volatility &#8211; and adjusts your portfolio accordingly. This is only available for account holders with $500,000 or more in their accounts.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"types-of-accounts\"><\/span>Types of accounts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Wealthfront offers the following types of investment accounts:<\/p>\n<ul>\n<li><strong>Individual taxable accounts:<\/strong> This is the most common type of brokerage account for individual investors.<\/li>\n<\/ul>\n<ul>\n<li><strong>Joint taxable accounts: <\/strong>This account is for people who file joint tax returns, such as married couples.<\/li>\n<\/ul>\n<ul>\n<li><strong>Retirement accounts:<\/strong> Wealthfront offers tax-advantaged retirement accounts too, such as Traditional IRAs, Roth IRAs, Rollover IRAs, and SEP IRAs. There is currently no support for SIMPLE IRAs, 401(k)s or Solo 401(k)s, which is one big detriment of Wealthfront to Betterment.<\/li>\n<\/ul>\n<ul>\n<li><strong>Trust accounts:<\/strong> This account is for people who want to leave their wealth to their heirs.<\/li>\n<\/ul>\n<ul>\n<li><strong>529 accounts:<\/strong> Unlike Betterment, Wealthfront actually allows investors to contribute to a 529 plan for their child. They\u2019ll help you determine how much you\u2019ll need, how much you can afford to contribute and show you a path to get there. They can even rollover a plan from another financial advisor or from a different state. This is a pretty significant account feature, especially if you have kids or are planning to.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"what-features-does-wealthfront-have\"><\/span>What features does Wealthfront have?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li><strong>Mobile &amp; Desktop App: <\/strong>Wealthfront offers both a mobile and web version that work near identically. It\u2019s compatible with iOS devices running 11.0 and up, including iPhone, iPad and iPod touch. It\u2019s also compatible with Android devices running 5.0 and up.<\/li>\n<\/ul>\n<ul>\n<li><strong>Tax Loss Harvesting: <\/strong>Tax loss harvesting is the strategic practice of capturing investment losses by selling a security that has experienced a loss. This can reduce your tax bill, leaving you additional money to invest. Tax loss harvesting is available on all taxable investment accounts.<\/li>\n<\/ul>\n<ul>\n<li><strong>Stock-Level Tax-Loss Harvesting:<\/strong> This is an advanced form of tax-loss harvesting that allows Wealthfront to use movements in individual stocks to harvest more tax losses and lower your tax bill. This is possible because Wealthfront composes your portfolio of 500 stocks from the S&amp;P, as opposed to just one ETF like VTI, so that they can be purchased and sold to maximize tax benefits. According to Wealthfront, this is a completely unique feature to this robo advisor.<\/li>\n<\/ul>\n<ul>\n<li><strong>Automatic Rebalancing: <\/strong>Over time, market gains and losses can change your asset allocation so that you may be more exposed to stocks or bonds than you\u2019d like. Wealthfront automatically buys and sells your ETFs to make sure your portfolio is at the correct asset allocation.<\/li>\n<\/ul>\n<ul>\n<li><strong>Tailored Transfers:<\/strong> A feature unique to Wealthfront, the tailored transfers feature can help transfer your account from your existing broker to Wealthfront without having to sell your entire position.<\/li>\n<\/ul>\n<ul>\n<li><strong>Portfolio Line of Credit:<\/strong> Another unique feature of Wealthfront, now you can borrow up to 30% of your portfolio\u2019s value on margin. Account holders with $25,000 or more in assets can borrow cash at rates as low as 2.55% to 3.80%. This account uses your investments as collateral, so tread carefully. If you borrow money and your investment account drops in value, you may have to pay back more than you borrowed.<\/li>\n<\/ul>\n<ul>\n<li><strong>PassivePlus: <\/strong>PassivePlus is Wealthfront\u2019s suite of rules-based investment strategies that are rooted in academic research. It aims to deliver clients more value over simply buying and holding an index fund. PassivePlus includes Tax-Loss Harvesting, Stock-level Tax-Loss Harvesting, Risk Parity and Smart Beta and is applied to individual, joint, and trust investment accounts. PassivePlus is only available to account holders with at least $100,000 in their accounts.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"how-do-pricing-and-fees-work-with-wealthfront\"><\/span>How do pricing and fees work with Wealthfront?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Wealthfront has a $500 account minimum and charges a management fee of 0.25% per year. If you have a $100,000 portfolio, that&#8217;ll cost $250 a year to manage. The only exception to this is the Risk Parity portfolio that charges an extra 0.25% to manage the fund per year.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"wealthfront-path-financial-planning\"><\/span>Wealthfront path financial planning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Wealthfront offers a cool feature called \u201cPath\u201d that can help you plan for specific goals or milestones in your life. Path is a software-based advice engine that delivers financial planning tools to help users realize better financial outcomes. Whether you want to save up to buy a house, fund your child\u2019s education or take time off to travel, Wealthfront can help you figure the details out.<\/p>\n<p>Wealthfront can help you plan for the following milestones or events:<\/p>\n<ul>\n<li><strong>Retirement: <\/strong>Tell Wealthfront how you want to retire, and they\u2019ll calculate the earliest age you can, factoring in taxes, inflation, social security, and even the sort of house you\u2019ll live in.<\/li>\n<\/ul>\n<ul>\n<li><strong>Buying a home: <\/strong>Decide when and where to buy, and they\u2019ll forecast future prices, taxes, and insurance to see what you can afford and measure the impact on your finances.<\/li>\n<\/ul>\n<ul>\n<li><strong>Paying for a child\u2019s education: <\/strong>Wealthfront will calculate your child\u2019s financial aid eligibility and how much of the projected future costs you can afford to cover.<\/li>\n<\/ul>\n<ul>\n<li><strong>Travel: <\/strong>Determine your budget for traveling, whether it\u2019s for a few months to a few years. Wealthfront will measure the impact to your retirement and overall finances, including disruption to income growth.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"wealthfront-cash-account\"><\/span>Wealthfront cash account<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In addition to automated investing, Wealthfront offers users access to a high-yield account that earns, as of March 2020, 0.26% APY (this is down significantly from 2.24% when it first debuted in February 2019). It requires just $1 to open and there are no additional deposit requirements, plus no advisory or management fees. You can even withdraw money as often as you like with no penalty.<\/p>\n<p>Because this is a cash account, your money isn\u2019t subject to market risk, so there\u2019s no need to worry about market volatility. And, because deposits are FDIC insured up to $1 million, you can sleep easy knowing your money is protected.<\/p>\n<p>Wealthfront is always looking to improve their products. Some of the additional features they\u2019re thinking of adding include debit cards, ATM access, direct deposit, bill pay, checks, and mobile check deposit.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"is-wealthfront-safe\"><\/span>Is Wealthfront safe?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>While there\u2019s no guarantee that your portfolio won\u2019t lose money in the stock market, Wealthfront\u2019s algorithms do their best to help reduce your exposure to risk by highly diversifying your portfolio across asset classes. They also make sure that your assets and their assets don\u2019t commingle &#8211; that is, they keep your money and their money separate.<\/p>\n<p>Furthermore, your Wealthfront investment account is protected by insurance from the Securities Investor Protection Corporation (SIPC), insuring your account up to $500,000 in the event of a broker failure. (As always, market losses are not SIPC covered).<\/p>\n<p>Additionally, Wealthfront uses precautions to safeguard your account. All of your personal data that gets entered into Wealthfront\u2019s website, such as your social security number, is encrypted. This means that while the data is transmitted, it\u2019s protected from hackers.<\/p>\n<p>A few additional ways you can keep your assets safe:<\/p>\n<ul>\n<li>Always enable two-factor authentication. This presents another barrier for hackers to get through.<\/li>\n<li>Keep all records and statements from your accounts<\/li>\n<li>Periodically check statements for errors<\/li>\n<li>Never give out your login information to anyone, including Wealthfront employees<\/li>\n<li>Only access your account over a secure internet connection<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"who-should-use-wealthfront\"><\/span>Who should use Wealthfront?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>People who should use Wealthfront:<\/p>\n<ul>\n<li>Beginner investors<\/li>\n<\/ul>\n<ul>\n<li>Investors with little money to start<\/li>\n<\/ul>\n<ul>\n<li>People who want their investments to be hands off<\/li>\n<\/ul>\n<ul>\n<li>People who don\u2019t have time to manage their investments<\/li>\n<\/ul>\n<p>People who shouldn\u2019t use Wealthfront:<\/p>\n<ul>\n<li>Investors who want to actively trade<\/li>\n<\/ul>\n<ul>\n<li>People who want more flexibility over their investments<\/li>\n<\/ul>\n<ul>\n<li>People who want to actively manage their portfolios<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"is-wealthfront-worth-it\"><\/span>Is Wealthfront worth it?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If you\u2019re a beginner investor just looking to get your feet wet in the world of investing, you could do a lot worse than Wealthfront. Everything is 100% automated, taking the guesswork and fear out of investing. They also offer financial planning, savings, and borrowing services, so whatever your financial goals, from investing for retirement to purchasing a home, Wealthfront has your back.<\/p>\n<p>Wealthfront also offers investing at a great price, as its fees are right in line with similar robo-advisers like Betterment, who charges an identical management fee of 0.25% per year.<\/p>\n<p>Wealthfront offers additional features such as 529 college saving, portfolio line of credit and tailored transfers you can\u2019t get from places like Betterment, making it an even more attractive option among robo-advisors. Overall, we\u2019d say that Wealthfront is definitely worth it.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"final-thoughts\"><\/span>Final thoughts<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There\u2019s no denying that Wealthfront works great as a robo advisor. It completely self directs and manages your accounts for you, so you don\u2019t have to waste time worrying about asset allocation, or the stocks and bonds that go into your portfolio. It also offers some robust features that you won\u2019t get anywhere else, like 529 planning, portfolio line of credit, and the Path planning feature, which helps guide you to reaching one of your life goals. They even offer this feature for free, so you can use it, regardless if you have an investment account with them!<\/p>\n<p>If you want a more self-directed, active trading account, there are plenty of options out there. But for the passive investor who wants to leave the active trading to the \u201cexperts\u201d, Wealthfront is a great option.<\/p>\n<p>Sign up for and get $5,000 managed free today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Robo advisors are still a relatively new product, and yet every year they seem to grow in popularity. One such advisor, called Wealthfront, is one of the largest automatic investment and financial planning services out there.<\/p>\n<p>It\u2019s also one of the most decorated, winning the \u201cBest Robo Advisor of 2019\u201d award, and the \u201cBest Robo Advisor, December 2019\u201d award.<\/p>\n<p>But robo advisors are a dime a dozen these days. Why <a href=\"https:\/\/www.getrichslowly.org\/betterment-review\/\">should you Wealthfront over another company like Betterment<\/a>?<\/p>\n<h2>W<\/p>\n","protected":false},"author":3440,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[492],"acf":[],"_links":{"self":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/240299"}],"collection":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/users\/3440"}],"replies":[{"embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/comments?post=240299"}],"version-history":[{"count":0,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/posts\/240299\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/media?parent=240299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.getrichslowly.org\/wp-json\/wp\/v2\/categories?post=240299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}