Wealthfront Review 2023 (2024)

Wealthfront is best for someone who’s looking to make as few financial decisions as possible—as well as users who enjoy lots of features and messing around with graphs and charts.

Like most robo-advisors, Wealthfront recommends a low-cost, tax-efficient diversified portfolio of exchange traded funds (ETFs) and index funds that match your financial goals and risk tolerance. The platform takes automation a step further with its Self-Driving Money service, which automatically allocates your paycheck to cover bills, college savings and investing goals.

Meanwhile, the Path tool gives anyone—including those without a Wealthfront account—a free 30,000-foot view of their financial situation simply by linking up their other accounts.

To open a Wealthfront account, you’ll need to pony up an initial contribution of $500 and pay an 0.25% annual advisory fee, in addition to any expense ratios charged by the funds that comprise your portfolio. This rate is pretty standard in the robo-advising space, but Wealthfront has a higher initial contribution requirement than many of its peers.

Wealthfront’s full menu of services and tools can be extremely helpful, if not overwhelming. If the idea of graphs, multiple accounts and projections on all aspects of your financial life makes you squeamish, consider alternatives.

Account details and annual percentage yields (APYs) are accurate as of March 24, 2023.

Wealthfront sells itself as a robo-advisor that helps you “use technology to make money on all your money.” When you first sign up for the platform, you begin by letting it know exactly how you’d like to make money on your money:

• Invest for the long term. This option gives you a taxable investment account.
• Plan for retirement. For this option, you open an individual retirement account (IRA). You may choose a traditional IRA, a Roth IRA or a SEP IRA.
• Save for college. The platform offers its own 529 college savings plan.
• Open a bank account. Wealthfront Cash is a cash management account that pays an APY of 5.00%.

If you choose the long-term investing option, you’re prompted to answer a series of questions to gauge your risk tolerance.

Besides your age (which helps set a baseline for what percentage of your portfolio should consist of stocks), Wealthfront also assesses your general risk tolerance by asking about your priorities (like maximizing gains or minimizing losses) as well as your likelihood to sell in a panic when the market dips. This insight is important not only for Wealthfront’s robo-advisor algorithms but also so you can understand your state of mind as an investor.

Wealthfront uses your answers to these questions to recommend a portfolio of funds designed to match your tolerance for risk. Additionally, Wealthfront will recommend you employ tax-loss harvesting strategies to lower your potential tax bill when your taxable account reaches between $100,000 and $500,000. You gain access to more advanced strategies on a stock-based level once your account is over $500,000.

Nearly half a century ago Burt Malkiel wrote “A Random Walk Down Wall Street,” which helped usher in the passive-investing revolution. The crux of passive investing is that few money managers could consistently beat the returns of the average stock market index, like the S&P 500, so the better approach is to match its gains and cut fees to the hilt.

Malkiel is now the chief investment officer at Wealthfront, and his philosophy undergirds how the robo-advisor invests your money.

Take the portfolio Wealthfront recommended to a 30-something who prioritizes maximizing gains as much as minimizing losses. That portfolio, with a risk tolerance score of 8.5 out of 10, consisted of 86% stocks and 14% bonds. In all, Wealthfront picked 15 different mutual funds and ETFs, most of which had expense ratios of 0.10% or lower. One conspicuous exception was the iShares Dow Jones Select Dividend Index, which charges an expense ratio of 0.39%.

For the sake of diversification and tax efficiency, the recommended portfolio invested in five different asset classes: domestic stocks, developed economy international stocks, emerging markets, dividend stocks and municipal bonds. Still, those are a lot of funds and assets classes when you can create a low-cost, diversified portfolio with just three.

Wealthfront recently added a few new features to its platform, which should be popular with younger investors: a socially responsible investing (SRI) portfolio and cryptocurrency. Those interested in the former will have access to mainstream funds like iShares ESG Aware MSCI (ESGU), which invests in large-to-mid size US companies that score well on MSCI’s ESG ratings. Meanwhile, crypto fans have access to hundreds of digital coins in addition to two trusts: Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE).

These thematic or speculative bets come with risks, though. SRI or ESG funds are more expensive than plain-vanilla ETFs. Take ESGU, for example, which charges an expense ratio of 0.15%, compared to 0.03% on the iShares Core S&P Total U.S. Stock Market ETF (ITOT). Crypto, of course, is pure speculation at this point: Bitcoin, much less Dogecoin, have no intrinsic value and rack up capital gains because someone today thinks they can sell it to someone else later for a higher price.

Wealthfront offers a suite of additional automated features that can provide you with a complete picture of your financial situation and help you place income where it is most useful.

Automated Financial Planning and Account Aggregation

Clients and non-clients alike can use Wealthfront’s free Path tool to create a bird’s eye view of their financial lives. Connect your various financial accounts—401(k), mortgage, credit cards—to Path for a read on your income, cash flow and debt. Outline long-term goals, such as a nice, long post-pandemic vacation, and Path will outline a plan to save the necessary amount to pay for it.

Wealthfront recently launched a feature called Autopilot that works hand-in-hand with Path. Deposit your paycheck with Wealthfront and its algorithm will determine the best path for your dollars. It’ll help you beef up your emergency savings fund and allocate the rest to where it can earn the best risk-adjusted return.

Cash Management Account

Wealthfront Cash is a cash management account that operates like a standard checking account but with the interest rate of a savings account. Wealthfront Cash charges no monthly maintenance fee or ATM fees, and you’ll earn an APY of 5.00%. You only need $1 to start, and you don’t need to open a robo-advisor investment account to use Wealthfront Cash.

Line of Credit

Wealthfront offers a line of credit for customers with at least $25,000 invested in their account. You can borrow a maximum of 30% of your portfolio value, sans fees or credit checks. The line of credit application takes less than 30 seconds to fill out and typically charges between 2.40% and 3.65% in annual interest.

• Account minimum: $500 to open an investment account.
• Advisory fee: 0.25% of assets. An account balance of $10,000, for instance, would pay about $25 per year.
• 529 college savings account fees: If you opt for Wealthfront’s 529 plan, fees range between 0.42% and 0.46% (which includes the 0.25% advisory fee, plus expense ratios and administration fees).
• Expense ratios:Expense ratios charged by the ETFs and mutual funds Wealthfront uses range from about 0.03% to 0.39%, according to Wealthfront.
• Line of credit:$25,000 investment minimum to access credit with an APR of between 2.40% and 3.65%.

Wealthfront offers a sophisticated suite of financial products that would entice anyone who’s looking to start investing for the long haul.

Wealthfront’s Path tool lets you sample some of Wealthfront’s powerful robo-advisor insight without making a full commitment. If you take the plunge and start investing with Wealthfront, you may conceivably never have to make another decision on the platform again after the initial questionnaire. Like other robo-advisors, Wealthfront gives you a portfolio suited to your risk tolerance, populated with low-cost funds that minimize fees.

Wealthfront will also continually rebalance your portfolio so you don’t drift toward a riskier or more conservative asset allocation, and it employs strategies like tax-loss harvesting to limit what you owe to Uncle Sam. Once all of the features are live, Self-Driving Money will even recommend the best use of every new dollar coming into your account.

If you need additional advice and interaction, Wealthfront might not be your first choice for investing. Unlike some other robo-advisors, there’s no real “human” component to speak of should you need a bit of assistance understanding any aspect of your investments—Wealthfront takes the “robo” part of robo-advisor really seriously.

While Wealthfront’s copious features provide a sophisticated view of your finances, they can also feel a bit overwhelming. This isn’t necessarily a bad thing: After all, gaining as much insight as possible into your finances for a relatively low cost can be highly beneficial.

But if you’re easily turned off by going through the motions of connecting accounts, or unsettled by giving access to lots of personal information to one company, consider limiting your use of Wealthfront to only its investing features.

On a more technical note, Wealthfront requires you to hold a bit more cash than you otherwise would. This is for two reasons: One, it sets aside the amount of money you’ll owe in fees for the year, and two, Wealthfront doesn’t allow you to buy fractional shares of ETFs, which means the platform holds on to your money until you can buy a full new share.

While we appreciate Wealthfront’s lack of fees on its banking product, you can find higher yields with other savings accounts. Wealthfront Cash is best used, then, for convenience’s sake.

¹Forbes Advisor receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. Forbes Advisor is not a Wealthfront Advisers client, and this is a paid endorsem*nt. More information is available via our links to Wealthfront Advisers.