Wealthfront Review (2024)

Account Setup

Wealthfront enables you to set up an account quickly, take a brief financial goals and risk quiz, and view a potential investment portfolio. Opening an account with Wealthfront starts with you clicking the “Get Started” button on the home page and selecting either “Cash” or “Automated Investing.” The total process for opening either account type is roughly 5 minutes.

To move forward with creating an investment account, you'll choose the account ownership structure with options ranging from individual and joint brokerage accounts, trust, traditional, Roth, simplified employee pension (SEP), and rollover individual retirement accounts (IRAs), to a unique 529 account.

Then you'll fill out a brief questionnaire about investment goals and account ownership, the site will ask for your name, email address, and phone number.

Now that you have a Wealthfront account and a specific type of investment account selected, you’re asked the standard age, income, net worth, and risk questions. Before viewing your investment portfolio you’ll choose either the Classic, Socially Responsible, or Direct Indexing (limited to accounts with more than $100,000) account style.

After selecting the style, you can then view the recommended investment portfolio for your risk level. You’re able to view other portfolio options by increasing or decreasing risk tolerance using a slider. You can also choose to further customize the portfolio using “Edit Portfolio” to add or remove investments. Once you’re satisfied, the last step is linking a bank account to fund the Wealthfront account.

After linking accounts, you can access Wealthfront’s comprehensive free digital financial planning tool, Path. To actually start investing with your Wealthfront account, your account balance will need to reach $500 before it is invested in your selected portfolio.

Goal Planning

Wealthfront’s goal planning and financial decision-making tools are among the best in our robo-advisor platform reviews. To properly use Wealthfront’s goal planning features, collectively called Path, you need to link all of your financial accounts to create an accurate picture of your current finances.

Wealthfront investors can choose from the following list ofinitial goals:

• Home ownership
• Early retirement
• Time off for travel
• College

It’s easy to track progress towards goals. After logging in to Wealthfront, users can view their dashboard which shows progress towards goals. As mentioned, anyone who registers and links their banking and investment accounts can use the digital financial planning tools. Path draws upon academic research to project your likelihood of reaching stated goals while taking into account inflation, projected income changes, market performance, and so on. The modeling automatically updates whenever any of the inputs change. This allows Path to approximate the services you might receive from a human financial planner, including building a financial plan that sets out how much to save to reach your various goals.

In addition to helping you track the progress being made toward reaching your goals, embedded charts and graphs show how much your goals will cost. Again, the plan will update with new guidance every time you change a goal or other key inputs, so you can use Path to run a variety of scenarios on your finances. Getting this level of free financial analysis is well worth it, whether you intend to invest with Wealthfront or not.

Account Services

Wealthfront continues to innovate with cash management, borrowing, and the opportunity to customize portfolios by adding additional ETFs. There are no fees to trade the ETFs and they can be added to an existing portfolio or used to create a new one.

Cash Management

Wealthfront Cash is similar to a free interest-bearing checking account and is available to individuals whether they sign up for the investment services or not. Users can save for specific goals, automate transfers to their investment account, pay bills, and directly deposit a paycheck. Wealthfront Cash sign-up is separate from the Invest sign-up.

Additional features include:

• Interest-bearing account that currently pays 4.30% and fluctuates based upon movements in the federal funds rate.
• In-network fee-free ATM transactions.
• Up to $3 million FDIC insurance through related banks.
• App-based mobile check deposits.
• Unlimited free transfers.

Through Wealthfront Borrow, users with a minimum of $25,000 invested with Wealthfront in a taxable account are eligible for a portfolio line of credit and can borrow up to 30% of their account value. There’s no credit check required and interest rates range from 6.65% to 7.90%, depending upon your account balance.

There is no payment schedule or constraints on how you use the money. But, if your account balance falls, you may need to add money to your investment account or repay some of the loan.

Portfolio Construction

Portfolios are created by the company's investment management team, which includes renowned Dr. Burton Malkiel, author of A Random Walk Down Wall Street. The portfolios include low-cost index funds and abide by Modern Portfolio Theory, which strives for the greatest returns at a specific risk level.

Asset classes include ETFs from the following categories:

• US Stocks
• Foreign Developed Market Stocks
• Emerging Market Stocks
• Dividend Growth Stocks
• US Bonds
• US Corporate Bonds
• Emerging Market Bonds
• Municipal Bonds
• Treasury Inflation-Protected Securities (TIPS)
• Real Estate
• Commodities

Wealthfront’s portfolio options include:

• Classic portfolios with a diversified portfolio of low-fee index funds
• Socially Responsible portfolios substitute several ETFs with socially responsible choices
• Direct Indexing includes individual stocks ($100,000 minimum)

While there are only three broad portfolio options for most users, you can access Wealthfront's Smart Beta portfolio if you have more than $500,000 in your account. This is a feature designed to "increase your expected returns by weighting the securities in your portfolio more intelligently."