Wealthfront Review 2024: Pros, Cons and How It Compares

Where Wealthfront shines

Holistic financial advice and automated investment management that appeals to both new and experienced investors: helpful planning tools, diversified — and hands-off — portfolios and advanced tax optimization strategies. High-yield cash account that requires a $1 minimum to get started and is covered by up to $8 million in FDIC insurance.

Exchange-traded funds in up to 12 asset classes.

Wealthfront stock investing account: It's rare for a robo-advisor to provide access to both managed portfolios and DIY investing; among the robo-advisors we review, Stash is the only other service that does so. That company charges a monthly fee; Wealthfront's stock investing account does not come with added fees, nor does it charge commissions for buying or selling investments.

Through that account, you can purchase and manage your own investments in individual stocks, ETFs and REITs. Stocks can be purchased individually (including as fractional shares) or through curated collections Wealthfront puts together based on sector, industry or other criteria.

Where Wealthfront falls short

What type of investor should choose Wealthfront?

• Hands-off investors.

• Investors opening taxable investment accounts, due to Wealthfront's advanced tax optimization strategies.

• Investors who want 529 college savings plan management.

• Those who want a DIY portfolio and a managed portfolio within one brokerage.

What the Nerds think

Wealthfront at a glance

Reviewed: Oct. 2024.

Period considered: Aug. - Oct. 2024

How to sign up for a Wealthfront account

The process of opening a Wealthfront account is easy — if you've ever opened a brokerage or bank account before, you'll find many steps are the same.

You'll start by selecting the type of account you want to open, then answering a quick series of questions that are designed to help Wealthfront decide what portfolio is right for you. The questions will dig into your goal, investment timeframe and how much risk you're willing to take, and once you've completed them, Wealthfront will recommend a portfolio.

You can review that portfolio and either accept it or customize it to better suit your needs. Once you've done so, you'll need to select a source for funding your account — typically this is done through a transfer from a bank account or other brokerage account — and transfer in at least the account minimum, which is $500.

How much does Wealthfront cost?

Wealthfront charges 0.25% for portfolio management. The company’s biggest independent competitor, Betterment, also charges 0.25% for its digital service, though some balances may be charged a flat fee instead. (For a full description of that company’s services and fees, read our Betterment review.) We also have a full comparison of Wealthfront vs. Betterment.)

If you're not quite ready to pay for financial management, Wealthfront will let you link your bank and retirement accounts to its financial-planning tool, Path, for free. If you decide you want Wealthfront to manage your portfolio for you, you'll start paying the 0.25% fee.

In addition to that portfolio management fee, the funds Wealthfront uses to build your portfolio will carry expense ratios, as is the case with most robo-advisors. The expense ratios on the ETFs Wealthfront uses average 0.08%.

Within Wealthfront's stock investing account, there are no trade commissions or management fees.

Wealthfront charges no annual or inactivity fee, and does not charge for transferring money, making trades, account maintenance or setup. Some other robo-advisors do charge additional fees.

Wealthfront's portfolio selection

The company’s methodology includes giving investors a streamlined questionnaire to identify risk tolerance, then employing exchange-traded funds in up to 12 asset classes. Wealthfront’s investment mix covers U.S. stocks, foreign stocks, emerging markets, dividend stocks, real estate and natural resources, as well as emerging markets bonds, Treasury inflation-protected securities, and U.S. government, corporate and municipal bonds. The typical portfolio includes six to eight asset classes.

Its investment lineup includes socially responsible ETFs and sector-based ETFs, such as technology and health care, as well as cryptocurrency options. Investors can also allocate up to 10% of their total portfolio to Bitcoin or Ethereum using two crypto trusts, Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE). And clients now have access to customization — they can edit their Wealthfront portfolios by adding or deleting certain ETF holdings or build their portfolio from scratch.

Wealthfront also offers exposure to new categories and strategies, including the Roundhill Ball Metaverse ETF, which gives exposure to the metaverse; the JPMorgan Equity Premium Income ETF, which invests in stocks that seem undervalued; the KraneShares Global Carbon Strategy ETF, which offers exposure to carbon allowance futures; the iShares Global Tech ETF, which offers exposure to global tech stocks; the Global X NASDAQ 100 Covered Call ETF, which lets investors add a covered call strategy to their portfolios; and the Invesco Buyback Achievers ETF, which offers exposure to U.S. companies that have bought back at least 5% of their outstanding shares in the last year.

As we noted, Wealthfront doesn’t buy fractional shares of ETFs in its automated portfolio. Also, it maintains a cash balance equal to the fees you're projected to owe over the next year — between the two, some accounts are likely to experience a small level of cash drag. The percentage held in cash isn’t nearly as high as Schwab’s allocation, which is a minimum of 6%, but it’s worth noting for investors who would prefer the fractional shares offered by other robo-advisors.

Wealthfront's stock investing account offers access to over 1,500 stocks, ETFs and REITs that can be purchased individually, including in fractional shares. Wealthfront has curated collections of stocks to make the process of investing easier — investors can opt to invest in an entire collection, or pick and choose on their own. The stock investing account requires investors hold a minimum of three different stocks and must be paired with a Wealthfront Cash Account.

Socially responsible portfolio options

Wealthfront has its own Socially Responsible Portfolio that includes a range of SRI investment options. This is an ideal fund for investors who only want investments that align with their values.

Its diversified portfolio screens for business involvement in civilian firearms, controversial weapons, tobacco, thermal coal and oil sands. Clients can also customize non-SRI portfolios to invest in what they believe in most, including renewable energy, gender diversity, minority empowerment, animal welfare and more.

Automated bond portfolio

Wealthfront’s bond portfolio offers a mix of Treasury bond and corporate bond ETFs that was generating a yield of 4.92% as of November 2024. The blend is tailored to your estimated tax rates based on state of residence, income and filing status, which helps minimize risk. Tax-loss harvesting and automatic dividend reinvestment help you keep as much of your investment gains as possible.

Wealthfront also offers an Automated Bond Ladder, which ladders U.S. Treasurys and is designed to be a hedge against falling interest rates. The range of yields as of November 2024 was 4.34% to 4.47%.

Other key Wealthfront features

Accounts supported

Wealthfront offers individual and joint non-retirement accounts; Roth, traditional, rollover and SEP IRAs; 529 college savings plans; and high-yield cash accounts. The inclusion of 529 plans is rare among robo-advisors, making Wealthfront a good choice for those saving for college.

Tax strategy

Wealthfront offers daily tax-loss harvesting on all taxable accounts. Tax-loss harvesting is an investment strategy that can significantly reduce capital gains taxes. In taxable accounts, the practice involves selling losing investments to offset the gains from winners.

New Wealthfront clients who transfer in assets may benefit from its tax-minimized brokerage account transfer service. That service incorporates existing investments into the Wealthfront portfolio where possible, and holds transferred securities that can’t be incorporated until capital gains become long-term.

Wealthfront beefs up its tax optimization services with stock level tax-loss harvesting or direct indexing. The basics: It’s harder to use tax-loss harvesting when you’re buying an index, so Wealthfront replicates the U.S. stocks index by buying the stocks held in it directly — up to 1,000 of them. Then its software can look for individual tax-loss harvesting opportunities. That tax savings can be reinvested, which compounds the potential impact of the service. Direct indexing is offered at no additional cost for taxable accounts with balances of $100,000 or more. To use direct indexing with account balances under $100,000, customers must hold a particular ETF, VTI.

Automatic rebalancing

Automatic rebalancing is regular rebalancing of your portfolio in response to market fluctuations or other factors that shift your portfolio out of its intended investment allocation. Wealthfront uses threshold-based rebalancing, meaning portfolios are rebalanced when an asset class has moved away from its target allocation, rather than on a quarterly or yearly schedule.

Wealthfront's software may rebalance your portfolio when dividends are reinvested, money is deposited, a distribution is taken or market fluctuations make it necessary.

Other instances in which Wealthfront will rebalance your portfolio are when deposits, withdrawals and reinvestment of dividends take place. It uses these as opportunities to minimize the taxable gains that can arise from threshold-based rebalancing.

Cash management account

Wealthfront offers the Wealthfront Cash Account, which currently pays 4.25% interest, competitive with many online banks. Most notable about the account is that through white-label agreements with several banks, Wealthfront is able to offer up to $8 million in Federal Deposit Insurance Corporation, or FDIC, coverage for individual accounts and up to $16 million for joint accounts through partner banks. Like other savings accounts, money deposited in the Wealthfront Cash Account is not subject to investment risk. The account charges no fees. If you also have a Wealthfront investment account, the investment management fee doesn't apply to money in the cash account.

Wealthfront Cash has many features, including a debit card, bill pay and automatic payments. Users who direct deposit their paycheck can get paid up to two days early and those using their Wealthfront Cash Account to invest in a Wealthfront Investment Account can get their funds invested within minutes.

One thing to keep in mind: It's possible to open a joint cash account, but only the primary owner has access to certain features, including tax documents and creating, editing or deleting an automated savings plan.

Portfolio line of credit

Wealthfront offers a portfolio line of credit that allows customers with balances of $25,000 or more in a taxable investment account to borrow up to 30% of their portfolio. Credit checks and paperwork aren't prerequisites to borrow money from your portfolio, and it takes one business day for funds to be transferred.

Financial planning tools

Wealthfront offers Time Off for Travel, a travel-planning tool that helps investors figure out how much time they can afford to take off, how much they can spend on travel, and how that spending could affect their ability to reach other goals.

Wealthfront's free Path tool (for mobile and desktop) helps people plan for buying a house, retirement, college and general savings goals — and you don't have to open a Wealthfront account to use it. The Self-Driving Money™ tool allows users to set up categories to save for specific goals in their Wealthfront Cash Account and automatically move excess cash into a Wealthfront taxable investment account, traditional IRA, Roth IRA or 529 college savings account.

If you're looking to build a retirement savings plan, the tool pulls in your current spending activity from your linked accounts, analyzes government data on spending patterns for people as they age, and then crunches the numbers to estimate your actual spending in retirement. The Path tool also incorporates long-term Social Security and inflation assumptions in its retirement-plan calculations.

In addition to bank and investment accounts, you can link your Coinbase account to track your cryptocurrency holdings. Some other functions of the Path tool include:

• Home buying: Path's home-planning tool incorporates your financial situation, home prices and mortgage rates to give you an estimate of how much house you can afford to buy. The tool lets you adjust your savings time frame to see different results, because you may be able to afford a bigger mortgage, say, in 10 years than you can right now. The tool also offers tips for how much to save each month and the best accounts to save in. Plus, you can do some virtual house hunting (and, if you already own a home, check your current home's value) via the app's connection to real-estate companies Zillow and Redfin.

• College savings: Wealthfront's Path tool also lets parents pick the college they want their child to go to, then projects college costs, estimates financial aid and develops a monthly savings plan. Parents can link an outside 529 college-savings account or open one through Wealthfront, which is one of the few robo-advisors to offer its own 529 college savings plan. The service will walk users through opening a 529 account, recommend a savings goal and manage the account — slowly skewing conservative as the child approaches college age — for an all-in fee of 0.42%-0.46%, depending on investment expense ratios. The plan is sponsored by the state of Nevada. You should carefully evaluate Wealthfront’s 529 offering compared with your own state-sponsored plan, especially if your state offers a tax deduction or credit to residents who contribute; choosing the Wealthfront 529 would mean giving up that tax benefit.

Good to know about Wealthfront

Liquidation of Wealthfront's risk parity fund

Wealthfront made some waves by launching its own Risk Party Fund several years ago, a proprietary mutual fund the company said would offer greater exposure to asset classes with higher risk-adjusted returns. As of Nov. 4, 2024, the firm is in the process of winding down the fund, and shares will no longer be available to purchase.

The fund was controversial, and investment research company Morningstar gave it low ratings. In October 2024, Morningstar said it "has struggled to provide consistent returns for investors," with risk-adjusted performance falling below average.

Customer support options

Customer service phone support is available Monday through Friday, 8 a.m. to 5 p.m., Pacific Time. All emails are responded to within one business day.

No human advisor

While product specialists at Wealthfront may have Series 7 and 66 licenses, and some may also hold other professional finance certifications, they do not offer personalized investing advice.

Is Wealthfront safe?

All investing comes with the risk of loss. Wealthfront does offer FDIC insurance to protect cash deposits and is covered by SIPC insurance, which protects brokerage accounts. These types of insurance don't apply to investment losses or price fluctuations, but the company's algorithms will invest your portfolio according to your own risk tolerance, goals and time horizon. The company is also regulated by the Securities and Exchange Commission to ensure compliance with securities regulations, and by FINRA, which regulates broker-dealers.

Is an investment at Wealthfront FDIC insured?

Wealthfront's Cash Account operates through over 30 partner banks, and altogether offers up to $8 million in FDIC insurance. This coverage applies only to the Cash Account.

Securities Investor Protection Corporation, or SIPC, insurance covers brokerage accounts. Brokerage accounts with Wealthfront receive up to $500,000 in SIPC insurance for cash and assets in the account. For Cash Accounts, SIPC insurance covers up to $250,000 while the funds are in transit to a partner bank. (Once deposited, it's then covered by FDIC insurance.)

Is Wealthfront worth it?

Wealthfront gets high marks on nearly every category we consider, and frequently tops our list of the best robo-advisors overall. It's also one of the lowest-cost online advice solutions, with a management fee of just 0.25% — less than you'd pay at many other robo-advisors, and significantly cheaper than a human financial advisor. In short, the service is worth it for most investors, as Wealthfront's features impressed us, especially at the low price point.