Wealthfront Review

Wealthfront is an excellent choice for you if you are a beginner in investing. With Wealthfront, you don’t have to individually select and maintain securities. Thus, making it ideal for a passive investor.

If you don’t want to pay a person to handle your finances and advise you on your long-term plans, then head to Wealthfront. With Wealthfront, you just have to set an account and let it do the rest of the work itself. Wealthfront takes the Robo part of Robo advisor very seriously. There is zero human interaction when working with Wealthfront. Wealthfront offers planning, banking, and goal-setting in a user-friendly way.

Wealthfront has democratized investing by providing services that would otherwise come from an expensive personal advisor. Since Wealthfront was launched in Dec 2011, it has built up its assets to $11.4 billion.

Your money is not held by the company itself. Instead, the Royal Bank of Canada is in charge of holding every penny. This ensures the safety of your money with Wealthfront.

Wealthfront outshines other brokers when it comes to taxable accounts. With the tax-loss harvesting, Wealthfront can minimize your tax expenses. This option is offered for all the accounts and is really appreciated by investors.

Wealthfront aims to make money self-driving. They have taken their first step to reaching their aim by the launch of Autopilot. Wealthfront has made a cutting-edge technology that will save money for you, pay your bills, and utilize your money in a way nobody can.

Wealthfront’s fully automated features provide you a good view of your financial situation. Some people even get overwhelmed by the amount of information and updates Wealthfront provides you. But that is not something to complain about.

There is a sea of brokers, but why Wealthfront is the big fish?

How Wealthfront works?

With Chief Investment Officer Burton Malkiel, senior economist at Princeton University, Wealthfront has created a near-perfect investment strategy as its backbone. The company’s first step is to test the investor’s risk tolerance by using a questionnaire. They rank the amount of tolerance on a scale of one to ten. Your answer will show how determined you are and how much of a risk-taker you are.

Considering these results, the company constructs a portfolio from a combination of eleven asset classes with an ETF representing each. Each portfolio contains different allocations of each asset class bases on your risk score. ETFs (exchange-traded fund) is cheaper than stocks and allow the company to expose your portfolio to hundreds of companies in each asset class. With multiple assets, your portfolio contains bonds and stocks of thousands of companies and institutions.

Your sum of money is then distributed over the ETFs to get you the maximum returns. Wealthfront not only focuses on the profit coming but also on the money outgoing your account. It has specialized in tax-loss harvesting and can minimize your yearly tax to the extent that it makes you invest incredibly profitable.

Wealthfront features


Wealthfront invests in U.S Stocks, Foreign Stocks, Emerging Market Sector, dividend stocks, real estate, and natural resources. The company also invests in the leading market bonds that include US Government, corporate and municipal bonds. But on average, a portfolio consists of six to seven assets.

A feature with which Wealthfront stands out is portfolio rebalancing. Portfolio rebalancing helps investors to maintain a target risk level. As asset classes generate different returns, they can affect your portfolio’s asset allocation.

There is no one scheduled for rebalancing; Wealthfront rebalances the portfolios when they try to drift away from the target asset allocation. You can trigger the rebalancing of your portfolio by depositing money, cash withdrawal, or dividend reinvestments. Wealthfront’s practical algorithms will alter the asset allocation if you change your risk score. But it will take some time.

Tax-Loss Harvesting

This is the part where Wealthfront stands above every other broker, the tax-loss harvesting. It is free for all regular taxable account holders. The tax-loss harvesting is also offered for specialized portfolios where Wealthfront has taken the tax harvesting to even another level. Although this is not offered free of cost in specialized portfolios, the charges are minimal.

It works by taking the benefit of the investments that went in a loss. Selling the assets at a loss lowers the investor’s taxes.

Wealthfront offers four different levels of tax minimization:

Index funds: Index funds, having minimal turnover, resulting in low capital gains taxes.

Intelligent dividend reinvesting: The dividends are reinvested to rebalance your portfolio, thus reducing the yearly sales. This, in turn, leads to lower capital gains.

Daily tax-loss harvesting: It works by covering the gains in ETFs with the losses of other ETFs owned by Wealthfront.

Tax location: clients are allotted different asset classes for taxable and retirement accounts to increase their after-tax performance.

For large portfolios, Wealthfront has to offer something bigger, the stock-level Tax-Loss Harvesting. Three specialized portfolios use a mix of both ETFs and stocks. Stocks serve the purpose of providing more tax-loss harvesting opportunities. For instance, it sells some stocks to generate tax losses instead of closing out the entire ETF.

Those having at least $500000 with Wealthfront can opt for Wealthfront’s “Smart Beta.” Unlike other companies, Wealthfront offers its Smart Beta option free of cost. Smart beta is paired with stock level tax harvesting and reduces the amount of taxes in your returns.

Line of credit available

A unique Wealthfront feature: For those having at least $25000 invested in their account can borrow a maximum of 30% of your portfolio amount without filling out an application form. Although the charge rates change frequently depending on the account size but typically, Wealthfront charges between 2.40% and 3.65% annually.

Autopilot by Wealthfront- self-driving money

In short, the Autopilot system, if enabled, piles up the money to a value set by you and then transfers the additional money to the investment account. So, your money is never rusting.

Autopilot is Wealthfront’s solution to “cash drag.” Cash drag is when you have a lot of portfolio cash resting in your account. It does earn interest but not as much as it would if invested in a diversified investment portfolio.

You can connect the Autopilot to your external checking account or your Wealthfront cash account. A maximum value will be set by you depending on how much you spend every month, and Autopilot will keep track of your balance. It will automatically transfer the excess money into your investment account or your cash account if you are over your maximum value.

Before this transfer of money is carried by Autopilot, an email is sent to you to confirm the transfer. You can cancel the transfer if you need that money for some emergency expenditure. And you can turn this option off anytime you want.

Wealthfront mentions this process as “Self-driving money.” It indeed is self-driving money. You can have your paycheck deposited into your checking account (External) or Wealthfront cash account. And if you stay within your monthly spending limit, you can have your surplus money invested in the place of your choice. Your income, savings, and investments move under a specially designed software that requires no effort from you. No other broker is currently offering this option. Even if someone does, it would not be free of cost as it is in the case of Wealthfront.

Fees and charges

Wealthfront receives 0.25% of your portfolio every month. The fees are low and competitive, and there are no fees charged for cash accounts. 0.07%-0.16% is of your portfolio goes to Wealthfront yearly as the management fees.

In short, the monthly fee to manage a $5000 portfolio is $1.04, whereas the monthly cost to manage a $25000 portfolio is $5.21.

High-interest savings

Wealthfront’s cash account is currently paying at a 0.35% interest rate, eight times more than what other banks pay on average. The money deposited in the savings account is not involved with the investment account. That means you can transfer in and out your money anytime. The investment management fee does not apply to the cash account money if you have an investment account.

Wealthfront Cash includes a debit card and allows you to withdraw money from ATMs without any charges. Other than that, it allows you to pay your bills and send money to your friends and relatives through apps like PayPal.

A recently launched feature by Wealthfront allows you to use your cash account as a checking account. Your paychecks can be directly deposited, and you can get paid two days early. 4


Wealthfront was designed to be a mobile experience. It has a dropdown menu and minimal typing system, which reduces typos. It requires you to enter account numbers and passwords with a keypad that rises from below when linking accounts.

The desktop version has a greater space, and thus the design becomes clearer and clearer. It is even easier when you are searching in the help center.

Customer service

Although Wealthfront doesn’t use any kind of human interaction software in mobile or desktop versions, customer service is excellent. You get responses comparatively quickly on questions posted on Twitter. You can also call the customer support helpline, which connects you to highly professional staff, answering almost any type of question.

Goal setting

Goal setting and planning is where Wealthfront shines. The tracking process is ingenious and can predict your financial situation ten years from when you made the account.

If you list home buying in your goals, then Wealthfront will connect to Redfin, giving you an estimate of how much a house would cost in your location. Similarly, it helps save for your children’s education. It takes into consideration not only the tuition fees but the travel and living costs.

Wealthfront’s downside

Cash balance

Wealthfront makes you keep a sum of money in your account for two reasons.

Firstly, as Wealthfront doesn’t buy fractional shares of ETFs, not all of your deposit is invested. It holds your money until it piles up and becomes enough to buy a full share.

Fractional shares mean buying a part of a company’s share and not the whole of it.

Secondly, Wealthfront keeps the fees that you will owe the company in the next year. So, you can never be zero in balance—no online chat for customers or prospective customers.

No human interaction

Unlike other Robo advisers, Wealthfront doesn’t offer its clients to speak to a human to get some additional advice. If you don’t feel like relying on a computer altogether, then Wealthfront shouldn’t be your first choice.

You might feel overwhelmed by Wealthfront providing you a sophisticated view of your finances. This isn’t a terrible thing, though. With that much low cost, getting an excellent overview of your financial situation is beneficial.

How to open a Wealthfront account?

It is just like opening a google account. Go to Wealthfront’s official website and click join. You will need to answer some questions to help Wealthfront make a financial plan for you. Once Wealthfront has verified your identity, you will be able to link your external accounts. With that done, you can flow your money into Wealthfront investment or Wealthfront cash accounts.

Is Wealthfront the right place for you?

Investors who are looking for a self-directed account are not welcomed by Wealthfront. Wealthfront doesn’t let you do much when compared to other brokers. It doesn’t allow you to pick your own stocks. But if you just want to deposit and feel free, then Wealthfront can do more than satisfactory.

Wealthfront is one of the lowest-cost advisors and appears to be an excellent investment service. With its tax-loss harvesting technology, it stands out.

You should definitely invest in Wealthfront as it provides the same services as a traditional human investment advisor does but at a fraction of cost. Wealthfront’s portfolio line of credit and free financial planning services make it even more attractive then many other brokers.

Not only your account grows in size, but you also take advantage of sophisticated investment strategies at a significantly lower price.

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