Wealthfront robo-advisor review: Fees, accounts and features
Wealthfront is a robo-advisor for investors who want to grow their money without managing every investment decision themselves. Its Automated Investing Account builds and manages a portfolio based on your goals and risk tolerance, with automatic rebalancing and tax features that can help make investing easier.
Of course, this convenience comes at a cost. Wealthfront charges a 0.25% annual advisory fee and requires a $500 minimum investment. Some of its more advanced tax features also require higher account balances, so the value you get depends on how much you invest and which services you plan to use.
In this Wealthfront robo-advisor review, we’ll cover the fees, account options, investment features and potential drawbacks to help you decide whether the service is right for you.
How does Wealthfront’s robo-advisor work?
Wealthfront’s Automated Investing Account uses technology to build and manage an investment portfolio based on your financial goals and risk tolerance. Instead of choosing every investment yourself, you can let Wealthfront handle most of the day-to-day work.
Portfolio recommendation and risk profile
When you sign up for Wealthfront, you’ll answer questions about your financial situation, investment goals and comfort with risk. Wealthfront uses your answers to recommend a diversified portfolio of exchange-traded funds (ETFs) designed for long-term investing.
Your recommended portfolio depends on your risk profile, but you can make adjustments based on your preferences. Wealthfront offers Classic and Socially Responsible portfolios, and you can customize your investments using eligible options from its available investment menu.
Automation and customization
Once your account is funded, Wealthfront takes care of ongoing portfolio management. This includes investing new deposits, reinvesting dividends and automatically rebalancing your portfolio to keep your investments aligned with their target allocations.
You can also adjust your risk level and customize certain investments over time. However, Wealthfront’s robo-advisor is designed for hands-off investing, not active trading or personalized advice from a human financial advisor.
Like any investment account, your portfolio can lose value when markets decline.
How much does Wealthfront cost, and what is the minimum?
Wealthfront charges an annual advisory fee for its Automated Investing Account, and you’ll need at least $500 to get started. Here’s how the costs break down.
Annual advisory fee
Wealthfront charges a 0.25% annual advisory fee based on the value of your investments. This fee covers automated portfolio management, including rebalancing, dividend reinvestment and tax-loss harvesting for eligible accounts.
For example, here’s what the annual advisory fee would cost with different account balances:
| Account balance | Annual advisory fee |
|---|---|
| $5,000 | $12.50 |
| $10,000 | $25 |
| $50,000 | $125 |
| $100,000 | $250 |
Note: These examples assume your balance stays the same throughout the year.
Minimum balance and underlying fund costs
You’ll need at least $500 to open a Wealthfront Automated Investing Account, which means you can start investing without a huge account balance. While this minimum seems low, some competing robo-advisors (like Betterment) have even lower minimum requirements.
Keep in mind that Wealthfront’s advisory fee isn’t necessarily your only investment cost. The ETFs and other funds in your portfolio may charge their own expense ratios, which are separate from the 0.25% advisory fee.
You can review the latest fees and account requirements on Wealthfront’s pricing page.
What portfolios, rebalancing and tax tools does Wealthfront offer?
Wealthfront offers several features designed to make investing easier and help you manage your portfolio over time. These include automatic rebalancing, tax-loss harvesting and advanced investment strategies for customers with larger balances.
Automatic rebalancing and portfolio management
Wealthfront builds diversified portfolios using primarily low-cost index ETFs that invest in stocks, bonds and other asset classes. Your investment mix depends on your goals and risk tolerance.
Once you invest, Wealthfront automatically monitors and rebalances your portfolio as needed. For example, if strong stock market performance causes stocks to make up a larger share of your portfolio than intended, Wealthfront can adjust your holdings to bring them closer to your target allocation.
Tax-Loss Harvesting and higher-balance tax features
Wealthfront offers automated Tax-Loss Harvesting for eligible taxable investment accounts. This feature sells investments that have declined in value to realize losses that may help offset taxable capital gains or, within IRS limits, other income.
However, tax savings aren’t guaranteed. Your results depend on your personal tax situation, and buying similar investments in other accounts could trigger wash-sale rules that affect your deductions.
Wealthfront also offers advanced features for investors with larger taxable account balances:
- U.S. Direct Indexing: Available at $100,000, this feature invests in individual stocks to create more opportunities for tax-loss harvesting.
- Smart Beta: Available at $500,000, this strategy adjusts stock allocations based on factors beyond traditional market capitalization.
You don’t need either of these advanced features to benefit from Wealthfront’s standard automated portfolio management.
Which account types are available, and how are assets protected?
Wealthfront offers several account types for investors saving for retirement, building wealth or planning for future expenses.
Available investment account options include:
- Taxable investment accounts: Wealthfront offers individual, joint and trust investment accounts for people who want to build wealth outside of retirement accounts. These accounts offer flexibility because you can withdraw your money whenever you want, although selling investments may trigger capital gains taxes.
- Retirement accounts: Wealthfront supports Traditional, Roth and SEP IRAs to help investors save for retirement. Traditional and Roth IRAs offer different tax benefits, while SEP IRAs are designed for self-employed individuals and small business owners.
- Education accounts: Wealthfront offers 529 college savings plans that let families invest for future education expenses. Earnings can grow tax-free, and withdrawals are tax-free when used for qualified education costs.
- Automated bond ladders: Wealthfront also offers Automated Bond Ladders, which invest in U.S. Treasury securities with staggered maturity dates. This separate product is designed for investors who want predictable interest income and access to their principal as individual bonds mature.
How does Wealthfront protect your investments?
Wealthfront Brokerage is a member of the Securities Investor Protection Corporation (SIPC), which provides protection if a member brokerage fails and customer securities or cash are missing. SIPC protection covers up to $500,000 per customer, including a $250,000 limit for cash, subject to SIPC rules.
However, SIPC does not protect against investment losses or guarantee that your portfolio will maintain its value. Your investments can still lose money when markets decline.
Funds kept in Wealthfront Cash Accounts are protected with FDIC deposit insurance through a variety of partner banks.
Wealthfront at a glance
| Feature | Wealthfront Automated Investing Account |
|---|---|
| Annual advisory fee | 0.25% |
| Minimum investment | $500 |
| Core automation | Portfolio management, dividend reinvestment and automatic rebalancing |
| Tax-Loss Harvesting | Available for eligible taxable accounts |
| Higher-balance features | US Direct Indexing at $100,000 and Smart Beta at $500,000 |
| Human financial advice | Primarily automated, without a dedicated human financial advisor |
Learn more: How to open a brokerage account: What you need to start investing
Frequently asked questions
How much money do you need to start investing with Wealthfront?
You need at least $500 to open and maintain a Wealthfront Automated Investing Account. Wealthfront also charges a 0.25% annual advisory fee.
Does Wealthfront charge more for Tax-Loss Harvesting?
No, Wealthfront includes automated Tax-Loss Harvesting for eligible taxable investment accounts at no additional charge beyond its standard 0.25% annual advisory fee.
At what balance does Wealthfront offer direct indexing in its Automated Investing Account?
Wealthfront offers US Direct Indexing for eligible taxable Automated Investing Accounts with balances of at least $100,000. This feature can create additional opportunities for tax-loss harvesting.
Is a Wealthfront investment account FDIC-insured or SIPC-protected?
Wealthfront investment accounts are SIPC-protected, not FDIC-insured. SIPC protection covers up to $500,000 per customer, including up to $250,000 in cash, if a member brokerage fails and customer assets are missing, but it doesn’t cover market losses.
