The future of the financial planning industry will heavily feature robo-advisers and investment A.I. solutions. Robo-advisers are software-based, making recommendations based on advanced algorithms. In this Wealtfront review, we will cover all of the basic features, fees, and basic knowledge that you will need before signing up for their service.
Wealthfront is at the forefront of this movement, offering a robo-adviser that offers tax-efficient investing to investors of all levels of experience. There are many robo-advisers out there today, but Wealthfront has been able to separate themselves from the competition with innovative features and an easy-to-use user interface. Wealthfront has become a popular service for those with larger balances, and in particular large-balance taxable accounts. Today the service manages more than $7 billion in assets.
Wealthfront offers a number of services to their users. One of their most popular is their direct indexing service. Combined with the company’s tax-loss harvesting, the company promises to add 2% to all investment performance. Recently, the company began offering college savings plans, a service that few other robo-advisers are currently offering.
Wealthfront Review: What is WealthFront
Wealthfront is a robo-adviser service that puts its focus on efficiency for taxable accounts and IRAs. The service uses the popular Modern Portfolio Theory to allocate assets automatically, providing a service that is as hands-off as users would like. Wealthfront doesn’t actually hold the portfolios of its users, and instead uses the Apex Clearing Corporation, a holding company that works with many companies in the robo-advisor industry.
Wealthfront invests into Exchange-Traded Fund index funds. Your account will automatically rebalance, ensuring that asset allocation remains consistent at varying levels of investment. The solution is completely software-based, with no account reps making decisions on your behalf. Wealthfront currently manages both personal accounts, as well as retirements accounts, including 401(k) rollover accounts.
Wealthfront requires a minimum investment of $500 to begin using their service. Their management fee is free up to $10,000, then $0.25%/year for all funds above the $10,000 mark. Is Wealthfront worth it? Well, their fees are lower than most of the competition, and the ability to have your funds managed for free up to $10,000 make them an excellent choice for new investors.
Wealthfront Review: How Does Wealthfront Work?
Wealthfront seeks to change the financial advising industry. Is Wealthfront legit? Do they have experts behind the scenes ensuring that the software makes the smartest decisions for their clients? Yep, in fact that they a very high-level team of financial experts working to perfect their offerings. The company uses a team of world-class financial experts that are led by legendary economist Burton Malkiel, the Chief Investment Officer of the company.
When first signing up, users are asked to complete a questionnaire. The questionnaire is short, with four objective questions and six subjective ones. The survey is used to get an idea of your risk tolerance and help the system to better allocate the assets that it manages. Ultimately, the service gives its users complete control over the risk that they take on when investing.
Once the allocation amounts are put into the system, they will remain at that risk tolerance level regardless of the amount of money that is placed into the accounts. When specific thresholds are crossed, your portfolio will automatically update to ensure that you stay within appropriate risk levels based on your settings.
Wealthfront Review: Wealthfront Features
Wealthfront offers many features to their users in order to ensure that their clients see a positive gain. Their expansion of features has helped Wealthfront to rise to the top of the online, robo-adviser industry.
- Portfolio re-balancing. Wealthfront automatically rebalances your portfolio on a daily basis to ensure that you fall within the chosen risk tolerance settings, even when new money is added to your account.
- Customer service. Wealthfront customer support reps are available Monday-Friday, from 7AM-5PM PST by phone. Support reps are also available via email.
- Tailored Transfers. This is a feature that is exclusive to Wealthfront. When moving accounts from another robo-advisor or existing brokerage, Wealthfront allows you to transfer into a diversified portfolio over time in an effort to reduce your tax bill. Typically, you would be required to sell all holdings and make your transfer in cash.
- Selling Plans. Those that have large amounts of company stock can use the “Selling Plan” service to sell company stock tax-efficiently and without providing commissions to Wealthfront.
- 529 College Savings Plan. Wealthfront offers the 529 college savings plan completely free for the first $10,000. The plan is domiciled in the state of Nevada, providing additional perks to Nevada residents. The company uses their Wealthfront Brokerage Corporation to act as the distributor and underwriter for the plan.
- Portfolio line of credit. A new feature, the portfolio line of credit is offered to accounts with more than $100,00- invested. It allows users to take out a line of credit against their investments. The typical loan rates are between 3.25% – 4.50%.
These are just a few of the many features that are offered by Wealthfront, and they are continually updating their platform to include new investment options and account types.
Wealthfront Review Conclusion
Wealthfront is an excellent choice for tax-minded investors. For beginning investors, it is an excellent starting point to familiarize yourself with the different mechanisms and find a diversification level that you are comfortable with. However, that doesn’t mean that the service isn’t suitable for the more seasoned investor as well. Wealthfront’s wealth of options make it an excellent choice for a range of situations.
If you are looking for an investment management company that focuses on tax efficiency with comprehensive financial planning options, there is no better choice than Wealthfront. Overall, it is an excellent choice for investors that want a diversified portfolio but don’t want to spend a lot in fees and commissions. This Wealthfront review should provide you with a basic understanding of the service and allow you to make the best decision for your financial future.