Reviewed in: Oct. 2022
Period considered: Aug. - Oct. 2022
The bottom line:
Wealthfront is a force among robo-advisors, offering a competitive 0.25% management fee and one of the strongest tax-optimization services available from an online advisor.
Pros & Cons
Get $50 customer bonus when you fund your first taxable investment account (NerdWallet promotion).
Low ETF expense ratios.
Daily tax-loss harvesting.
No fractional shares.
No human financial advisors.
Compare to Other Advisors
per trade for online U.S. stocks and ETFs
per share; as low as $0.0005 with volume discounts
Get $50 customer bonus
when you fund your first taxable Investment Account
no promotion available at this time
US resident opens a new IBKR Pro individual or joint account receives 0.25% rate reduction on margin loans. Tiers apply.
Up to $600
when you invest in a new Merrill Edge® Self-Directed account.
no promotion available at this time
Paid non-client promotion
NerdWallet doesn’t invest its money with this provider, but they are our referral partner – so we get paid only if you click through and take a qualifying action (such as open an account with or provide your contact information to the provider). Most importantly, our reviews and ratings are objective and are never impacted by our partnerships. Our opinions are our own. Here is a list of our partners and here’s how we make money.
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Where Wealthfront shines
Comprehensive offerings: Wealthfront provides the kind of holistic financial advice and automated investment management that appeals to new and experienced investors alike: helpful planning tools, diversified — and hands-off — portfolios and advanced tax optimization strategies.
Investments: 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.
Where Wealthfront falls short
Risk parity: Risk parity is a strategy for allocating and capital across multiple asset types, with the aim of giving your portfolio some added diversification. Wealthfront's Risk Parity Fund is a proprietary mutual fund the company says offers greater exposure to asset classes with higher risk-adjusted returns. Morningstar data show that the fund has underperformed.
Fractional shares: Wealthfront doesn’t buy fractional shares of ETFs, which prevents the company from investing your entire deposit.
Large balance discounts: The robo-advisor also lacks large-balance discounts, an incentive that could be appealing to investors who intend to carry big balances.
Wealthfront is best for:
Free financial tools, even if you don't have a Wealthfront account.
529 college savings plan management.
Wealthfront at a glance
Reviewed: Oct. 2022
Period considered: Aug. - Oct. 2022
$500 for investment accounts, $1 for cash accounts, $0 for financial planning.
Account management fee
Investment expense ratios
ETF expense ratios average 0.08%.
Portfolios that include the Wealthfront Risk Parity Fund have an average expense ratio of 0.11%.
Account fees (annual, transfer, closing)
Socially responsible portfolio options
Clients can choose to invest in Wealthfront’s SRI portfolio or customize any other Wealthfront portfolio to include socially responsible options for no additional fee.
Free on all accounts.
Human advisor option
Savings account/cash management account
The Wealthfront Cash Account offers high interest checking. The cash account offers a competitive yield and is covered by up to $2 million in FDIC insurance. The account requires just $1 to get started.
Customer support options (includes how easy it is to find key details on the website)
Licensed product specialists (have Series 7 & 66 and some are CFAs/CFPs/CPAs) available to provide support or product information via phone or email (they do not make recommendations or give advice). Phone support Monday through Friday 8 a.m. to 5 p.m. Pacific; and all emails are responded to within one business day.
More details about Wealthfront's ratings
Account minimum: 4 out 5 stars
Some providers require an account minimum — the least dollar amount you can open an account with. Wealthfront’s minimum is $500 for investment accounts, $1 for cash accounts and $0 for financial planning.
Account management fee: 4 out of 5 stars
Wealthfront charges 0.25% for management, and get a $50 customer bonus for NerdWallet readers. The company’s biggest independent competitor, Betterment, also charges 0.25% for its digital service. (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 money 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 money for you, you'll start paying the 0.25% fee.
Investment expense ratios: 5 out of 5 stars
An expense ratio is an annual fee mutual funds, index funds and ETFs charge as a percentage of your investment in the fund. Expense ratios are paid in addition to your asset management fee. If you invest in a mutual fund with a 1% expense ratio for example, you’ll pay the fund $10 per year for every $1,000 invested.
If high, these fees can significantly drag down your portfolio returns, but the expense ratios of the funds used in Wealthfront’s portfolios are low. Wealthfront’s ETF expense ratios average 0.08%. Portfolios that include the Wealthfront Risk Parity Fund have an average expense ratio of 0.11%.
Account fees: 5 out of 5 stars
Wealthfront charges no annual or inactivity fee, and does not charge for transferring money, trades, account maintenance or setup. Some other robo-advisors do charge additional fees.
Portfolio mix: 5 out of 5 stars
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 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). Also, 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.
In March 2022, Wealthfront added exposure to new categories and strategies. The robo-advisor now offers 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. Also, it maintains a cash balance equal to the fees you're projected to owe over the next year, so 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.
Socially responsible portfolio options: 5 out of 5 stars
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.
Accounts supported: 5 out of 5 stars
Individual and joint non-retirement accounts; Roth, traditional, rollover and SEP IRAs; trusts; 529 college savings plans; and high-yield cash accounts.
Tax strategy: 4.5 out of 5 stars
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.
If you're a TurboTax user, when you file your taxes, you can enter your Wealthfront account login information to import your tax-loss harvesting data.
Automatic rebalancing: 5 out of 5 stars
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.
Human advisor option: 1 out of 5 stars
Some robos offer financial planning advice from a licensed professional, sometimes for an added fee. Wealthfront does not.
Savings account/cash management options: 4 out of 5 stars
Wealthfront offers the Wealthfront Cash Account, a savings account that currently pays 3.30% 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 $2 million in FDIC coverage for individual accounts and up to $4 million for joint accounts. 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 one owner will be able to log into the account; the other person will have read-only access. (Wealthfront says it plans to roll out joint access on cash accounts in the future.)
Customer support options: 3.5 out of 5 stars
Wealthfront has licensed product specialists who can answer questions regarding products and services. Its product specialists have Series 7 & 66 and some are CFAs/CFPs/CPAs, but they don’t give investment advice or suggestions. Customer service phone support is available Monday through Friday, and emails are responded to within one business day.
Other details you should know
Partnership: In January 2022, Wealthfront agreed to be acquired by UBS Group AG. However, in September 2022, the investment service provider and UBS said that they had decided to terminate the pending acquisition. The two said they were looking at ways to partner, and announced UBS had given Wealthfront financing, but that Wealthfront would remain an independent company.
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 paper work aren't prerequisites to borrow money from your portfolio, and it takes one business day for funds to be transferred.
Risk parity: In taxable accounts, customers can select Wealthfront's Risk Parity Fund, a proprietary mutual fund the company says offers greater exposure to asset classes with higher risk-adjusted returns.
The fund’s expense ratio is lower than other risk parity funds, but as it is a more actively managed fund, its costs are slightly higher than the other index funds Wealthfront employs, bringing the weighted average expense ratio of portfolios that include the Wealthfront Risk Parity Fund to 0.11%. Clients who select risk parity will hold a mix of three ETFs — VTI, EMB, BND — until their account balance reaches $100,000, at which point these ETFs will be replaced with the Risk Parity Fund.
The fund uses complex financial instruments called total return swaps and leverage (borrowing power) to adjust and respond to volatility in an effort to generate better returns for a given level of portfolio risk. Morningstar data show that the fund has underperformed against both comparable funds and its own benchmark index over the past three years.
Wealthfront says its risk parity strategy is appropriate for investments with a time horizon of five years or more, as it tends to smooth out in the longer term. And since the fund would make up only a piece of your investment portfolio, Wealthfront says performance should be evaluated on the overall portfolio instead of on the fund itself.
As with any investment, past performance is not indicative of future results. Still, you might not want to pay extra for that track record so far. Investors who don't want exposure to this fund can opt out or choose not to invest in it in the first place.
Travel planning: 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.
Financial planning tools: 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.
Is Wealthfront right for you?
Wealthfront is one of the lowest-cost online advice solutions. Especially for customers with taxable accounts, Wealthfront offers compelling tax strategies to help enhance your tax efficiency. It also offers digital financial planning tools that are both useful and easy to use.
How do we review robo-advisors?
NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. robo-advisors. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.
We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across 16 factors. The final output produces star ratings from poor (one star) to excellent (five stars).
For more details about the categories considered when rating robo-advisors and our process, read our full methodology.