The bottom line: Wealthfront is a force among robo-advisors, offering a competitive 0.25% management fee, free management of balances under $5,000 (with NerdWallet’s promotion) and one of the strongest tax-optimization services available from an online advisor.
Pros & Cons
- First $5,000 managed free (NerdWallet promotion).
- Low ETF expense ratios.
- Daily tax-loss harvesting.
- Automatic rebalancing.
- No fractional shares.
- No large-balance discounts.
Compare to Other Advisors
per year (approximately)
amount of assets managed for free
career counseling plus loan discounts with qualifying deposit
No advisory fees
your first 90 days of Vanguard Digital Advisor investment management (Enrollment requires a Vanguard account with a minimum of $3,000)
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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 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
$500 for investment accounts, $1 for cash accounts, $0 for financial planning.
Account management fee
0.25% (first $5,000 managed free for NerdWallet readers).
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 $1 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, though the first $5,000 invested is managed for free if you sign up through NerdWallet. 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.
Wealthfront also has a referral program. If you invite friends and they fund an account, the company will waive fees on $5,000 for each of you.
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.
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. 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 0.10% 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 $1 million in FDIC coverage, four times more insurance than the average bank account. 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
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 the 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, and giving it a try comes with little commitment thanks to the company's offer to manage $5,000 free of charge for NerdWallet users. 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 by assets under management, along with emerging industry players, using a multifaceted and iterative approach. 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.