Wealthfront Reviews 2017

Product Introduction

Wealthfront provides automated asset management for investors. The company, founded in 2011, now manages over $5 billion for clients and 100,000 accounts. Its online portfolio management system combines technology and investment research to benefit clients at all stages of life, from young adults to retirees. Wealthfront reviews by users depict an easy-to-use digital product with no hidden fees.

This company provides all the essential features clients expect from automated fund managers, with several cutting-edge features not available from many other digital investment firms, including direct indexing.

Types of Accounts Supported/Facts

You only need $500 to open an account. There’s no account fee for balances under $10,000. The management fee for balances $15,000 or more is 0.25% yearly.

Refer a friend to Wealthfront through their Invite Program to get an additional $5,000 managed without a fee for you and your friend.

Types of Accounts Accepted:

  • Individual and Joint Accounts
  • Roth IRA Accounts
  • Traditional IRA Accounts*
  • 401K and 403b Rollovers
  • SEP IRA Accounts
  • Trust Accounts
  • 529 Plans
  • Corporate Accounts

*Except for inherited and beneficiary IRAs

Wealthfront is registered with the SEC.  FINRA and SIPC member Apex Clearing conducts its trades. Every type of account you hold with Wealthfront is protected for up to $500,000 by SIPC insurance.

How Wealthfront Works

Wealthfront uses algorithms to find the right asset allocation for you, based on your risk profile and financial goals.

Register online with Wealthfront by answering several questions about yourdesired financial goals and risks.The automated system will present you with a list of investment recommendations based on your answers to the questions. Wealthfront assesses your financial risk on a scale of one to ten, with ten being the highest amount of risk.

Wealthfront recommends EFTs and other securities based on your profile andthe account type – either taxable or retirement.

The company’s algorithms change your asset allocations as your circumstances change – the investments will have a lower risk level as you get closer to retirement. Research-based digital information, your desired financial plan, and algorithms determine the right investments at the right time, so nothing is left to chance.

For non-taxable retirement accounts, Wealthfront may invest your money in Emerging Markets Index, Real Estate Index, Corporate Bond Index, and the US Total Stock Index, Developed Foreign Stock Index and Dividend Yield Stock Index.

For taxable accounts, Wealthfront recommends the following EFTs: The Municipal Bonds Index, Dividend Yield Stock Index, US Total Stock Index, Emerging Markets Index, Natural Resources Index and Developed Foreign Stock Index

To consolidate 401(K)s, TSP rollover accounts or 403(b)s into one account, check your 401(K) to see if it has both Roth (post-tax) and traditional (pre-tax) elements. If so, you’ll need to open a Roth IRA and regular IRA account withWealthfront. (Accounts must meet the $500 minimum.) Roll over each component to the appropriate account.

Wealthfront offers two-step authentication to protect your account. It gives you a security code to enter after you use your password to keep your information safe from prying eyes.

Wealthfront Features

Automated rebalancing returns your portfolio to a stock/bond balance that you’re comfortable with, according to your initial risk assessment.  If you’ve indicated you want a 50/50 split between stocks and bonds.

Wealthfront takes new funds you’ve added to your account and automatically purchases more of the underperforming security in a service called cash flow reinvestment.

During Intelligent Dividend Reinvestment, Wealthfront reinvests all dividends into the ill-performing asset class, eliminating the need to sell money-making securities.

With its Tax-optimized Direct Indexing feature, Wealthfrontcan purchase up to 1001 securities. The securities may consist of 1,000 stocks from the Standard & Poors’ 500 and 1500 Indices and exchanged-traded funds from small companies.  This service gives you more opportunities for tax-loss harvesting due to the purchase of individual stocks.

Wealthfront offers three levels of Direct Indexing–

Wealthfront 100

Available for taxable accounts of $100,000, this service gives you up to 100 stocks from the S and P and specific EFTs

Wealthfront 500

Available for taxable accounts of $500,000, you’ll receive up to 500 stocks from the S and P 500 with the Vanguard Extended Market ETF

Wealthfront 1000

Available for taxable accounts of $1,000,000, the service will invest up to 1000 stocks from the S and P 1500 along with the Vanguard Small Cap ETF.

Wealthfront offers its daily tax-loss harvesting feature with all accounts. It sells investments that have dropped in value at a loss. You can deduct this loss from your taxable income, reducing your year-end tax bill.

Another investment can replace any investment sold via tax-loss harvesting. Tax-loss harvesting means the return in your profile remains the same, even though you’ve gained tax savings. When an ETF loses value, it’s sold and replaced with a similar but safe alternative.

Wealthfront also offers a Portfolio Line of Credit for clients with taxable accounts of $100,000 or more. Your investment portfolio acts as your line of credit. The interest rate depends on your account size, and you won’t need to fill out an application if your account qualifies. You can borrow up to 30% of the current value of your account. The Portfolio Line of Credit can be used for buying or renovating a home, paying for medical bills or any other reason.

Contact a client support specialist by phone or email if you have a question. The support center operates during business hours (weekdays 7 a.m. to 5 p.m. Pacific Time) only.

Wealthfront has apps for iPhone, Android, and iPad in addition to desktop login. The Apps include a Portfolio Review that analyzes your non-Wealthfront investments and provides recommendations on how to improve them.

It bases the report on cash drag, tax efficiency, diversification, and cost. CNN Money named Wealthfront as one of the 10 Best Investing Apps of 2016.

You can use the Tailored Transfer Program to migrate your investments to Wealthfront without incurring excess taxes.

Potential Drawbacks

Investors with balances over $100,000 can find robo-advisors with lower fees. You’re out of luck if you like having the option of talking to a financial advisor over the phone; Wealthfront offers digital services only.

The support center provides help during weekdays, not nights or weekends, and Wealthfront doesn’t offer Live Chat.

Who Will Benefit from Using This Product?

Wealthfront benefits are best for beginning investors and people with balances of $10,000 or less. The company accepts 529 Plans, unlike several other robo-advisors, so if you need help saving for your kid’s college tuition, it’s a good choice.

The Invite program can be a real boon if you know a lot of people interested in signing up with a digital portfolio management service. You can avoid management fees for each additional $5,000 you invest and help you friends save on costs as well.

According to the Wealthfront website, clients with a taxable investment of $100,000 can net an after-tax benefit of $1635.00 by utilizing their services. Most investors can save money using Wealthfront, although you should check out other options to save money on fees if you have a high balance.

Summary

Business Insider ranks Wealthfront as the fifth best robo-advisor in the financial industry. Wealthfront reviews on Consumer Affairs.com give this digital financial advisor an overall satisfaction rating of four stars, citing the excellent customer service and upfront fee structure. Wealthfront offers straightforward automated financial services that are especially beneficial to young or low-balance investors.

About the Author HarryC

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