About WealthFront

WealthFront is a software-based wealth management system that claims to provide “sophisticated” investment management and advice, without high fees or account minimums.

For individuals who aren’t able to commit a lot of time to learning the ins and outs of investing, “Robo-Advisors” such as WealthFront claim to help you manage a portfolio of index funds using a hands-off approach. As such, the company claims to have become the world's largest & fastest growing automated investment service since opening their doors in 2011, with more than $1 billion managed for their clients.

While we’ll admit that WealthFront’s approach to investing is unique and that it certainly has a great deal of appeal to some investors, how can you figure out if they’re right for you? Read on to find out.

How WealthFront Works

At its most basic, WealthFront claims to provide hassle-free investing that acts as an alternative to putting your money with traditional wealth management companies. In order to accomplish this, WealthFront claims to utilize state-of-the-art software, created by a world-class investment team with more than 200 years of combined experience, to measure risk tolerance, constantly monitor your portfolio for opportunities, automate the process, and to take the “guesswork out of sound, long-term investing.”

In fact, WealthFront claims to employ a team that has authored more than 16 investment books, as well as software engineers from companies such as Google, Facebook, LinkedIn, Twitter & Apple.

When compared to other automated investment services, WealthFront offers all 5 tax minimization levels including index funds, Intelligent Dividend Reinvesting, tax location, and tax-optimized US index portfolio. In addition, the company claims that their daily tax-loss harvesting could add at least 1% after tax to your annual return.

On top of this, WealthFront supports the following types of accounts:

  • Individual, joint, trust & LLC taxable accounts
  • Traditional, Roth, SEP retirement accounts (IRAs)
  • 401(k) rollover accounts
  • 501(c) accounts for non-profit institutions

How to Begin Using WealthFront

After clicking on the Invest Now button on WealthFront’s homepage, you’ll be asked 10 anonymous investing questions regarding the reason you’re looking for a financial advisor, your age and after tax income, your risk tolerance, and several more. Once this is complete, you’ll be presented with a diversified investment plan based on your answers, including Taxable and Retirement mixes for U.S. and foreign stocks, emerging markets, and more. You’ll also be able to read a brief overview of each category, as well as the most popular ETFs they include.

If you’d like to change some of these parameters, you can then return to the beginning and alter your answers. Once you’re ready to proceed, you can press the Open My Account button and proceed from there.

WealthFront Pricing & Refund Policy

When compared to traditional Advisors, WealthFront doesn’t charge trading commissions, custodial, or exit fees. However, their minimum account size is $5K, with the first $10K free, while anything over this amount is assessed a monthly fee based on an annual rate of 0.25%. For a detailed example of how this works, please see the company’s FAQ page.

On top of this, WealthFront clients can have the fees waived on an additional $5K when they refer a friend who signs up for an account.

What’s the Bottom Line: Should You Invest with WealthFront?

Admittedly, while the thought of letting software handle your investments can be nerve-racking for some, others might view it as a blessing. With this said, should you invest your money with WealthFront? Maybe, but keep the following in mind:

Age is a Factor

Even according to WealthFront themselves, most of the company’s clients are young (under 40), who are often more apt to embrace software-based investing, and who are more focused on growing their accounts than they are about minimizing their exposure to risk.

As such, if you’re married with children, nearing retirement age, or any other factors that may lead you to prefer lower-risk investments, you may want to think twice about WealthFront.

Low Fees, but Also Low Customization

Next, although WealthFront’s services come with lower fees than even some of the least expensive brokers, keep in mind that other than risk tolerance, you won’t be able to customize your investments or take a hands-on approach of any sort. On top of this, you won’t be able to receive any investment advice through WealthFront.

Because of this, if you’re an investor who likes to receive constant feedback about your accounts, or who likes to perform manual adjustments based on performance, WealthFront may not be an ideal option.


As with any investment, software-based or otherwise, keep in mind that past performance does not necessarily guarantee of future results. On top of this, based on SIPC guidelines, securities in your account are only protected up to $500K. As such, you may want to remain under this amount with WealthFront.

Research the Competition

Finally, whether you call them software-based financial planners, Robo-Advisors, or anything else for that matter, remember that there are numerous competitors in this field, so be sure to research them all before making a decision.

Bottom line:

If you’re younger with a high risk tolerance and are looking to minimize your investment fees, WealthFront appears to be a solid choice. However, be sure to research all the competition in order to find the company that best matches your needs.

Read Next: Deciding Who Will Manage Your Financial Future: Advisors, Planers or Robo-Advisors

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