Wealthfront has been around for a while now. It was founded in 2008 in Palo Alto, California. Wealthfront initially started out as an automated investment firm using low-cost robo-advisors. Wealthfront has since expanded its offerings into banking.
What Wealthfront Offers
When signing up, Wealthfront offers several different accounts:
Cash Account, Automated Bond Portfolio Account, Automated Index Investing Account, and Stock Investing Account
Wealthfront’s offerings are straightforward to understand, but better than the competition in some ways.
Automated Index Investing
With its automated index investing account, Wealthfront operates through an automated system. When opening an account, you’ll answer questions about your time horizon, risk tolerance, and goals. From there, Wealthfront will balance your investments based on your financial plan. With these accounts, you won’t directly make trades as Wealthfront will manage the portfolio.
Wealthfront offers the following accounts: Traditional IRA, Roth IRA, SEP IRA, 401(k) Rollover, 529 Account, Individual Accounts, Joint Accounts, and Trust Accounts.
Wealthfront’s portfolio includes a wide mix of assets from equities to real estate. Based on your risk score, the portfolio will be managed by Wealthfront in different allocations across assets. With this account, Wealthfront charges a 0.25% management fee and there’s a $500 minimum to get started.
Automated Bond Portfolio
Wealthfront’s automated bond portfolio is personalized around the account holder’s tax situation with a diversified mix of bond ETFs. This portfolio is designed to earn a higher yield than a savings account, but with less risk than an ETF portfolio.
It operates in a similar fashion to the automated index investing account with a 0.25% management fee. Why? Because account holders get a higher yield, tax optimization service, dividends reinvested, and liquidity (unlike CDs or I-bonds).
It takes 3-4 business days to withdraw from the automated bond portfolio with zero penalties!
Stock Investing Account
Wealthfront introduced its stock investing account in March 2023. It was introduced to satisfy its clients’ investing needs for direct investments. The stock investing account is like your typical stock trading app that includes fractional shares, zero commissions, and a $1 minimum. However, Wealthfront takes it a step further!
Wealthfront shares its research on individual stocks and similar stocks so that investors can discover other options to invest in as well! By compiling stocks into what it calls “stock collections”, Wealthfront enables investors to make more informed decisions and discover new companies to invest in based on an investor’s preference.
Another feature that Wealthfront offers is the ability to diversify by splitting a deposit across stocks. Investors can decide exactly how much money to invest in each stock with Wealthfront automating the investing.
Since trades are made by the account holder, this account is not professionally managed by Wealthfront so there are NO FEES. Wealthfront simply offers its clients a more direct way to invest rather than through its managed account.
Cash Account
The cash account is essentially a high-yield checking and savings account. The cash account can be used like a checking account to either pay bills or withdraw money using the debit card, but has the interest rate of a high-yield savings account. It doesn’t offer all the features of a checking account like a checkbook, but it’s close. Best of all, Wealthfront offers one of the HIGHEST rates available.
The cash account also includes no fees, unlimited withdrawals and transfers, up to $5 MILLION FDIC insurance through its partner banks, and no minimum to earn interest.
As of August 2023, the interest rate is 4.80%. For a limited time, new Wealthfront cash account holders can earn 0.50% higher for 3 months to earn a total of 5.30%.
You can get started with opening an account here.
What’s nice about this account is that there isn’t any commitment required from account holders. Other banks may require a direct deposit to enjoy the high rate or a minimum balance greater than $1. The Wealthfront cash account doesn’t have any strings attached!
Website & App
First off, the website and app is very user-friendly. The sign-up process was seamless and took only a few minutes!
Once an application to open a Wealthfront cash account was submitted, approval took about three minutes. This will likely vary based on the individual, but it was a very easy process.
The app is very intuitive and the design layout makes it easy to navigate.
Overall, the entire website and app were well-designed and both are very responsive.
What Wealthfront Lacks
Does Not Offer Human Advisors
Wealthfront is a robo-advisor first off so interaction with a human advisor is nonexistent. Although most do not need or want this, it’s something to be aware of.
Cash Account Is Not A Full Service Checking Account
While the cash account comes with a lot of features in a traditional checking account, it’s not a complete checking account. It does come with a debit card and can be used to pay bills, but it doesn’t offer a checkbook.
To get a check, you can follow these steps and Wealthfront will mail the check where it needs to go.
You can review all the features of the Cash Account here.
Final Words
Overall, Wealthfront offers customers a lot of value! It appeals to investors who want a DIY approach to their investments with additional support from a financial planning service.
With its expanded offerings, Wealthfront offers features that would appeal to a lot of investors. You can use it as a hands-free option to manage your investments or to receive the benefits of a high-yield savings account.