Advisor Excellence Profile: Wealthfront

Estimated read time: 4 minutes

Whether you are a seasoned trading veteran or new to the world of investing, there is one thing all investors have in common: they are wanting to better their financial health.

Choosing to invest or trade in any type of security is a wise financial decision. It is also one not without risk. That's why it is important to find trusted, low risk, and low cost solutions to your investment needs, and that's where Wealthfront enters the picture.

Wealthfront Overview

Wealthfront is a robo advisor. It is also classified as an online financial advisor. Both mean the same thing.

Wealthfront offers investors a way to invest in low risk options without the hassle of dealing with complicated phone calls, in-person consultation, or human interaction. As an online financial advisor, Wealthfront makes available algorithms and financial tools once reserved for financial advisors. By inputting a variety of personal and financial information into its online database, investors are able to paint a clear picture of where they currently stand, where they would like to be, and the investment strategies that will take them there.

Like its competitor, Betterment, Wealthfront is an industry staple. It is one of the bigger, more robust, and intuitive online financial advisors on the market. Being tailored to a broad audience is what makes Wealthfront so attractive. It has a simple interface that is driven by user experience and data accumulated over the years. Wealthfront allows investors to see a more broad financial picture and expand their understanding of personal investment strategies.

To use Wealthfront is simple and relatively low cost. Opening an account requires $500. From there you can choose a tax-deferred IRA account or go with a more traditional option. After that you'll be asked to input a variety of data that correspond to personal financial goals and investment desires. These can be related to risk desired, growth strategies, and other investment data points. Once these are collected, Wealthfront's algorithms get to work and allocate your money automatically.

Who Should Use Wealthfront?

As one of the bigger online financial advisors out there, Wealthfront is a robo advisor that caters to the masses. This makes it a great option for many who seek an entry-level experience to investing and trading that is low cost, low risk and intuitive.

Those who particularly benefit from Wealthfront are the following demographics:

  • Entry-level investors and those new to the market
  • Younger individuals who don't have as much capital to invest
  • Younger individuals who are not yet experienced in investing or trading
  • Experienced investors looking to simplify the overall investing process
  • Investors looking for an individual retirement account (IRA)
  • Users desiring a simple online interface for investment and financial strategies
  • Investors not wanting to deal with in-person or human financial advisors
  • Investors looking to simplify the process of investing

There are a number of accounts one should be aware of when considering Wealthfront. The online financial planner offers the account types listed below. Consider it a great option if you are looking for any of them.

  • Taxable
  • Traditional IRA
  • Joint
  • Rollover IRA
  • Trusts
  • Non-profit
  • Roth IRA
  • 529

Wealthfront: Pros & Cons

Wealthfront is an outstanding online financial advisor for those new to investing, those looking for a low cost investing option, and those wanting an all-in-one financial experience. As one of the bigger robo advisors out there, Wealthfront comes with many advantages afforded by larger advisors. Unlike traditional investment methods or solutions, Wealthfront is transparent.

Wealthfront provides direct access to algorithms once reserved for in-person financial advisors that could cost a lot to partner with. By offering the same tools through a simple, online platform, Wealthfront cuts this cost and saves investors money. It also does so while providing the low risk solutions afforded by ETFs.

Other advantages to choosing Wealthfront include:

IRA focused
Ability to take out a line of credit against investments over $100,000
College, home retirement, and general financial planning
Low fees
Ongoing promotions for new accounts
Low expense ratio
Zero account fees
Robust tax strategies

Though Wealthfront does offer many advantages when it comes to investing, there are some drawbacks to this robo-advisor. The main negative associated with Wealthfront is that there is no option to interact with a human advisor. Other cons associate with Wealthfront include:

  • Necessary cash balance to cover assumed fees related to expense ratio
  • Does not allow for complete investment of all your money

Does Wealthfront Beat Competitors?

Wealthfront offers a distinct advantage over traditional human advisors in regards to it being a low cost, low risk solution to entering the investing and trading marketplace.

When it comes to comparing Wealthfront to its direct robo advisor competitors (such as Betterment), things become a little more complicated. That's because both online financial advisors offer different algorithms, strategies, and tools that may attract different types of investors.

For example, if you are one looking to invest in an IRA then Wealthfront is the option for you. If, however, you would prefer a 401(k) option, Betterment is the better choice. Wealthfront does not offer a 401(k) account option.

Likewise, Wealthfront does have a higher minimum balance than other large robo advisors and a slightly higher fee of 0.25%.

Where Wealthfront shines is in its promotions, incentives, and reputation. It is widely considered the premiere robo advisor due to the way it has performed and its sound investment strategy. The company also deploys multiple incentives and promotions geared towards attracting new users.

Is Wealthfront For You?

Choosing a financial advisor is a big decision. It is also a personal one. To decide on the best option for your investing needs you must consider your current financial standing, where you want to be, and the types of strategies you would like to deploy. Doing so will provide you more financial flexibility in the long-term, in addition to clarity.

If you are new to the market, would like to invest with a proven online financial advisor and desire a low cost, low risk option, Wealthfront is the tool for you.