What is Wealthfront? | What You Need to Know About Wealthfront Reviews & Wealthfront’s Investment Strategy – AdvisoryHQ (2023)

Wealthfront Review| Features & User Experiences

Robo-advisors have become the trendiest new concept across the financial technology world. Among the popular robo-advisors is Wealthfront.

What is Wealthfront? It’s a wealth management tool that utilizes automated robo software to createand cultivatea personalized investment portfolio for its clients.

A review of Wealthfront’s available investment accounts reveals a number of options for non-retirement and retirement investment accounts for clients willing to invest a minimum of $500.

Those who are not trying to save for retirement can open an individual account, a joint account, or even a trust account with Wealthfront. Those looking for retirement investing options can open a traditional IRA, a 401(k) rollover, a Roth IRA, or an SEP IRA on Wealthfront.

After conducting a review of Wealthfront’s offerings, potential users will find that Wealthfront employs exchange-traded funds for its investment strategy, much like one of its popular competitors, Betterment.

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Wealthfront Review | What Is Wealthfront’s Investment Strategy?

This Wealthfront review requires an explanation of its investment strategy and, by extension, an explanation of exchange-traded funds (ETFs), which are at the center of the platform.

Exchange-traded funds can be traded on the market much like other securities. The fact that they can be traded on the market like stocks is the key feature that differentiates them from mutual funds.

Exchange-traded funds track commodities, bonds, and more, and a review of Wealthfront’s use of ETFs shows that the investment software includes a variety of ETFs.

Direct Indexing

This shines through in their Tax-Optimized Direct Indexing service tailored for accounts of $100,000 and above. This service creates a diversified portfolio while using an enhanced form of Tax-Loss Harvesting to minimize investment costs.

With Tax-Optimized Direct Indexing, Wealthfront purchases up to 1,000individual stocks with efficient software algorithms, potentially adding over2 percentto annual after-tax returns.

For investors who are looking for direct indexing, this is a significant feature, as Wealthfront is currently the only major robo-advisor to offer direct indexing.

Wealthfront Review | What Is Wealthfront to the Everyday Investor?

The main attraction of robo-advising technologies is their ability to make investment advice accessible. Traditionally, investment advice has only been available to high-income individuals.

The amount of intellectual labor required of investment advisors made high-net-worth individuals the only profitable clients. A recurring comment in Wealthfront reviews is how it allows people with modest savings an easy and accessible investment vehicle for their money.

Then again, while it may seem like all robo-advisors are similar, they are all eager to differentiate themselves from the rest.

What is Wealthfront compared to other robo-advising apps on the market? And exactly what is Wealthfront doing with your money?

The Basic Process

Based on the goals and risk tolerance you specify to the software, Wealthfront uses Modern Portfolio Theory (MPT) to allocate your money to different assets, ensuring you benefit from a diversified portfolio.

While a review of Wealthfront’s offerings shows that it is geared toward taxable accounts, they also provide options for those seeking non-taxable retirement investment accounts.

Wealthfront provides a questionnaire to assess your willingness and ability to accept investment risks.

After reviewing your answers about your personal financial situation and goals, Wealthfront recommends an investment portfolio with a specific asset allocation in line with your needs and your risk preferences.

Individuals can link their bank account to their Wealthfront account to make instant contributions. Additionally, reviews of Wealthfront point out the convenient option to transfer IRA accounts over to the online investing platform.

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IRA Transfers

A review of Wealthfront’s attitude toward IRA transfers reveals the company’s commitment to behaving like the modern investment vehicle it claims to be. There are two ways to switch IRAs to another brokerage account: rollovers and transfers.

Rollovers require the original brokerage firm to sell the assets in the IRA and give those to the holder, who is required to send that to the new firm within 60 calendar days to avoid being taxed on those earnings.

A transfer involves the direct movement of the investments in one account to another. Transfers can be difficult because there are a fair number of brokerage firms that do not have the technology to facilitate them.

To make things more complicated, the Internal Revenue Service (IRS) recently limited the number of IRA rollovers an individual can carry out, allowing only one in a 12-month period.

A review of Wealthfront’s website shows that they do offer direct transfers for those interested in moving their IRA to their platform.

While moving IRAs can be facilitated by transfer or rollover, 401(k) accounts can only be transferred through rollovers. Fortunately, the IRS has not imposed any restrictions on 401(k) rollovers.

Wealthfront Fees

Wealthfront reviews applaud the service for providing an easy, affordable pricing structure. No matter what your account balance is, Wealthfront charges a low annual advisory fee of 0.25 percent.

Fees can be waived on an additional $5,000 for qualifying members of the Wealthfront Invite Program.

Ultimately, there is no denying that the affordable fee structure put forth by Wealthfront certainly increases investor accessibility. This is particularly true for those who have less than $10,000 to invest, or those who are new to using robo software for investing.

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What Is Wealthfront to Its Users? | Wealthfront Reviews

While Wealthfront does open up investment advice to a larger number of people, some users criticize it for occupying an awkward middle zone.

Wealthfront charges an annual fee for its investment services, but some users feel as though itprovides what is considered common sense advice.

What is Wealthfront? | What You Need to Know About Wealthfront Reviews & Wealthfront’s Investment Strategy – AdvisoryHQ (2)

As one Wealthfront review notes, “They don’t give you the personal attention a professional money manager would, and you still get charged a fee.”

Critical Wealthfront reviews point not to any real problems with the advice the app provides, but rather to the limited sophistication of the app in relation to the amount of funding and publicity it has received. A few reviews of Wealthfront speak to the platform’s inability to live up to expectations.

While on its face Wealthfront sounds like an attractive option, a fair number of users report unsatisfactory results and poor customer service. In fact, a significant share of Wealthfront reviews state that Betterment is the more profitable and enjoyable alternative.

Keep in mind that, no matter what robo software is being reviewed, there will always be a range of positive and negative consumer experiences to read through.

Ultimately,what truly matters is getting enough information to create your own Wealthfront review that meets your unique financial situation and expectations.

Wealthfront & the Investment Community| Wealthfront Reviews by Financial Experts

Many Wealthfront reviews from financial experts applaud the robo software as an innovative and accessible investment method.

Image Source: What is Wealthfront?

For those who are unsure about investing with Wealthfront, looking at what other financial experts have to say in their own Wealthfront reviews can be a great way to determine whether this is the best robo software for your personal investment needs.

Here is a quick summary of how financial experts are portraying Wealthfront:

In general, Wealthfront reviews from financial experts all praise a common set of core offerings. These offerings include direct indexing, advanced indexing, tax loss harvesting, and an accessible fee structure.

Wealthfront Review |Tax-Loss Harvesting Opportunities

One feature Wealthfront reviews often point out is their tax-loss harvesting opportunities, part of their PassivePlussuite of investment features.

Capital gains are subject to taxes, and increased taxes can negatively impact returns on your investments. Tax-loss harvesting essentially makes lemonade out of poorly performing assets in your portfolio.

Wealthfront reviews your existing investments and picks out those that are not working well or have decreased in value. Wealthfront then sells these assets, providing a tax write-off that helps offset the cost of other assets that are doing much better.

Wealthfront also provides a number of options for reinvesting your tax savings and replacing investments sold for this purpose.

Once upon a time, a Wealthfront review of tax-loss harvesting opportunities was only available to investment accounts with more than $5 million. At present, all taxable clientaccounts can benefit from Wealthfront’s tax-loss harvesting feature.

While some user reviews of Wealthfront are underwhelmed by the value presented by Wealthfront’s general investment advice, Wealthfront’s tax-loss harvesting experiences a fair share of praise.

The taxes associated with capital gains are something that all investors should take into consideration, but most investors do not wish to bother with the complicated research and follow-through required.

With Wealthfront, users can take a step back and let the robo-advisor do the tax-related thinking for them.

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Wealthfront Review | Is Wealthfront Safe?Is Wealthfront Legit?

The short answer is yes, Wealthfront is safe and legit. Althoughthere will always berisk associated withany investment strategy,Wealthfront reviews do not suggest any shadiness on the part of the company.

What is Wealthfront’s AUM? The latest numbers putWealthfront’s assets under management were tallied at an impressive$5billion.

Knowing there are many others with skin in the game is a comforting answer to the questions, “Is Wealthfront safe?” and“Is Wealthfront legit?”

Safety in numbers may not be the best way to choose an investment option, but for some, knowing that the brand is well known and recognizable in the robo-advising world may instill confidence.

What is Wealthfront’s clearing company? Do they hold the money themselves? According to their tax instructions, Wealthfront uses Apex.

Wealthfront uses Apex because it is a clearing company that allows a purely online strategy (other brokerages require things like written signatures). Their policies (i.e., not participating in proprietary trading) also present less of a risk to investors’ money.

Given this, it’s safe to answer the questions of “Is Wealthfront safe?” and “Is Wealthfront legit?” with yes, Wealthfront is safe and certainly legit.

Wealthfront Review | What Is Wealthfront’s Policy about Using Another Brokerage Firm?

The automatic planning and trading feature of Wealthfront sounds attractive, but some investors may wish to have their money held in a brokerage of their choice.

Unfortunately for them, a review of Wealthfront’s FAQ quickly reveals that this is not an option.

In order to carry out their trades purely online and keep things cost-effective, Wealthfront does not work with other brokerages. Those wishing to use Wealthfront must be okay with putting their money in Apex.

Wealthfront Review | What Is Wealthfront’s Deposit Insurance Status?

Wealthfront is an SEC-registered business. Notably, this is the reason you will not find any Wealthfront reviews or testimonials on their site.

While the Federal Deposit Insurance Corporation does not insure Wealthfront, the Securities Investor Protection Corporation (SIPC) does. Some assets are not protected by SIPC, such as precious metals and futures.

If Wealthfront were to undergo any structural changes, like an acquisition or an IPO, investors’ money is still held in their name in their brokerage account.

Additionally, users can enable two-step authentication both for their web-based account and on their mobile device for added security.

Wealthfront also offers portfolio reviews for people looking to gain some feedback but not yet willing to put their money with Wealthfront. Wealthfront reviews your existing investment portfolio and provides recommendations.

Conclusion: Wealthfront Reviews

With a growing accessibility to investment tools, many people are turning to financial technology to access the kind of investment advice they were hard-pressed to find before. As a result,there are plenty of new investors looking to test the waters and try their hand at investing.

When it comes to Wealthfront, diving into the world of robo-advising does not have to be a baptism by fire. Thankfully, robo software technology nowempowers individuals to grow the money they worked hard to save.

But for those who are still hesitant, Wealthfront reviews from financial expertsand existing investment account holders allow you to consider all the options and information before making the bestdecision for your investment future.

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