Wealthfront Robo Advisor Review & Performance February 2021
Posted on February 22, 2021
Wealthfront was founded in 2008 as kaChing, a mutual fund analysis company, before pivoting into wealth management. Wealthfront officially launched in December 2011 and has since raised a total of over $200M in venture capital to expand operations. Between its investment management and cash account offerings, Wealthfront is now one of the largest independent robo advisors.
Wealthfront has been ranked by Backend Benchmarking as the Best Robo for Digital Financial Planning. Its free online planning platform allows users to model six different planning scenarios: retirement, saving for college, buying a home, large one-time purchase, income windfalls, and taking extended time off of work to travel. Once inputted, all goals are plotted along the net worth timeline for easy visualization.
Wealthfront continues to operate as a digital-only platform and is one of the few remaining robo advisors that does not offer access to live planners. For investors with higher account balances, Wealthfront offers individual stock portfolios and access to its Risk Parity fund (WFRPX).
- Robust digital financial planning tools
- High-yield cash account
- Integrated cash management
- No access to live advisors
- No fractional shares
Performance Summary: (as of 12/31/20)
|Rank vs Benchmark*||---/0||41/65||32/42||17/26||7/13|
*The Normalized Benchmark is a method of comparing each account against a comparable asset allocation. Details can be found here.
Additional Returns: (as of 12/31/20)
|Fixed Income-Only Return||#N/A||0.0625||0.068||0.049||0.0484|
|vs. Normalized Benchmark||#N/A||-0.0287||-0.0222||-0.0132||-0.0122|
Platform Facts: (as of 12/31/20)
|Account Minimum||$500, some additional portfolio features require a higher minimum|
|Advisory Fee||0.25% annually|
|Average Weighted Expense Ratio||0.001|
Digital Advice Ratings: (Winter 2021 Robo Ranking)
Access to Advisors (0/5)
Since its founding, Wealthfront has maintained a digital-only platform without access to human advisors. It does not have any service levels that provide human advisors and may not be the best choice for investors hoping to speak with humans regarding planning issues.
Financial Planning (5/5)
Wealthfront has been ranked by Backend Benchmarking as the Best Robo for Digital Financial Planning. Its free online planning platform allows users to model six different planning scenarios: retirement, saving for college, buying a home, large one-time purchase, income windfalls, and taking extended time off of work to travel. Once set up, all goals are plotted along the net worth timeline for easy visualization.
Transparency and Conflicts (3/5)
Wealthfront does not provide access to traditional or blended benchmarks to assess performance. It does provide white papers detailing investment strategy and detail performance of their models online. Portfolio models are made available before account opening, based on the planning goal and results of the risk tolerance questionnaire. If you meet certain minimum balance requirements, Wealthfront offers access to invest in its proprietary Risk Parity mutual fund.
Features and Customer Experience (3.5/5)
Wealthfront falls in the middle of the pack in regards to features and customer experience. While it does offer a high-yield cash account and mobile app, it does not provide the full range of features offered at competing robos. For example, it does not invest in fractional shares and does not allocate reinvested dividends. It also does not provide flexibility for clients with current positions that are concentrated or have unrealized taxable gains.
|Management Fee||Fund Fees||Total Cost|
*Per $10,000 invested
Wealthfront is a low-cost option, with investment management offered at just 0.25%.Posted in Profiles
Tagged AUM, Backend Benchmarking, Digital Advice, Digital Investing, Financial Planning, Performance, Robo Advisor, Robo Ranking, Wealthfront