Welcome to my Wealthfront scam review
Wealthfront is an online financial advisor in the industry based in Silicon Valley. It is was the first to reach $1 billion in assets under management that they did in two in a half year.
Wealthfront is a Robo advisor that has been growing their investment capability in every direction that offers Robo Investing and Financial Planning.
So the question is, is Wealthfront a scam? Is it worth your time and money?
We will find it out in this review.
In this review will try to answer the following four questions. It should give you a clear understanding if Wealthfront is a scam or not and whether it’s worth your money.
- What Is Wealthfront?
- How Wealthfront REALLY Works?
- Is Wealthfront Scam or Legit?
- Is There Something Better?
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WHAT IS WEALTHFRONT?
Program Name: Wealthfront
Website: www.wealthfront.com
Creator: Andy Rachleff
Price: $500 Minimum
Recommendation: depend
Wealthfront founded in 2011 it is the second-largest independent Robo Adviser after betterment. In recent years, dozens of Robo-advisors have arrived, and Wealthfront stands out as one of the best.
Wealthfront primary business is automated online investing. Pay as little as $500 you can open an account, and they will design a portfolio for you. Your cash, like most other Robo-advisors, will be invested in a balanced combination of stocks and bonds.
Like other Robo-advisors, in portfolio creation, Wealthfront uses Modern Portfolio Theory or MPT. When building a portfolio, they first determine your investment goal, time horizon, and risk tolerance then designed to work within those parameters.
Wealthfront offers a variety of portfolio and investment methodologies, including socially responsible investment, smart beta, and parity of risk.
In their planning package, they offer retirement planning and college planning.
Now you know what is Wealthfron now let see how it works.
HOW WEALTHFRONT REALLY WORKS?
The first product of Weathlfront is automated portfolio management. They call it “Modern Portfolio Investing,” it is to help clients invest their assets. Investors of Modern Portfolio believes that it is hard to beat the market.
The investors want to see their money grow on Wealthfront because of their investment platform opportunity, and they don’t want to spend time thinking about their investments.
There are four objective questions and six subjective questions that Wealthfront ask. Wealthfront then allocates your investments between stocks, bonds, and other asset classes after assessing your risk.
If you invest more than 100k at Wealthfront, you can use the value add features that are part of their PassivePlus investment suite.
The PassivePlus is a first of its kind suite of passive investment tax-efficient product that includes Smart Beta. Investing in Smart Beta attempts to use decreased volatility downward portfolio to increase portfolio returns.
So now you know how Wealthfront works, and it is clear that they capture systemic tax advantages. Also, Wealthfront points out to clients that its five-factor investment model in combination with indexing boosts returns.
Wealthfront PassivePlus program:
- Risk Parity
Risk Parity, also known as the optimization of mean-variance helps investors to weigh volatility more effectively against expected returns, costing an additional .03% per year and only available for a portfolio of more than $100,000.
- Tax Loss Harvesting
It is an algorithm that checks for daily capital loss opportunities. And over the years, investors can claim $3000 in capital losses for a tax credit, plus any gains can be compensated for with losses.
They guarantee you’re not going to pay the government more than you have to.
If you have a big account of after-tax brokerage, you have to take advantage of this tax-loss harvesting. Accounts that are over $100,000 are readily available at the stock level rather than that on ETF level, Also known as direct investing is called “Stock level harvesting.”
For accounts that is more than $100,000, this is available at a Stock level rather than that at ETF level. You should take advantage of tax-loss harvesting if you have that big after-tax brokerage account. Direct investing here is known as Stock level harvesting.
- Stock-level TaX-Loss Harvesting
It is an enhanced form of tax-loss harvesting, available for no additional cost to taxable accounts over $100,000 that seeks movements in individual inventories within the stock index to reap more tax losses and to further reduce your tax bill.
- Smart Beta
Wealthfront is not entirely straightforward about what’s in their “Secret sauce,” but their latest algorithm based on the well-known investment model of five factors.
In the past, the five-factor model would not only beat the market; it would decrease portfolio volatility. Smart-beta accounts for the value, momentum, dividends, low volatility, volatility compared to the market.
It’s not clear yet that if it’s true. For portfolios over $500,000, Smart Beta is available.
Wealthfront Plans and Pricing
For the Wealthfront portfolio, they will charge you 0.25% per year. If your portfolio is under $100,000, you’ll pay 0.07 – 0.16% per year for fund fees. If you are with direct investment, you do not have to pay for the fund fees.
If you have a Wealthfront account, you can link directly to a checking or savings account if you plan to start an automated savings plan.
This is the following types of investment accounts that Wealthfront supports:
- IRA transfers
- Roth IRAs
- Traditional IRAs
- 529 plans for college
- SEP IRAs
- Rollover 401(k)
- Individual and joint taxable brokerage accounts
Wealthfront Three New Features:
- Free financial planning software
- High-yield cash account
- Portfolio line of credit
Wealthfront Financial Planning Software
Wealthfront offers you free financial software to those who want to use it. And the best part is you can use it even if you are not a Wealthfront customer.
The financial planning software will connect directly to the user’s account so that users can track easily on their goals.
If you haven’t set your financial goals, you don’t have to worry because Wealthfront has a Financial Health Guide that provides you a framework to help you think about your business or financial goals in life.
The software cant tells which question to ask, and it doesn’t have the same value as a financial coach. However, it will help you move in the right direction.
It is one of the better free planning tools that you’ll ever see.
Wealthfront Portfolio Line Of Credit
If you have a taxable brokerage account with at least $100,000, you are eligible for a credit line of stock worth 30% of your account value.
Your account secures the loan, so loan rates are often below most credit lines for home equity. On your schedule, you can pay back the loan, but interest accumulates until the loan paid in full.
On your schedule, you can pay back the loan, but interest accrues until the loan is fully paid.
If you have investments in a taxable brokerage account and you need cash to begin a business or purchase a vehicle, you are likely to have to liquidate your account to pay your needs.
Wealthfont Cash Account
This year 2019 in February Wealthfron Cash Account was Launch it is the next step towards automating all of clients finances.
Cash Account is a safe place to store money that you may be planning to invest, spend in a few years, or use in an emergency.
An interest rate of 2.32% that the account offers and is FDIC or also known as Federal Deposit Insurance Corporation insurance for up to $1 million. That’s almost 20x the national.
The National average is almost 20 times its interest rate and four times the insurance you could receive on other traditional banks. Clients of Wealthfront can start an account for at least $1.
Also, the account isn’t subjected to any market risk, and they offer an unlimited and free transfer to all for no fees
The account is separated from a regular managed account, and there is no management fee.
The next section we will see if Wealthfront a scam or not.
IS WEALTHFRONT SCAM OR LEGIT?
Wealthfront is not a scam. It is a legit company that gives you a way of making a profit through the online investment.
Also, Wealthfront is an investment company with the minimum fee and financial flexibility that makes it a suitable choice for new investors who have not much experience in this field.
However, since the company system works based on Robo-advisor, there is also moderate to minimal human intervention. With that, if in case there is another way of investment that would be more beneficial to both parties. Then Robo-advisor cannot further assist you on other concern.
Wealthfront investment also takes time to gain interest before you can withdraw your money. Make sure you have an extra income or another source of income while waiting for these investments earn more significant interest.
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Pros
- Free for Accounts Under $5,000
- Tax-Loss Harvesting for All Accounts
- Stock Level Tax-Loss Harvesting
- Risk Parity
- Two-Factor Authentication
- Free Financial Planning
- Path Considers External Accounts
- Cash Account
Cons
- Wealthfront carries no excess SIPC insurance
- Portfolios under $100,000 are not customizable beyond risk settings
- Larger accounts may contain more expensive mutual funds
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If you have any question or thought as to whether Wealthfront is a scam, feel free to leave a comment below and I will always reply!
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Wealthfront
$500 Minimum
Overview
- PRODUCT NAME: Wealthfront
- WEBSITE: www.wealthfront.com
- CREATOR: Andy Rachleff
- RECOMMENDED? Yes