Is Wealthfront at risk?
Is Wealthfront Safe? Wealthfront carries the same safety protocols that you'll find in most major financial institutions. Your cash is insured by the FDIC, while investments are insured by the SIPC. 23 No insurance protects your investments from the price fluctuations of the stock and bond markets.
Once your funds are deposited at a partner bank, they're covered by FDIC insurance as we described above. Because of this, you can feel confident that your funds are well protected no matter what kind of Wealthfront account they're in, even if they take a day to land at one of our FDIC-insured partner banks.
Your cash is insured by the Federal Deposit Insurance Corporation (FDIC). This coverage protects your cash in the event that a bank goes out of business. Wealthfront uses multiple partner banks to ensure FDIC coverage of up to $8 million for your cash deposits.
In the unlikely event that Wealthfront fails, your money is protected up to 32 times more than the usual $250,000 insured by the FDIC. The additional coverage is made possible by Wealthfront's network of 32 partner banks.
Bottom line: Wealthfront is one of the best robo-advisors for investing in ESG funds and low-cost automated portfolio management. Wealthfront also provides features like tax-loss harvesting, US direct indexing, and crypto trusts. But if you want access to financial advisors, you'll need to look elsewhere.
Accounts carry a 0.25% annual advisory fee and expense ratios on funds. Wealthfront doesn't currently offer individual cryptocurrency investing at this time. Instead, you can invest in Bitcoin and Ethereum through unit investment trusts (UITs), which operate like exchange-traded funds (ETFs).
| Formerly | kaChing (2008–2010) |
|---|---|
| Industry | Personal finance, Stock exchanges, Finance |
| Founded | 2008 Redwood City, California |
| Founders | Andy Rachleff Dan Carroll |
| Key people | Andy Rachleff (CEO & Chairman) Burton Malkiel (CIO) |
The SEC's order also found that Wealthfront improperly re-tweeted prohibited client testimonials, paid bloggers for client referrals without the required disclosure and documentation, and failed to maintain a compliance program reasonably designed to prevent violations of the securities laws.
Schwab doesn't charge management fees but requires you to hold cash in the portfolio. Wealthfront offers greater customization options and excellent digital financial planning tools at a lower account minimum and competitive fee.
Your security is important to us. We use bank-level security to keep your account safe. Linking does not allow Wealthfront to manage or transfer assets in your linked account.
Can you lose money in a Wealthfront savings account?
FDIC Insurance
Money invested in a security — like a portfolio of bonds or commercial paper — is subject to capital loss risk. Money deposited into a Wealthfront Cash Account or a traditional savings account is not subject to any capital risk.
What about the penalty? A withdrawal before the age of 59 ½ is considered an early withdrawal, so a penalty of 10% may apply. This penalty is in addition to your specific federal tax rate withholding as required by the IRS and any income tax your state of residence may require.
The bottom line is: we've been good for our clients' bottom lines. Investors in Wealthfront's Classic Automated Investing Account, with a risk score of 9, watched their pre-tax investments grow an average of 8.02% every year since we started.
Is Wealthfront Safe? Wealthfront carries the same safety protocols that you'll find in most major financial institutions. Your cash is insured by the FDIC, while investments are insured by the SIPC. 23 No insurance protects your investments from the price fluctuations of the stock and bond markets.
In 2022, the Wealthfront Smart Beta strategy outperformed its benchmark by 4.71%. Figure 4 shows the total return of each factor portfolio over the full comparison period, along with the total return of the S&P 500.
Wealthfront: 2024 Comparison. Betterment and Wealthfront both charge 0.25% for digital portfolio management. But Wealthfront also offers digital financial planning tools, while Betterment offers access to financial advisors for an upgraded fee.
If you would like to invest around financial goals without having to select the actual securities to trade or when to trade, Wealthfront is the choice for you. Investors who would like to select their assets personally and build a financial plan based on their personal financial management should select Vanguard.
Your assets are held in a brokerage account in your name at Wealthfront Brokerage LLC, a subsidiary of Wealthfront Corporation. Please note that Wealthfront Brokerage LLC has partnered with RBC Clearing & Custody (RBC CC) for many clearing functions such as trade settlement.
Robinhood is designed for low-fuss, no-fee trading. For many, its highlights are its few costs, easy-to-navigate design and cryptocurrency trading option. Looking at Wealthfront, we see a more comprehensive range of options for investment, including retirement accounts like IRAs and 401(k)s.
Wealthfront's target audience is millennial investors, which means that costs are relatively low and portfolio options are easy to manage.
What does Wealthfront do with your money?
We invest your money across the right mix of asset classes for your risk tolerance. To maintain this diversification, we automatically rebalance your portfolio.
It depends on what you're looking for. Robinhood offers more investment types, including cryptocurrencies and options. Wealthfront offers more account types, including SEP IRAs and 529 Plans. Both let you invest in individual stocks and ETFs, but only Wealthfront offers to manage your account for you (for a fee).
Wealthfront was founded in 2008 by Andy Rachleff and Dan Carroll and launched automated investing services in 2011. It is a pioneer in using automation to craft low-cost investment portfolios for Americans.
According to Wealthfront, clients who started with them in 2012 with a risk score of 8 portfolios benefitted from an average annual harvesting yield equal to 2.41% of their portfolio values. This is more than they charge in fees. You can see the value of their tax-loss harvesting service below…
Today, Wealthfront is one of the most popular options for folks in search of automated financial guidance, and it's also Forbes Advisor's pick as the best robo-advisor for financial planning.
