Wealthfront Official Review
Investment Management and Online Financial Robo-Advisor
What is Wealthfront?
I want to give you a little bit on insight as an investor as to what resource might help you in your investing process. Whether you're a public or private investor, a website called Wealthfront has really taken off.
So what is Wealthfront? Wealthfront is of a new breed, a new generation of investing products that's called robo-trading or auto trading platforms. Wealthfront allows an investor to put money into an account each month, or as often as they'd like, and essentially let that process be automated. So you no longer deal with the traditional broker at the end of phone. So Wealthfront allows you to put your assets into stocks and therefore automate the process of investing.
Some positives about Wealthfront is that there is automatic re-balancing. So you don't have to necessarily jump in and constantly change your portfolio based on your age since your risk profile in your thirties is quite different than your risk profile in your sixties or seventies. In our book, "Kings Over Aces", we talk about the fact that your allocation should not necessarily be standardized. if you're in your thirties or sixties or seventies, whichever age range you're in, you should constantly be thinking about taking a slightly higher risk profile if you want to do better. But if you're the type that just wants to sit back and just let it ride, then you can try Wealthfront. They've got built in tax loss harvesting which is not a new concept per se, but it gives you the opportunity to move assets legally through their automated platform and defer some of your capital gains taxes.
Wealthfront allows investors to put their assets into stocks and automate the process of investing.
Other things that Wealthfront does provide is a low fee for balances less than $10,000, which is important for a new investor who doesn't have a lot of money with which to get started. One, I think investing is really the right thing to do instead of just keeping cash on hand, and second, beginner investors should look for low fees. We all do. So that's another positive for Wealthfront.
Some of the negatives. Well, there's actually an ETF (exchange traded funds) for everything now. Now it's not very often but ETFs can drop in value. When you've got your money locked up in something like Wealthfront, it will be difficult if you need to access capital fast or quickly so know that.
What are the areas of improvement for Wealthfront?
Another negative that Wealthfront has to improve is that it's harder to access capital. I'll give you a personal experience which is that I tried Betterment, Wealthfront, ,Robin Hood, Acorn - all the new breed of robo-trading - and I just tried to figure out how fast I could deposit money and how fast I could take it out just in case I needed it. In Wealthfront's case, it was a bit more difficult but it was better than Betterment in terms of accessing capital. They do need to make the process quicker.
Taking all this together, what does Wealthfront need to show or fix to ensure trust and to built trust amongst a new generation of investors. They need to show how impactful they are. Will investing in Wealthfront by getting the tax loss harvest make you more money than investing in traditional stocks or ETFs? The point here is this, there is not enough data to show that robo-advisors are giving you a higher ROI than traditional investing via broker. Where are the case studies? Wealthfront and these new breed or robo-advisors have to show that in order for more wide spread adoption.
There are better tax savings than tax loss harvesting. Tax loss harvesting is Wealthfront's clique. That's their thing. If they're going to promote that, they should be transparent about what other tax loss savings or tax loss mechanisms exist to save you an investor money. Just putting in robo-advisors is not the right way. You should consult with a CPA, we work phenomenal advisors at Angel Kings with whom you can speak. There are other ways and I think they need be transparent about what other options exist other than just putting your money and automating and doing better because you have tax loss harvesting.
Lastly, I believe in having worked with some great CPAs, Certified Public Accountants, that you should always speak with a CPA, especially if you have high assets or a credit investor, because their insight is still more valuable than hoping to put money with an ETF or an Exchange Traded Fund such as Wealthfront.
If you've got questions and you're an investor and you want to make a lot of money investing in some awesome companies, make sure to get in contact with us right away. It will give you the opportunities that you've never seen before. I'm excited to share this information with you. I look forward to working with you too someday as you learn about sites like Wealthfront and Betterment.