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Wealthfront – The Millennial and Gen-Z Advisor

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In 2008, KaChing! was founded. Why am I talking about KaChing!? Because KaChing! changed their name to Wealthfront in 2012 and revamped their services and platform to compete with Betterment. At the time, Betterment was well known as being the best robo-advisor platform. They revolutionized and ignited the robo-advising financial services industry. Up until recently, Wealthfront’s growth was slow. Within the past 2 years, they have redone their marketing and website design to target and attract Millennials and Generation Z to their platform. Due to their efforts in improving their user interface and app features, Wealthfront currently has the highest rated investing app in the Google Play Store at 4.6/5.0 stars, beating Stash, Betterment, Acorns, CashApp, Sofi Invest, Fidelity, and several other investing brokerages.

Automate your Finances

Wealthfront is a robo-advisor that automates your saving and investments with what they call Self-Driving Money™. When you deposit your paycheck, you can have Wealthfront automatically pay your bills, fund your emergency savings, and invest the rest.

Banking with Wealthfront’s Cash Account

Wealthfront offers a no fee, no transfer limit Cash Account that acts similar to a Checking Account. It is a high yield account offering 0.35% APY as of February 2021. Like a checking account, you get an account and routing number allowing you to setup direct deposit and pay bills. You can also deposit checks through the mobile app. Unlike a checking account, checkbook’s are not provided. Keeping with the theme of catering to the younger generation, you can link your Cash Account to Apple Pay, Google Pay, Venmo, Paypal, and Cash App. In addition, you can access more than 19,000 ATM’s for free and get your direct deposit paycheck up to 2 days earlier, giving you quicker access to your earnings as compared to the average checking account. With $1 million in FDIC insurance and a $1 minimum to open an account, it is easy to open a Wealthfront account.

Investing with Wealthfront

Wealthfront offers many types of investment accounts including the 401k, Traditional IRA, Roth IRA, SEP IRA, 529 College Savings, Individual Accounts, Joint Accounts, and Trust Accounts. Combined with the Cash Account, you can setup Wealthfront to automatically invest 5% towards your Roth IRA and 2% towards your college savings, and so on.

Like Betterment, Wealthfront charges an annual advisory fee of 0.25% on their investment accounts. Like Betterment, Wealthfront offers Tax-Loss Harvesting which when turned ON, will automatically manage your investments to save on taxes. Wealthfront also offers “Autopilot”, a feature that monitors your account to invest extra cash. To get started with Autopilot, you need to set a maximum balance for your Cash Account and a destination account. Every time you exceed the balance by $100 or more, Wealthfront will automatically invest that money for you. Autopilot is also designed to avoid overdrafts. M1 Finance offers a similar product known as Smart Transfers as part of the M1 Plus Membership of $125 per year. In comparison, Wealthfront’s Autopilot is free.

With Wealthfront and most robo-advisors, your investments go into diversified index funds consisting of bonds and ETF’s, or exchange traded funds. With 10 global asset classes to choose from, Wealthfront will personalize your portfolio based on your answers from a simple questionnaire. Wealthfront makes investing easy and is geared towards growing your wealth over time. The platform is not setup for day trading or swing trading, but is a great choice for the long term investor.

Borrowing from Wealthfront

Many brokerages offer either a Margin account or a Portfolio Line of Credit (PLOC). Wealthfront is no different. Their PLOC can help you out in times of need, whether you need to borrow money to pay for taxes, a major repair or surgery, or a home renovation. The PLOC is a similar product to the HELOC, or Home Equity Line of Credit. Home Owners can borrow up to 85% of the value of their home to pay for whatever they want. In contrast, Wealthfront’s PLOC lets you borrow against 30% of the value of your investments. The 30% limit is common as many PLOC’s range between 20% and 40%. Wealthfront’s PLOC interest rates are variable and differ depending on the amount. The rates currently range from 2.24% to 3.65%. It can be difficult for the younger generation to borrow money as they have little to no credit history, but Wealthfront made this step easier as they do not require credit checks for Portfolio Lines of Credit.

In Conclusion

Wealthfront is a brokerage firm with products geared towards financial planning. With the ability to link and monitor external accounts (credit cards, bank accounts, etc), Wealthfront can be used to monitor all of your accounts and your total net worth. They have revamped their website and business to cater towards young adults, helping them grow their wealth with financial planning services and access to financial experts.

I already have Betterment, which I love. However I believe Wealthfront is also great. A few months ago, I convinced my wife to open a Roth IRA with Wealthfront. She was never into tracking her finances. After I linked all of her external accounts and showed her what she can do through the Wealthfront app, she started to check the app on a weekly basis. If you would like to join Wealthfront, consider joining through my wife’s referral link here, where you will receive $5000 managed free for a year. If you’d like to do your research first, read my full review on Betterment here, and M1 Finance here.

Affiliate Link Notice: This post contains affiliate links, which means I may earn a small commission at no additional cost to you if you decide to purchase or sign up for a product through my referrals. While you can sign up through any other means, it would help support the blog if you sign up through my links. Thanks.

Hyder A.

Hyder is the engineer and blogger behind Finance Throttle, a blog that helps you accelerate your net worth through personal finance. With a Master’s degree and 10+ years of experience in manufacturing, Hyder is well versed in the topics of engineering economics and financial studies helping him to invest in equipment and reduce manufacturing costs. Hyder is passionate about cars and earning money as he bought a Porsche at 21, became a landlord at 24, and paid off $40,000 in student loans at 25. Along with his wife, they are currently on track in paying off their $282,000 mortgage by 2026 (Only 7 years!)

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