Wealthfront is a robo-advisor that relies on computer algorithms to manage client investment portfolios while Robinhood is a trading app for investors who are actively buying stocks, options and exchange-traded funds (ETFs).
Both companies offer mobile-first platforms, but which one is right for you? In this Wealthfront vs Robinhood review we compare costs, investment minimums, tax strategy and more to help you decide.
Table of Contents
- Robinhood vs Wealthfront Features
- Fee Comparison
- Investment Minimums
- Account Types
- Tax Strategy
- Tools and Calculators
- Stocks, Bonds, ETFs – What Can You Trade?
- Customer Support Comparison
- Mobile App Comparison
- Overall Winner
- Which Robo Advisor Is Best For You?
Robinhood vs Wealthfront Features
Why Wealthfront? Wealthfront is one of the first and most successful roboadvisors; it currently has north of $11 billion in assets under management.
It’s a solid choice for a hands-off investor who wants to park his or her dollars away and let them grow in peace.
Why Robinhood? Robinhood has 4 million customer accounts, and processed over $150 billion in transactions since the company was first founded in 2013.
Robinhood’s allure is commission-free trades with no minimum investment requirement. This may make it ideal for millennials who are interested in the stock market but don’t want to spend scant cash reserves on broker fees.
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How Much Is Wealthfront?
Wealthfront bills clients at a flat rate of 0.25% per month on all investments held with its service. There are no hidden fees or other invisible costs.
Your average monthly balance is used to calculate the fee, and it is deducted from your account on a monthly basis.
For account holders with under $10,000 in assets, Wealthfront waives its management fees.
What Does Robinhood Charge?
Robinhood charges no commissions to buy and sell stocks, but it does charge an outgoing transfer fee of $75 for each automated customer account transfer.
The company’s monetization strategy rests with its premium Robinhood Gold service, which offers investors extended-hours trading as well as the ability to trade on margin.
Depending on the service tier you choose, you may be charged between $6 and $200+ a month for the Gold service.
This is based on the amount of money you deposit and the level of “Instant Deposit” to which you have access. The higher your “Instant Deposit” power and account balance, the higher the fees you will pay.
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Robinhood Investment Minimum
Robinhood doesn’t impose an investment minimum on standard accounts. But for its Robinhood Gold premium margin account service, a $2,000 minimum balance is required.
This is in keeping with the regulatory minimums required both by the New York Stock Exchange and the National Association of Securities Dealers.
Robinhood also offers Robinhood Crypto, which is an account designed for investors who are interested in cryptocurrency trading.
Wealthfront Investment Minimum
In order to open a standard Wealthfront account, you’ll need to deposit $500.
For premium account services, such as stock-level tax-loss harvesting and Smart Beta (an advanced indexing service), the minimums are $100,000 or $500,000, respectively.
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Wealthfront Account Types
Wealthfront handles the following types of accounts:
- Personal investment accounts
- Joint accounts
- Traditional and Roth IRAs
- Simplified Employee Pension (SEP) IRAs
- IRA and 401(k) rollovers
- 529 college savings plans
- Trust accounts
Robinhood Account Types
Robinhood is strictly an investment platform for standard brokerage accounts. It offers these securities:
|Tax Loss Harvesting||N/A||YES|
|Free Account Balancing||N/A||YES|
Wealthfront Tax Strategy
Wealthfront is firmly committed to reducing its clients’ tax liability and maximizing their after-tax returns. To accomplish this, it seeks to offset capital gains by selling securities that have suffered losses.
Another investment that’s been correlated with the portfolio’s risk and return profile will then be substituted for the security that’s been sold. This practice is known as tax-loss harvesting.
The company will wait to transfer securities that have been losing value until they have become “long-term” assets as defined by the IRS. At that point, Wealthfront will sell those securities and pass the savings along.
For asset investitures of more than $500,000 that qualify for the Smart Beta investment feature, Wealthfront offers both ETF and individual stock tax-loss harvesting.
Opportunities to lower tax losses can be numerous with this strategy since stocks typically demonstrate more volatility than other securities.
Robinhood Tax Strategy
Robinhood supports brokerage accounts, and the only types of accounts it offers are individual taxable accounts.
The company does not offer retirement accounts that come with specific tax benefits.
You will be able to access a consolidated tax 1099 document that contains the information most often found separately on 1099-DIV, 1099-MISC, 1099-INT and 1099-B forms.
As the client, you are responsible for making sure this information is entered properly on your tax returns.
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Tools and Calculators
What Tools Does Robinhood Offer?
You won’t find robust research materials or sophisticated analysis software on Robinhood.
The company’s web interface, which launched in the spring of 2018, contains more bells and whistles than the smartphone app but is still skimpy in comparison with the tools offered by some other leading online discount brokerages.
Both the mobile app and the web interface offer the following tools:
Earnings: Robinhood describes this as a report card. It’s a dynamic page that aggregates financial information on a specific company’s earnings and its next earnings announcement date.
Watchlist: Allows you to customize a catalog of stocks and cryptocurrency opportunities that you want to keep an eye on.
Candlestick Charts: Candlestick charts are a type of financial chart that describe a security’s price movements on a particular day so that you can keep an eye on variables like the opening price as well as the high, the low and the closing price.
Additionally, the web interface aggregates analysts’ rankings so that Robinhood clients can break them down into Buy, Hold and Sell percentages.
The web interface also offers curated collections of stocks with names like “100 Most Popular,” “U.S.” and “North America” as well as a “People Also Bought” option for any stock you’re researching.
What Tools Does Wealthfront Offer?
Wealthfront’s Path tool is a piece of scenario-planning software that lets you do reality testing on the assumptions you’re making about your financial future.
The Path tool combines your risk profile and your real transaction history over the past 12 months with assumptions about inflation rates, changes in consumer spending habits and other economic criteria gleaned from the Bureau of Labor Statistics’ Consumer Expenditure Surveys.
This allows you to see the potential impact various decisions may have on your financial future.
Stocks, Bonds, ETFs – What Can You Trade?
Wealthfront Asset Classes
Wealthfront clients have access to three portfolios:
The portfolio the robo-advisor assigns each individual client is determined by the amount of risk that the client is comfortable assuming (based on client responses to his or her initial interview questions).
Each portfolio is balanced according to the principles of Modern Portfolio Theory with between six and eight ETFs representing stocks, bonds and assets like Treasury Inflation-Protected securities.
Robinhood Asset Classes
Robinhood lets clients create their own portfolios from stocks, ETFs, call and put options and cryptocurrency.
It does not offer access to mutual funds or bonds.
Customer Support Comparison
Wealthfront and Robinhood both offer phone and email support for clients who are experiencing technical issues with the apps or with the web interfaces.
You can call Wealthfront’s help line between 11 a.m. and 8 p.m. EST, Monday through Friday.
Robinhood’s helpline is available Monday through Friday between 8 a.m. and 6 p.m. EST.
Mobile App Comparison
Robinhood’s user-friendly mobile app is available both for iOS and Android smartphones.
The mobile app supports market orders, limit orders, stop limit orders and stop orders, and it also allows users to program customizable alerts.
Users can sign up for a news feed. They can also listen in to earnings calls on their smartphones.
Wealthfront clients can monitor their accounts throughout the day on their iPhones or Android smartphones.
Users can generate charts and tables that will help them track their investment portfolios’ performance. Wealthfront also offers a subscription investment news feed.
What’s the best way to grow wealth? Would you be better advised to turn financial decision-making over to an advisor or to take control of the process yourself?
The answer to that question depends on whether you have the knowledge, the time, the inclination and – most important of all – the temperament to manage your own investments.
If you’re lacking in any one of those areas, then you’d probably be better off working with a planner, which means you’d be better off with Wealthfront than you would be with Robinhood.
Both Wealthfront and Robinhood considerably lower the barriers to entry into the realm of financial investments. Both also offer a robust suite of services.
There is no clear winner here in terms of the quality of the products offered, but since Robinhood requires no investment minimum, it may be more tempting to beginning investors who are confident in their own ability to make smart investment choices on their own.
The key word, though, is “confident.” Robinhood’s platform is very basic: The service doesn’t offer a lot of data on its site, which means you may have to track down third-party research. That can turn into a time-consuming process.
If you are unsure about where to begin, then a robo-advisor like Wealthfront may be the better starting point. In fact, you could fund your tax-advantaged retirement account through Wealthfront and then open an account with Robinhood to learn the basics of stock trading.
Which Robo Advisor
Is Best For You?
Wealthfront is the best choice if:
- You want to work with a low-cost service that has an excellent reputation as a roboadvisor
- You’re a hands-off investor who’s comfortable sticking with one risk strategy while saving toward a long-term goal like retirement or college education for your child
- You’re looking for a service that will optimize your tax savings
Robinhood is the best choice if:
- You want to take advantage of commission-free stock, ETF and options trades.
- You want to begin trading securities, but you don’t have a lot of money available with which to open an account
- You’re very comfortable using a smartphone for sophisticated transactions.
|Costs||Account Minimum||Rating||Best For||Open Account|
|$0 for first $10,000|
|$0 Commissions||$0||Beginner Stock Traders|