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Wealthfront vs. Schwab: Who Should You Invest With?


From robo-advisors to mutual funds, there are many choices in the investment space to make about how you want to grow your money and there is no shortage of service options. Wealthfront and Schwab are two companies you may have heard of that can help you make these choices. Both offer slightly different types of services but can be used if you’re looking to make a lot of your own investment choices. For a more active guidance approach to managing your assets, consider working with a financial advisor

Overview of Wealthfront and Schwab

Wealthfront and Schwab are two very different companies. Wealthfront was started in Palo Alto, California, in 2008 by Andy Rachleff and Dan Carroll. Wealthfront’s a robo-advisor that has one multiple awards over the years. It provides automated investing and curated portfolios that involve a lot of mutual fund options, as well as a high-interest-rate savings account.

Schwab, on the other hand, is a large, multinational financial services company that’s been running since 1971. They offer full-service wealth management that works with individual investors, independent advisors and employers. Where Wealthfront is the new kid on the block focused on a specific investing niche, Schwab is one of the world’s largest discount brokerages, as well as the owner of another big-name full-service brokerage, TD Ameritrade.

Wealthfront vs. Schwab: Fees

Knowing the big differences between Wealthfront and Schwab, it should come as no surprise that their fees are vastly different. Wealthfront charges a flat annual fee of 0.25%. That means if your account holds $70,000, you’re paying $178.32 for the service.

Schwab is a little more complicated, but that doesn’t mean it’s more expensive. In fact, you can open a Schwab account and pay next to nothing if you just stick to listed securities and don’t get advising. For a non-broker-assisted online trade, you’re looking at $0 online commission for listed stocks and ETFs, a $6.95 fee for OTC stocks, a $0.65 fee per options contract and $2.25 per futures contract.

That’s just a start, though. With Schwab, the fees can start to add the more services and investment choices you make. Where you have the freedom to invest your money where you want, you’re going to have to pay for the privilege.

Wealthfront vs. Schwab: Features and Services

SmartAsset: Wealthfront vs. Schwab

Wealthfront’s core service is its robo-advisor. Consistently ranked as one of the best robo-advisors for investors, Wealthfront features automated investing designed to diversify and balance your portfolio based on the market.

Along with your investment portfolio, they offer 529 college savings plans and retirement plans as well. On top of that, they offer the aforementioned high-interest savings account and portfolio lines of credit, where you can borrow up to 30% of your portfolio.

Schwab has their own version of a robo-advisor, called Schwab Intelligent Portfolios. This robo-advisor comes in two tiers. The basic version is free and only requires an account minimum of $5,000. The premium plan requires a minimum of $25,000 and is $30 a month with a one-time $300 setup fee.

But the robo-advisor isn’t the main draw of using Schwab. Their major draws are the flexibility to pick and choose where you invest, talking with a human advisor and the amount of high-quality educational content you have access to. Schwab truly is a full-service brokerage offering banking, money management and financial advisory services across-the-board.

Wealthfront vs. Schwab: User Experience

User reviews on the Google Play and Apple app stores praise Wealthfront’s app for its ease of use and intuitive interface. However, some reviews point out that, when you need to talk to someone in customer service, it’s nearly impossible.

Schwab, on the other hand, has lower ratings for its app, with many users complaining it often crashes or doesn’t work. Some reviewers point out that the worst part of investing with Schwab is using this app, as it’s slow, clunky and trading values are often delayed. On the other hand, with Schwab, it can be easier to reach someone in customer service if you need a problem addressed.

Wealthfront vs. Schwab: Controversies

Both Wealthfront and Schwab have had their run-ins with the SEC. In 2018, Wealthfront was fined $250,000 for making false claims regarding a tax-loss harvesting strategy it offers its clients. Wealthfront failed to manage the accounts properly and 31% of the participants faced penalties due to the mismanagement.

That’s a small change compared to the ruling Schwab faced this year. A court ordered Schwab to pay $187 million due to failing to disclose fund allocations and misleading the users of Schwab Intelligent Portfolios, its robo-advisor service.

Who Is Wealthfront Best For?

Wealthfront can be the right investment tool for those digital natives who need to build savings and grow wealth, but who don’t have the time or knowledge to dedicate to trading. Wealthfront gives you the simplicity to choose a curated portfolio you like without option paralysis. Its straightforward annual fee and high-rate savings account can make building wealth easier.

Who Is Schwab Best For?

Schwab can be the right brokerage for those who want options and flexibility. With Schwab, you can use a robo-advisor and/or invest on your own. Ultimately, you make the choices where you put your money. The fees for investing are low, and you have plenty of educational resources on hand.

Bottom Line

SmartAsset: Wealthfront vs. Schwab

Wealthfront and Schwab, while both occupying the financial services industry are two very different companies. Schwab has a reputation and rich history, whereas Wealthfront is a relative newcomer focused on using tech to help people invest. Each has its pros and cons and is ultimately for different people. Both can be excellent options depending on what you’re trying to accomplish.

Tips for Investing

  • A financial advisor can offer valuable insight and guidance as you evaluate various investing platforms. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you decide to invest on your own, it pays to know what you’re doing. SmartAsset has you covered there as well. For example, check out our free investment calculator.

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