Stash vs Wealthfront: Who They're Good For
Stash and Wealthfront are both robo-advisors that will appeal to younger investors, but they offer very different approaches. Stash, which began as a micro-investing app and now offers desktop functionality, appeals to the beginner investor with its low minimum ($5), unique account options, and variety of stock and ETF offerings. Wealthfront follows a more traditional approach as an advisor and has a lot to offer any investor at a low management fee of 0.25%. We’ll look at the key differences between Stash and Wealthfront to help you decide which one is the better choice for managing your portfolio.
On Friday, September 2, 2022, Wealthfront announced that, together with UBS, the companies have decided to terminate the pending acquisition, leaving Wealthfront to remain an independent company.
- Account Minimum: $0, $5 for Smart Portfolio
- Fees: $3 for a Growth account that includes IRAs, $9 per month for a Stash+ account with UTMA options
- Ideal for young investors with little experience who need guidance with long- and short-term financial planning
- Designed for people looking for new ways to save money with an innovative path to equity ownership through the Stock-Back feature
- Perfect for people used to having digital helpers prompt them along and gamify the experience with achievements
- Account Minimum: $500
- Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers.
- Great for those looking to connect all their financial accounts to see the bigger picture
- Designed for people who would like to set and track their goals
- Access to a portfolio line of credit for those interested in a loan
- If you are someone who has an account of $100,000 or more you get access to additional securities
Wealthfront has set the gold standard for goal planning at robo-advisories, but Stash gets credit for trying a unique approach that is targeted specifically at younger investors. Stash’s planning tools (Stash Coach) are organized as a game, in which you earn points and climb levels after completing investment and learning challenges. Each week there are new challenges and suggested portfolio picks, which can introduce investors to new funds. Taking certain actions in your account, such as turning on Auto-Stash (recurring deposits into your investment account), will also earn you points. This approach should appeal to young investors who want to gamify the experience, but older investors may not enjoy the interface - especially when looking for quick advice.
Wealthfront’s goal-setting features ranked among the very top for all the robo-advisors we reviewed.. Wealthfront’s planning tools incorporate web partners and calculators to guide clients toward their goals, connecting to Redfin (for instance) to help you estimate how much a house will cost in your desired location. College savings scenarios estimate costs for many U.S.-based universities and project expenses for tuition, room and board, and other costs. There’s a wedding planning goal, and a database that tells you how much your ideal car will cost. You can even determine how long you could take a sabbatical from work and travel while still maintaining progress toward other goals. The dashboard gives you a snapshot of your assets and liabilities and the likelihood of reaching your goals.
While Wealthfront offers traditional and Roth IRAS, SEP IRAs, and 401(k) rollovers, Stash offers only traditional and Roth IRAs.
Stash Retire guides beginner investors toward either traditional or Roth IRA accounts, and the account dashboard offers snapshots of current progress, a yearly contribution tracker, and future potential. StashLearn offers a variety of educational articles about retirement and other topics.
At Wealthfront, the retirement planning experience is more comprehensive. Your information is used to estimate your net worth at retirement and what you’ll be able to spend per month once you stop working. You can compare projected retirement income against your current spending habits to see whether you’ll be able to maintain your lifestyle in later decades using the Path planning tool. The platform allows you to adjust retirement age, savings, target retirement spending, and life expectancy to experiment with different outcomes.
Wealthfront has a clear edge in the variety of accounts on offer, covering a variety of individual retirement accounts (IRA), taxable accounts, and the less common 529 college savings plan. That said, Stash offers the most common account types as well as Uniform Gift to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) accounts.
Stash account types:
- Debit accounts*
- Taxable accounts
- Traditional IRA accounts
- Roth IRA accounts
- UGMA/UTMA accounts
*Clients must open at least a taxable account in order to open a debit account.
Wealthfront account types:
- Taxable accounts (individual, joint and trust)
- Traditional IRA accounts
- Roth IRA accounts
- SEP IRA accounts (for the self-employed and small businesses)
- IRA transfers
- 401(k) rollovers
- 529 college savings plan accounts
- High-interest cash accounts (individual, joint, trust)
Features and Accessibility
Wealthfront and Stash both have strong offerings when it comes to features. With Wealthfront, the service grows with your assets under management, giving investors more as their balance increases. In contrast, Stash is built around its unique Stock-Back feature that helps young investors just starting out. Choosing between the two in terms of features and accessibility again depends on which ones you are likely to use, but in this case, it may also be a question of where you are in life. Stash’s features are designed to get you started in the stock market, while Wealthfront rewards you after you have built up an investment nest egg.
- Stock-Back points: Stash offers a debit account that includes thousands of free ATMs, and purchases build “Stock-Back” points that automatically add fractional shares of the retailer or retailer’s parent, if publicly traded and on their list of 190 stocks. Points from other purchases buy fractional shares of Vanguard Total World Stock ETF, which carries a low 0.09% expense ratio.
- Mobile friendly: Stash was originally launched as a mobile-only platform. Although it now offers web-based account management, the desktop experience isn’t as full-featured as the mobile app is. For smartphone-savvy investors, this may be a plus.
- Customizable portfolio: While Stash doesn’t build you a custom portfolio like many robo-advisors, there’s also more freedom and flexibility to what you can do with your investments. Stash recommends investments that fit your financial goals and you can build your own portfolio from there.
- Round-Ups: If you link a bank account to your investment account, Stash allows you to enable Round-Ups, which round up purchases (on that bank account) to the nearest dollar and transfer the change to your Stash account. Once your savings hit $5 or more, Stash deposits the change into your personal investment account cash balance.
- 529 college savings: Wealthfront allows you to open a 529 college savings account, which is rare among the robo-advisories. (Fees are slightly higher for 529 accounts as compared with other Wealthfront accounts because these plans include an administrative fee.)
- Wealthfront Cash Account: Wealthfront offers a high-interest cash account paying 2.57% APY with no fees, unlimited transfers and FDIC insurance up to $1 million.
- Portfolio Line of Credit: Once you reach $25,000 in your individual, trust or joint investment account at Wealthfront, you have access to a line of credit at 4.75% to 6% interest. There’s no credit check or credit score impact, and you can borrow up to 30% of your account.
- PassivePlus investing: This is Wealthfront’s term for their rules-based investment strategies, which aim to maximize client investments using tax-loss harvesting. At higher asset levels ($100,000+), the company offers stock-level tax-loss harvesting and risk parity. At $500,000 and up, the strategy includes Smart Beta, which weights the stocks in your portfolio more intelligently.
On the surface, Stash and Wealthfront look similar in terms of fees.
Stash charges 0.25% annually for advisory services, with a $1 minimum per month for taxable accounts and a $2 minimum per month for retirement accounts. It is that minimum that creates a potential issue, however, as $1 a month on a small total value will be a larger management fee percentage than 0.25%. This problem goes away as you portfolio grows, of course, and Stash is fee competitive at those higher levels. For $9 a month, Stash clients can also open UGMA or UTMA accounts for custodial savings. To have a Stash debit card, you must sign up for a Stash plan for at least $1 a month. Stash clients are charged no trading fees but you will incur fees charged by ETFs after purchase, and the ETF list includes several securities with high expense ratios. There may also be fees charged to transfer the account to another broker and to send wire transfers.
Wealthfront has a single plan that charges an annual advisory fee of 0.25%. There are no fees assessed for cash balances, and services like stock-level tax-loss harvesting and the Smart Beta program are added in based on asset levels with no additional fee. The ETFs that make up most of Wealthfront’s portfolios have annual management fees of 0.08%. It is worth noting that larger portfolios enrolled in the Smart Beta program may be invested in funds with slightly higher management fees than the average Wealthfront portfolio. Overall, Wealthfront has the edge over Stash in terms of fees mainly because it avoids an account minimum, but it also offers a wider range of portfolio management for that fee.
Stash lets investors get started for much less than Wealthfront. The low minimum deposit of $5 is again aimed at bringing young investors into the market. Wealthfront’s $500 minimum is still reasonable, but it may be a barrier to investors just starting out.
- Stash: $5
- Wealthfront: $500
Getting started at Stash involves answering questions about risk tolerance, life status, net worth, and other income data. Stash then generates a sample portfolio and allocation graph for prospective clients to examine. You must pick one of six specific themes that include “Emerging international up and comers” and “Companies with a conscience.” However, choosing a theme may limit your investment choices due to thematic filtering. You can reject the list of curated investments and choose among limited alternatives, but the system may push back if it feels the changes aren’t the best idea.
Stash builds your portfolio from a pool of 190 S&P components and 58 ETFs. Although dividend reinvestment is mandatory for retirement accounts, it’s not available for individual taxable accounts, which is an odd omission. Stash also doesn’t rebalance your portfolio, although Stash Coach may alert you if your portfolio should be more diversified.
Getting started with a Wealthfront account is also very simple. You link a checking account and answer some questions about financial goals, risk tolerance and time horizon to generate a suggested portfolio. While you can see the exact portfolio you’d be funding. Wealthfront made updates in May 2021 allowing customers to customize their portfolios further. Investors can now add and remove specific ETFs, build a portfolio from vetted ETFs, and choose investment themes. Customers with more than $100,000 in their accounts can choose a stock portfolio rather than a portfolio of ETFs.
Wealthfront portfolios are built out of ETFs and mutual funds from Vanguard, Schwab, iShares and State Street. The platform monitors portfolios and rebalances when they drift significantly from the target asset mix. Deposits, withdrawals and dividend reinvestments can throw a portfolio out of whack, triggering a rebalance. If a customer changes their risk score, Wealthfront’s algorithm will transition the asset allocation to match the new score, but it can take some time. The company’s goal is to minimize short term capital gains and avoid wash sales.
Robo-advisors often use strategies, such as tax-loss harvesting, to help investors avoid excessive taxes. Tax-loss harvesting is the selling of securities at a loss to offset a capital gains tax liability. Wealthfront has a clear edge here as Stash doesn’t offer tax-loss harvesting. At Wealthfront, tax-loss harvesting is available for all taxable accounts; an ETF showing a loss may be swapped out for a similar ETF in order to reduce your tax bill. Accounts over $100,000 may take advantage of stock-level tax-loss harvesting.
Both Stash and Wealthfront have sufficient security, providing 256-bit SSL encryption on their websites. Stash holds client funds at Apex Clearing, providing access to Securities Investor Protection Corporation (SIPC) insurance and excess insurance. Wealthfront is a member of the Securities Investor Protection Corporation (SIPC) and client accounts are protected up to a maximum of $500,000. The site actually has an article on why SIPC insurance doesn’t protect investors in the way they think it does, but the company still holds the coverage – likely because they have faced too much client friction on the matter. Wealthfront’s trades are cleared at RBC Correspondent Services, a Canadian company that focuses on wealth management and financial advisors rather than clearing firms that serve broker/dealers with very active traders.
Neither Stash nor Wealthfront offer human advice on your portfolio, so the customer service is limited to support type questions.
At Stash, an email address and phone number are provided at the bottom of most web pages and the FAQ. Several phone calls during market hours achieved contact with a representative within two minutes. There is no live chat available.
Wealthfront also offers no online chat capability on the website or mobile apps. The “Contact us” page takes current and prospective clients to an email contact form, but a phone number is only available once you’ve logged into your account. Phone calls provide access to technical support if needed. Clients can also pose a support question on Twitter, and most were answered relatively quickly, although one query took more than a week to get a response.
When it comes down to a category-by-category comparison, Wealthfront has Stash beat in nearly every way. Wealthfront features rich goal-setting and planning tools, a high-interest cash account, the option of 529 savings, and tax-loss harvesting to boot. The minimum investment is reasonable ($500), and client portfolios are built on investments from giants like Vanguard and Schwab. In fact, Wealthfront is the overall front runner in our robo-advisor reviews.
By comparison, Stash just doesn't offer as much guidance as you’d get from another robo-advisor and the service is lacking in key areas. The platform doesn’t offer tax-loss harvesting or rebalancing, and the “game” interface may annoy investors looking for a more straightforward investing platform. With all that said, Stash still deserves recognition for the innovative Stock-Back fractional share purchase through debit transactions. Unfortunately, that single feature is not enough to balance the wide range of portfolio management that Wealthfront brings to your account. For the average investor, choosing between Stash and Wealthfront is a quick and easy decision in favor of Wealthfront.
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Every robo-advisor we reviewed was asked to fill out a 50-point survey about their platform that we used in our evaluation. Many of the robo-advisors also provided us with in-person demonstrations of their platforms.
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