We have a pioneer in digital investment management in Wealthfront going against a pioneering online brokerage in E*TRADE. E*TRADE was one of the first online brokerages and rose to prominence in the 1990s but only entered the digital investment advisory space in 2016. Wealthfront launched as a digital investment advisor originally and has been in the space since its beginning in 2008. E*TRADE Core Portfolios has taken a simpler and straightforward approach that allows customers to self-guide through a basic goal and risk profiling section to create a self-running portfolio that will automatically rebalance, allow for changes, and invest in socially conscious funds. Wealthfront, which won our award for best robo-advisor, is also a self-directed and automated program, but its Path software is designed to electronically provide a full investment advisor type of experience that includes the ability to see a much more complete financial picture through account aggregation. We will take a deeper look at these contrasting styles to see which is a better fit for you.
On Wednesday, January 26, 2022, Wealthfront announced that it has agreed to be acquired by one of the premier brands in wealth management, UBS, in a transaction valued at $1.4 billion. In a blog post on the company's website, David Fortunato, Wealthfront’s chief executive officer, said, "You will see no change to your experience and can look forward to benefiting from UBS’s breadth of products, services, and intellectual capital. Rest assured that nothing will change with your account or the cost of our service. We will continue delivering great products and features to you, now at a much faster pace. And you’ll get access to even more research and insights that can empower you as an investor."
- Account Minimum: $500
- Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers.
- Uses sophisticated questionnaires to closely replicate a full financial advisor experience.
- Has superior goal setting and monitoring tools.
- Uses a fully integrative approach that includes aggregation of accounts and built-in checking.
- Provides access to cryptocurrencies as well as core, socially responsible, and smart beta options, in addition to tax-loss harvesting and customizable portfolios (for accounts over $100,000).
- Account Minimum: $500
- Fee: 0.30%
- Very easy to set up and fund an account, and the questionnaire and portfolio selection, and investment process can be done quickly.
- Goal planning and tracking is weak, with limited ability to plan for multiple goals or financial milestones.
- Both online and mobile offerings are well designed and offer the same experience and functionality on either platform.
- Lacking features such as account aggregation, tax-lot planning, and cryptocurrencies.
Account setup at both E*TRADE Core Portfolios and Wealthfront is straightforward and simple to do, with both brokers requiring a minimum investment of $500 to fund a digitally managed portfolio. E*TRADE Core Portfolios allows anyone to run multiple scenarios and view potential portfolios without any type of registration. Moreover, investment advisors are available during the day to assist customers with establishing an account, although the focus of this assistance is getting up and running instead of true investment advice. E*TRADE’s focus on ease of use allows investors to run through the questionnaire and portfolio selection process very quickly—existing E*TRADE customers could have a Core Portfolios account created in minutes with a transfer from an existing account.
The account setup and portfolio creation process at Wealthfront is just as easy, but requires the establishment of an account by entering a name, email, and phone number. You don’t have to fund an account in order to set one up. Once an account has been established, you go through a preliminary questionnaire that gathers information such as your overall portfolio goal and standard questions about age, income, net worth, and risk tolerance. This initial questionnaire, along with the choosing between classic, socially responsible, or direct indexing (available for accounts with $100,000 or more) leads to your portfolio recommendation. The portfolio will be funded once the account is linked to a bank account and the account balance reaches $500 or more. Once a bank account has been linked to the Wealthfront account the user gains access to Path, a comprehensive digital financial planning tool.
With Wealthfront, the process is certainly more involved, but not overly so, as it’s still account setup, portfolio selection, and account funding. The pay off for the longer process at Wealthfront is access to Path, which goes far beyond E*TRADE’s Core Portfolio offering but is addressed later in our matchup. There is also additional work for you if you decide to sync multiple accounts with Wealthfront to maximize the Path financial planning software.
Overall, we give E*TRADE an edge in account setup, primarily because you don’t have to sign up and open an account to take the profile questionnaires and see potential portfolios.
Goal planning tools on E*TRADE’s Core Portfolios are lacking, seemingly because they have made a conscious decision to have a streamlined digital investment management platform. As such, Core Portfolios only has a handful of drop down questions and there is no ability to customize for individual investors. In addition, Core Portfolios accounts can only be set up for one goal and the questionnaire’s longest time horizon is just 11 years.
Wealthfront, in contrast, won our category for best goal planning in the digital investment advisory space because they provide an opportunity to aggregate accounts so you can see a full picture of your wealth, finances, and goals. Further, Wealthfront’s automated financial advisor program, Path, is a sophisticated tool that replicates a human financial advisor, asking you multiple questions about various life goals. Path is equipped to answer more than 10,000 questions, such as how much you can spend on a house in a particular city, how early you can retire, and other potential goals such as paying for a child’s education or a wedding. Path then helps track the progress of the goals with charts and graphs to show the cost of overall goals. This summary information changes as the relevant variables change, and Path also has the ability to project the impact of inflation, projected income changes, and market performance will have. This allows Path to build a financial plan that outlines required savings to meet all your financial goals.
When it comes to goal planning, Wealthfront offers much more than E*TRADE’s Core Portfolios.
E*TRADE Core Portfolios allows customers to set up automated recurring deposits with an amount that is easy to increase or decrease. While margin is not available, borrowing against the portfolio is supported at rates ranging between 1.87% for accounts with more than $10 million to 4.912% for accounts with less than $65,000. Moreover, individual holdings from other E*TRADE accounts cannot be included in Core Portfolio accounts. E*TRADE charges termination fees of $75 for full withdrawal and $25 for partial withdrawals (the fee for partial transfers is waived for accounts with more than $5,000 in assets); these fees do not apply when transferring funds to other E*TRADE accounts.
Wealthfront also allows for automated deposits and borrowing up to 30% of the portfolio’s value at more competitive interest rates ranging between 2.4% and 3.65%. Wealthfront does not charge fees for transfers and allows portfolio assets to be transferred to a separate cash management account. For accounts with $100,000 or more, individual securities and ETFs can be incorporated into the automated portfolio.
Overall, Wealthfront gets the slight edge with account services because they don’t charge termination fees, and their lending rates are lower for accounts with less than $500,000.
While E*TRADE Core Portfolios offers checking account and credit card services, these are handled outside of the robo account so transfers from the Core Portfolio would be required. Cash in the Core Portfolios account, typically allocated as 1% of the portfolio, will be swept into a money market account currently paying 0.05% interest, until there is a portfolio rebalancing.
Cash services are also supported at Wealthfront, although they do not offer a credit card. Wealthfront’s cash management offers check writing, a debit card, mobile based deposits, and bill payments, and is easy to move money into from your investment account. The cash management account currently pays 0.10% interest.
Overall, we give Wealthfront a slight edge over Core Portfolios for cash management because of the higher interest rate.
Wealthfront has an edge over E*TRADE because they offer more investment vehicles including real estate investment trusts (REITs) and cryptocurrency funds, as well as flexibility for customers to customize their portfolio.
|E*TRADE Core Portfolios||Wealthfront|
|Individual Stocks||No||Yes (for accounts $100K and over)|
|Fixed Income||Yes, but limited to municipal bond ETFs for tax efficiency||Yes (via ETFs)|
|Socially Responsible or ESG Options||Yes||Yes|
|Crypto||No||Yes (via cryptocurrency funds, and not individual coins)|
Both E*TRADE’s Core Portfolios and Wealthfront offer commonly used accounts, but only Wealthfront offers trust and 529 plan accounts under their digital investment advisory.
Wealthfront account types:
- Individual taxable accounts
- Joint taxable accounts
- Custodial accounts
- Traditional individual retirement accounts (IRAs)
- Roth IRA accounts
- Simplified employee pension (SEP) IRA accounts (for the self-employed and small businesses)
- Rollover IRA
- Trust accounts
- 529 Plan Accounts
E*TRADE Core Portfolios account types:
- Individual taxable accounts
- Joint taxable accounts
- Custodial accounts
- Traditional IRA accounts
- Roth IRA accounts
- SEP IRA accounts
- Rollover IRA
Wealthfront has the edge in this category because it offers digitally managed accounts for trusts and 529 plans.
E*TRADE Core Portfolios does not offer customization of portfolios beyond the ability to choose between core, socially responsible, and smart beta ETFs. Wealthfront also has those features, but smart beta portfolios require a $500,000 balance. Wealthfront allows customers with account balances of at least $100,000 to customize their portfolio by adding or removing individual equities and ETFs in the portfolio. Having the ability to add a stock or two to the investment portfolio is helpful, but Wealthfront discourages making changes to its portfolio models. In a more general sense, investors considering digital investment management are looking to have the company manage the chosen portfolio, so significant customization defeats that purpose.
While both Core Portfolios and Wealthfront offer core and socially responsible investment options, E*TRADE provides smart beta accounts for all their Core Portfolios customers and Wealthfront has a $500,000 minimum account size for smart beta. However, we still give Wealthfront an edge in the portfolio customization category because they do provide portfolio customization, while E*TRADE does not support customization in Core Portfolio accounts.
Both Wealthfront and E*TRADE Core Portfolios follow modern portfolio theory in their portfolio construction. At Core Portfolios, rebalancing is an automated process performed if the portfolio allocations drift by 10%, or semi-annually. Rebalancing at Wealthfront is performed when deposits or withdrawals are made, or if the asset allocation deviates significantly from its target. Wealthfront also looks for tax-loss harvesting opportunities as it rebalances your portfolio, giving it another bump up on Core Portfolios’ approach.
Another difference between these digital investment advisors is that E*TRADE Core Portfolio accounts do not support aggregating information from external sources, while Wealthfront does offer account syncing. The external data is used by Wealthfront’s Path to allow you to see multiple goals and progress across all of your financial holdings. While this isn’t specific portfolio management in terms of your Wealthfront holdings, this view is incredibly valuable in nudging you to monitor and adjust external holdings as part of the overall Wealthfront offering.
We give Wealthfront an edge for portfolio management due to the comprehensive view of all your holdings through Path and tax-loss harvesting.
As mentioned, one main contrast between platforms is that Wealthfront offers tax-loss harvesting, while E*TRADE does not. For taxable accounts, Wealthfront claims that tax harvesting, available to all investors, offsets the 0.25% account management fee. Moreover, other Wealthfront accounts can be linked to your investment account, including the account of a spouse, to maximize tax-loss harvesting opportunities further. Wealthfront is the clear winner for tax advantaged investing.
|Key Portfolio Management Features|
|Automatic Rebalancing||Semi-annually, or when the target allocation deviates by 10% or more.||When cash is transferred into or out of the account, or when percentage allocations deviate from their goal.|
|Reporting Features||Online portfolio monitoring and monthly statements.||Tax and monthly statements are available on the website.|
|External Account Syncing/Consolidation||No||Yes|
Both E*TRADE and Wealthfront provide two-factor authorization and biometric authentication on mobile phones. Wealthfront limits the access of its staff to customer data, and investment accounts are covered with up to $500,000 in Securities Investor Protection Corporation (SIPC) insurance that covers up to $250,000 in cash. E*TRADE offers additional protection to SIPC through a Morgan Stanley excess of SIPC coverage. Neither broker had any data breaches in the past four years.
Overall, we give E*TRADE Core Portfolios a small edge because of their excess SIPC coverage, but your investments are safe at either company.
Both E*TRADE Core Portfolios and Wealthfront have intuitive and easy to use desktop platforms. On Wealthfront, the platform menu has links for Invest, Cash, Borrow, and Blog, which allows customers to quickly and easily find account information, as well as available research, support, and contacts. Wealthfront tries to update aggregated information each day, but there are sometimes delays with this that are somewhat common for other brokers consolidating information from various external accounts.
E*TRADE’s Core Portfolios platform has uncluttered pages that are succinctly presented, and going through the questionnaire process and portfolio review before opening an account was fast. A frequently asked section from the primary window provides useful educational content and helpful information for new investors.
Overall, the desktop experience was too close to call between the E*TRADE Core Portfolios and Wealthfront.
Mobile App Experience
Again, both Wealthfront and E*TRADE Core Portfolios have good websites that largely replicate the desktop experience. E*TRADE’s mobile app is our top rated robo-advisor mobile app. In addition, E*TRADE’s mobile app makes transferring funds into or out of Core Portfolio accounts easy, as is transferring money from Core Portfolios to other E*TRADE accounts, such as checking or bill pay. Wealthfront’s mobile app is also well rated and is easy to use with functionality very similar to its desktop version.
Overall, we give E*TRADE a slight edge in mobile platforms, but both are very good.
Customer service is another key point of differentiation between E*TRADE Core Portfolios and Wealthfront. Wealthfront leans more heavily on digital support to the minimization of human touch, while E*TRADE can leverage a wider network of human support. Overall, Core Portfolios has better customer service than Wealthfront because it is easier to get people on the phone to help and the service provides access to financial advisors during the day. Whether this matters depends largely on how you prefer to access help.
|Phone contact available||Yes; available 24/7, and with an investment advisor during the day.||Yes, but it is difficult to access a human by phone. Email questions are encouraged before calling.Yes, but it is difficult to access a human by phone. Email questions are encouraged before calling.|
|Pre-funding phone consultation with certified advisor||No|| No
|Online chat available||Yes/No - Human or bot? For existing or prospective clients, or both.||No|
|Website FAQ sectionWebsite FAQ section||Yes, there is a comprehensive FAQ sectionYes, there is a comprehensive FAQ section||Yes, the help center and FAQ sections are comprehensiveYes, the help center and FAQ sections are comprehensive|
Wealthfront’s fees are 0.25% on assets under management (AUM), while E*TRADE’s Core Portfolios charges 0.30% AUM. Neither company offers tiered management fees. Core Portfolios’ expense ratios are slightly lower than Wealthfront’s, but Wealthfront doesn't charge termination fees. Further, all taxable accounts at Wealthfront benefit from tax harvesting that Wealthfront says makes up for the 0.25% management.
Overall, Wealthfront does better than E*TRADE’s Core Portfolios on fees because the management fee is lower, they don’t charge termination fees, they have low expense ratios (even if slightly higher than E*TRADE’s), and they offer tax harvesting that offsets management fees in taxable accounts.
Wealthfront is clearly a better digital investment advisor, but E*TRADE’s approach also has its place. Account setup is slightly easier at E*TRADE Core Portfolios and the customer support is stronger than Wealthfront. Beyond that, however, Wealthfront’s management fee of 0.25% is 5 basis points lower than Core Portfolios and it provides customization, access to cryptocurrencies (via cryptocurrency funds), and tax-loss harvesting. More importantly, Path is an incredibly powerful tool that helps you far beyond your Wealthfront portfolio when you sync up your accounts. Wealthfront is our top robo-advisor for goals and planning because of Path and its realistic projections that take into account inflation and cost of living in different areas.
E*TRADE Core Portfolios will still appeal to existing customers and others that want to quickly and easily add a reasonably low-cost managed portfolio to their overall investment strategy. That said, it lacks features compared to many of its competitors and will likely not be the first choice for people who aren’t current E*TRADE customers. Wealthfront, on the other hand, provides an experience closer to what you would get with a full service investment advisor and is either leading or competitive in every category that should matter to people seeking out a digital investment manager.
Our mission at Investopedia is to provide investors with reviews and ratings of robo-advisors that are comprehensive and unbiased. Our team of researchers and expert writers, led by senior editor Michael Sacchitello, spent months evaluating all aspects of a robo-advisor’s platform, including the account setup process, goal planning tools, account service options, portfolio construction offerings, portfolio management, mobile and desktop user experience, educational content, fees, and security. As part of this evaluation, we extract critical data points that are weighted by our quantitative model that produces a powerful star-scoring system.
With the individual investor in mind, we’ve designed a comprehensive ranking methodology to find the best overall robo-advisors and the best robo-advisors across nine key categories. Each advisor is then scored across multiple variables to rate performance in every applicable category. The score for the overall award is a weighted average of the categories.
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