Wealthfront vs Fidelity, TD Ameritrade, Etrade, Charles Schwab, Ally, and Vanguard



Wealthfront vs TD Ameritrade, Charles Schwab, Fidelity, and Vanguard: Chart


Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
TD Ameritrade
Ally Invest
Charles Schwab
Etrade
Fidelity
Vanguard
Wealthfront


Wealthfront vs Fidelity and Others


Wealthfront is a smooth front-end for investing for someone who doesn't want to pick individual stocks, ETF's and mutual funds. Wealthfront accounts can be set up as retirement (traditional and Roth IRAs) as well as non-retirement and trusts.

Wealthfront's main competitor, M1 Finance, offers a lot of the same features, though M1 Finance is absolutely FREE.

Fidelity Investments and Vanguard are known for their own families of mutual funds and ETFs. But through these brokers clients can also buy and sell stocks, exchange traded funds, options, bonds, and other investments.

TD Ameritrade, Etrade, Charles Schwab, and Ally Invest are the household names, the largest discount brokerage houses in the U.S. The companies are very popular among all investors - from beginners to institutions.


Pricing

Cost structure at Wealthfront and its competitors is very different. Wealthfront charges an annual management fee of 0.25% of your account balance. It is prorated across the entire year and is charged at the end of each calendar quarter (every three months).

All the Wealthfront's competitors in this review charge on "per-trade" basis, which means that the client pays a small commission for each investment transaction. If a client did not make any transactions (also called "trades") during a year, then there are no expenses on his or her account unless they invest in mutual funds or ETFs: all of them have annual expenses which could be found in fund's prospectus.

The lowest priced brokerage in this review, Ally Invest, charges $3.95-$4.95 per stock or ETF trade. Others have rates ranging from $4.95 to $20 per stock or ETF trade (Vanguard's rate is $7 to $20 and it depends on account balance).

For transaction-fee, no-load mutual funds Ally Invest charges rock-bottom $9.95 per transaction. Other companies have much higher rates: from $20 to $76 for the same trades.


Services

TD Ameritrade offers its customers easy access to an online user community, where investors can see what other, more advanced users invest in or trade, create and follow other member's blogs, and interact with like-minded individuals.

Charles Schwab and Ally Invest are the best ranking firms in customer service. Fidelity Investments and TD Ameritrade also got very high scores in this category.

All the companies in this review (except Vanguard and Wealthfront) created easy-to-use, powerful trading tools that will satisfy most clients. But only TD Ameritrade also offers a professional trading platform that is crucial for active traders as well as for forex and futures trading.

Because Ally Invest and TD Ameritrade created well-designed, intuitive trading screens, offer access to large network of local offices, and provide award-winning customer service, in 2018 we rated them the Best Entry Level Brokers.

All firms in this article (except Vanguard and Wealthfront) do not charge IRA accounts (ROTH, Traditional, self-employed) setup and custodial fees (sometimes also called annual or maintenance fees). Some of these companies don't even charge for closing IRA accounts. There is, however, a fee if you decide to move your IRA or non-IRA account to a different firm.


Recommendations

Wealthfront is a good company for investors that want easy and hands-free way to start investing. Its capabilities, however, are very limited.

Ally Invest is the best priced company among the large brokerage houses. It attracts cost-conscious customers that want the lowest pricing. We also recommend it to beginner investors and for IRA accounts.

For customers who want to have free of charge professional level trading tools that hedge funds are using, TD Ameritrade is the way to go. The broker is also great for mutual funds investors as well as for long-term investors.

Fidelity Investments and Vanguard brokerage are natural choices for anyone interested in investing in these firm's own mutual funds and ETFs.

Etrade is great for Treasuries, corporate and municipal bonds investors.


New Account Offers

Ally Invest: Up to $3,500 cash bonus + commission free trades for new accounts.

TD Ameritrade: Trade free for 60 days + get up to $600.

Etrade: At E*TRADE, get $6.95 trades + 65₵ per options contract.

Charles Schwab: Make $100,000 deposit and get 500 commission-free online equity and options trades.








Wealthfront


Wealthfront offers a variety of different options when it comes to investing accounts, but one of its best set of options is its IRA group. Wealthfront offers three types of IRA’s which are a traditional IRA, a Roth IRA, and a SEP IRA or Simplified Employee Pension IRA. While all three are nuanced in the individuals that can use them, each offers significant benefits that only Wealthfront can bring you.


Setting Up Your Account


Setting up your Wealthfront account is incredibly simple. Just create an account, verify your identity, and within a short amount of time you can be adding dollars to your account.

Wealthfront occupies a different niche than your standard bank as it has no physical locations, thus reducing cost in overhead. Wealthfront also uses sophisticated algorithms to make all of the investment decisions meaning that trades are done faster, simpler, and with more benefit to their clients.

Wealthfront makes setting up your IRA incredibly easy with just a few short questions. Whether you are starting your IRA from scratch or you are transferring thousands of dollars from an existing account, Wealthfront makes the process hassle-free.

You’ll begin by selecting a type of IRA to invest with. Not sure what type of IRA will work best for you? Don’t worry. Wealthfront has easy to read and understand articles that make selecting an account easy. Their help center offers in-depth analysis of each different IRA class and offers recommendations of what would fit your situation best.

Once you’ve selected what type of IRA account you want to open, it’s as simple as adding money to your account and watching the results over time.


The Good


There are many reasons to love Wealthfront’s IRA accounts. The firm makes investing for your retirement easy. Wealthfront does all the work for you.

Once your initial deposit has been added to your IRA account, you can quite literally set it and forget it. Wealthfront will rebalance your account, reinvest dividends, and much much more so that you get the most out of your money.

Wealthfront also makes setting up recurring deposits incredibly simple. Just click the “add funds” button on the account dashboard and within seconds you can set up a weekly, biweekly, monthly, and even quarterly recurring deposit. This deposit will be automatically deducted from the bank account you choose and added to your IRA on the determined day.

Worried that Wealthfront’s investing strategies won’t line up with your risk tolerance? Not to fear as Wealthfront allows you to take a risk assessment for free and at anytime to determine whether your portfolio’s risk should be changed. Folks with higher risk scores can expect higher returns, with the knowledge that those returns could just as easily be gobbled up by the market.





Younger account holders will likely prefer a riskier portfolio with higher exposure to emerging markets and other higher return assets, while account holders nearing retirement age will aim for a more conservative portfolio aimed at wealth preservation. Wealthfront offers both, along with everything in between.

Wealthfront manages your first $10,000 free across all account types, but even after you cross this threshold, the fees Wealthfront charges are a fraction of traditional advisors. There are absolutely no commissions on trades with Wealthfront, no matter how many are made from your account. Better yet, Wealthfront charges only a 0.25% per year management fee once your account exceeds $10,000. With traditional advisors charging nearly twelve times this amount, Wealthfront is saving you huge amounts over time. On an account valued at $100,000, that’s the difference between Wealthfront charging $225, and the traditional advisor charging $3000. The savings is huge, especially when it comes to your IRA account.

Now you’re probably wondering what sort of return you can expect from Wealthfront’s IRA’s. The answer, much like the rest of Wealthfront, is simple. You can expect at least what the best advisors are returning. An account opened in May of 2016 is up just over 8%. This is about 2% better than the S&P 500 over the same span.





Last, but certainly not least, Wealthfront allows you to increase the amount they will manage for free. For every person you refer that opens and funds an account, Wealthfront will manage an extra $5000 absolutely free.


The Bad


There really aren’t a whole lot of negative things to say about Wealthfront’s IRA’s. The biggest knock is that they are not easy on the small account holder. Wealthfront requires a minimum deposit of $500 to open an account and a minimum deposit of $100 to set up a recurring deposit. For the account holder that doesn’t have the upfront cash to get started right away, this can be a deal breaker.


Wealthfront IRA Review Conclusion


Wealthfront is easy and simple way to save for retirement. However, it has limited functionality and will appeal only to clients who want a hands-free approach to investing.


Updated on 3/17/2018.