Wealthfront vs Ally Invest

Ally Invest vs Wealthfront (2022)


Wealthfront vs Ally Invest for online investing. Compare cost, brokerage fees, IRA accounts, and differences. Which firm is better?


Wealthfront vs Ally Invest vs Betterment: Overview


Three financial companies that provide investment advice for a fee are Wealthfront, Betterment, and Ally Invest. There are some important differences among these three brokers. Let's take a detailed look at them and evaluate their pros and cons.


Wealthfront


A somewhat known company company in the world of brokerage firms is Wealthfront. Established in 2008, it has been attracting customers who desire portfolio management at very low cost. In fact, this company has taken human advisors out of the equation altogether and replaced them with sophisticated computer programs that manage and trade client accounts. By using on-line questionnaires and mathematical formulas, the broker is able to keep costs at low levels.


Wealthfront vs Ally


The broker offers traditional securities accounts along with IRAs, trusts, 401(k) accounts, and education savings plans. There is a minimum deposit requirement of $500 to open a Wealthfront account. All account types are managed in the same automatic way.

The annual fee for the company's automated portfolio management is only 0.25%. This is much lower than the traditional average of 1.00%. To entice new customers, the broker manages the first $10,000 free of charge. The asset-based management fee is charged at the end of each month, based on a monthly rate. Traditionally, brokers have charged a decreasing management fee, giving larger accounts a discount. Wealthfront is unusual in charging a flat percentage.

Everything in life comes at a price, and the cost of such a low advisory fee is that Wealthfront only invests in ETFs. If you want to buy a specific mutual fund or stock, you will not be able to do it here. The exchange-traded funds the broker invests in have low expense ratios—just 0.12% on average.


Betterment


Another robo-advisor came on the scene just two years after Wealthfront. Betterment also has cancelled the human financial advisors, trusting in the ability of a computer program. Various account types are available, including regular brokerage accounts, workplace 401(k) plans, and trusts. The firm requires a nominal $10 to open an account, significantly lower than Wealthfront's requirement. There are no low-balance fees or IRA charges. A Betterment app can be used on Apple and Android devices to track account balances and more.


Ally vs Wealthfront


Betterment also charges a management fee of 0.25% per year. Account fees at Betterment are applied quarterly. Customers with $2,000,000 or more invested with Betterment do not pay management fee.

The firm offers an in-person financial consultation with a human advisor for clients who have $500,000 or more in total balances across all accounts. The broker's only office is in New York. Betterment also offers a tax loss harvesting system where ETFs that have generated a capital loss at the end of a tax year are sold to offset capital gains on other investments. This application can help reduce customers' April tax burden.


Betterment Promotion


Up to a whole year managed for free with this promotion.

Open Betterment Account

Ally Invest


Like the first two brokerage firms in our study, Ally Invest gives new clients a questionnaire when they open a new account. Unlike the other firms, however, Ally Invest uses the old fashioned method of relying on human advisors to make trading decisions. In order to keep costs down, Ally Invest invests solely in low-cost ETFs. All Ally Invest accounts, including managed and self-directed accounts, can be accessed with a single log-in.


Ally vs wealthfront


Several accounts can be professionally managed by Ally Invest, including IRAs (Roth, Traditional, SIMPLE, SEP, and Beneficiary formats are available), a Coverdell education account, trusts, and custodial accounts. A new account can be opened with as little as $500.

The management fee is a flat 0%. Considering that the broker uses human advisors, this is incredible. Customers who are willing to pay 0.50% per year receive a service called Risk Assist. Under this plan, the firm will monitor the securities markets and sell stock ETFs and purchase bond ETFs if there is a significant decline in equity prices.


Ally Invest Promotion


Up to $3,000 cash bonus + $0 commission trades.

Open Ally Invest Account


Final Thoughts


The best deal is with Ally Invest that offers investing in stocks and ETFs completely free.

Updated on 5/2/2022.


About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.