Wealthfront vs. Charles Schwab Intelligent Portfolios
Important
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, alleviated an concerns on the part of current and prospective customers by stating, « 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. »
Wealthfront and Schwab Intelligent Portfolios are distinct enough to make the choice rather easy regarding which is best for you. If you don’t have the $5,000 minimum required by Schwab, then Wealthfront’s $500 is more attainable. Both offer some level of portfolio customization, and the Intelligent Portfolios income fund is a find for those seeking cash flow. Knowledgeable Wealthfront users might want to put their own stamp on the portfolio by adding additional exchange-traded funds (ETFs). Wealthier investors might lean toward Schwab’s Intelligent Portfolio Premium with Certified Financial Planner access and low subscription pricing. For those looking for access to more traditional support, the 24/7 customer service and branch access available at Schwab is also enticing. We will cover all the different features of both digital investment advisors to help you decide which is best for you.
Wealthfront has agreed to be acquired by UBS during the second quarter of 2022.
- Account Minimum: $500
- Fees: 0.25% for most accounts, no trading commission or fees for withdrawals, minimums, or transfers.
- The extensive customization options including 200+ ETFs and 2 cryptocurrency funds are good for investors looking to tweak their portfolio compositions.
- Wealthfront offers both a high-yield checking and a margin account.
- The Path Digital Financial planner is a best-in-class financial planning tool in the digital investment advisory sphere.
- Wealthfront is best for investors comfortable with an all-digital platform and weekday only phone customer service.
- Minimum Account: $5,000 ($25,000 for Premium)
- Fees: $0, expense ratios range from 0.04%-0.18%, with an average of 0.11%. ($300 setup plus $30 per month for Premium)
- Schwab offers highly diversified portfolios with U.S., Global, and Income choices.
- The 24/7 phone and financial representative customer service is a plus.
- Fee-free investment management is a rare benefit for cost-conscious investors.
- The required cash allocation and high account minimum may deter some investors.
Account Setup
The Wealthfront account setup is quick. Users complete the initial questionnaire which assesses your goals, timeline, and risk level. You can create an account with your name, email, address, phone number, and password. No Social Security number is required to view the suggested Core portfolio, which is a nice benefit. The Core offer includes U.S. and international stock and bond ETFs along with a real estate ETF—another plus not found on some competitors’ platforms. Users can check out alternate portfolio choices before transferring funds into the account.
You will need a $500 investment minimum to begin investing at Wealthfront. The 0.25% management fee of assets under management is near the average digital advisory cost. No financial planners are available at Wealthfront, although the well-trained customer service representatives have a minimum of Series 7 investment license. More sophisticated investors can add to existing portfolios or create a new portfolio from a choice of 200+ ETFs and two Grayscale cryptocurrency funds.
The well-regarded Path digital financial planner, available to clients and the public, enables users to link external accounts and receive high level digital financial planning guidance.
Schwab Intelligent Portfolios guides users through 12 questions spanning your investing goals, timeline, and risk tolerance. Your responses inform a customized investment portfolio containing roughly 12 distinct ETFs and a cash allocation. You must open and fund an account to view the tailored portfolio ETFs. This drawback is partially offset by Schwab’s choice of low-fee, diversified funds for the Intelligent Portfolios.
The barrier to entry is a $5,000 account minimum, steeper than many digital investment managers. Making up for the high account minimum, however, is the fact that Schwab Intelligent Portfolios doesn’t charge an investment management fee. Some investors will take issue with the required 8% to 10% cash allocation within each portfolio as it can contribute to performance drag over time.
The Schwab Intelligent Portfolios interactive tool, based upon investment strategy and risk tolerance level, provides potential best and worst case scenario investment returns. Although the Schwab Intelligent Portfolios doesn’t include investment advisors, you can visit a branch or speak with a well qualified customer service representative for basic guidance.
Onboarding is easy at both platforms. That said, we like the opportunity to view specific ETFs before funding an account at Wealthfront, so it gets the edge in this category.
Goal Planning
Winner of our Best for Goal Planning overall category, Wealthfront is superb for mapping your future plans. Users choose from goals such as large purchases, college planning, and retirement. Your progress is updated automatically on the dashboard. The Path digital financial planner provides the opportunity to try out multiple goal-based scenarios. The tool can answer 10,000+ financial planning questions including “When can I retire?”, “How much should I save for a home down payment?”, and “Can I afford a new car?”. For a large majority of people, the Path digital financial planner is an effective replacement for a financial planner in most situations.
Schwab Intelligent Portfolios goal planning includes choices such as retirement, college, home down payment, long term wealth, and income. Users can access Schwab’s interactive tool to assess how changes in the market, contribution rates, and other factors will impact the likelihood of you achieving your goals. All Schwab clients can access their digital financial planning tool which helps you clarify your goals and create a personalized investment strategy.
Users seeking a digital investment advisor with financial planner access can sign up for the Schwab Intelligent Portfolios Premium product. Clients with $25,000 or more gain access to a Certified Financial Planner on an as-needed basis, along with automated investment management for the subscription pricing of $30 per month and a one time set up fee of $300.
Both Wealthfront and Schwab Intelligent Portfolios offer top notch goal planning and advice options. As mentioned, however, Wealthfront’s Path digital financial planning tool is almost a match for a live financial planner, so we give it an edge here for having comprehensive digital advice within the platform.
Account Types
Most investors will find sufficient account types at either platform. Wealthfront has a high-interest cash account, which requires an additional sign in. Schwab requires a new account for the checking account with a debit card. Other account differences include the 529 college account at Wealthfront and Schwab’s custodial and SIMPLE individual retirement accounts (IRAs).
Wealthfront
Schwab Intelligent Portfolios
- Individual taxable
- Joint taxable
- Traditional IRA
- Roth IRA
- SEP IRA
- SIMPLE IRA
- Revocable Living Trust
- Custodial
The basic account types are available at both Wealthfront and Schwab, so this category is effectively a tie. If you are looking for a 529 plan, choose Wealthfront. Those seeking a custodial account or SIMPLE IRA should select Schwab.
Account Services
After the Wealthfront acquisition by UBS, you’ll likely have access to all of the expected financial products and services available at a major financial firm. Presently, Wealthfront customers have the usual auto deposits along with cash accounts, debit cards, and lending.
Schwab Intelligent Portfolios sticks with investment management without checking, debit cards, or lending products within the robo-advisory product. With a click, Intelligent Portfolios users can sign up for banking, lending, self directed investing, and more on the Schwab platform.
Cash Management
Wealthfront Cash management requires a separate signup. The fee-free, high-yield checking account is available to anyone, whether they have a Wealhtfront investment account or not. Top features include goal-based saving, a fee-free ATM debit card, bill pay, and direct deposit. Wealthfront Borrow provides account holders with at least a $25,000 account value the opportunity to borrow up to 30% of their holdings amount for low interest rates without a credit check.
Schwab Intelligent Portfolios doesn’t offer cash management within the robo-advisory platform, but access to cash management is quite straightforward. Anyone can open a Schwab high yield checking account with debit card, banking, and brokerage services.
At both Wealthfront and Schwab you need to set up separate accounts for cash management. The distinction between the two is that Wealthfront’s cash management is more integrated with their investment services.
Portfolio Construction
| Wealthfront | Schwab Intelligent Portfolios | |
|---|---|---|
| Individual Stocks | Yes – Direct indexing for accounts worth $100,000+ | No |
| Mutual Funds | No | No |
| Fixed Income | Yes – ETFs only | Yes-ETFs only |
| REITs | Yes | Yes |
| Socially Responsible or ESG Options | Yes | No |
| ETFs | Yes | Yes |
| Non-Proprietary ETFs | Yes | Yes – Only a few |
| Mutual Funds | No | No |
| Forex | No | Yes/No |
| Crypto | Yes – 2 Grayscale crypto funds | No |
Portfolio Customization
Wealthfront ramped up their customization features by adding access to 200+ ETFs and 2 Grayscale cryptocurrency funds. Users can add additional ETFs to existing portfolios or create customized new portfolios with their own ETF picks.
Schwab Intelligent Portfolios can change their asset allocation composition by retaking the initial goals and risk questionnaire. You can also exclude up to three ETFs from the portfolio. Users may choose a U.S. domestic portfolio of ETFs or a Global option. The platform also offers an Income portfolio choice for those seeking cash flow from a more conservatively invested account, with greater allocations to cash and fixed income ETFs.
Portfolio Management
Wealthfront monitors portfolios daily and rebalances when investment values deviate significantly from the target weight you agreed upon. Wealthfront rebalances your portfolio whether you’ve customized it or not.
At Wealthfront you can sync outside accounts using the Path digital financial planner. Path is designed to answer 10,000+ financial planning questions and will make recommendations based upon all of your linked accounts. The synched accounts don’t impact your portfolio’s asset allocation recommendations.
Schwab Intelligent Portfolios also monitors your holdings daily and rebalances when needed. Schwab doesn’t enable syncing of outside accounts.
Wealthfront offers more customization options than Schwab, so it has the edge for us when it comes to portfolio management. For a customized portfolio, Schwab users will need to open a brokerage account.
Tax-Advantaged Investing
At both Wealthfront and Schwab, tax-loss harvesting opportunities are monitored daily in taxable accounts. Although at Schwab, only those with $50,000+ in their accounts can opt for tax-loss harvesting while Wealthfront conducts tax-loss harvesting on all taxable accounts. Taxable accounts at each service include municipal bond ETFs.
| Key Portfolio Management Features | ||
|---|---|---|
| Wealthfront | Schwab Intelligent Portfolios | |
| Automatic Rebalancing | Monitored daily – rebalanced as needed. | Monitored daily – rebalanced as needed. |
| Reporting Features | Statements, tax information. Goal progress viewable online. | Statements, tax information. Goal progress viewable online. |
| Tax-Loss Harvesting | Yes | Yes – Available for accounts worth $50,000+. Must opt in. |
| External Account Syncing/Consolidation | Yes – Automatically updated after linking. Used in Path recommendations, not portfolio asset allocation. | No |
Security
Wealthfront and Schwab Intelligent Portfolios enable top-level financial institution-grade security protocols. Both also offer two-factor authentication and the highest level of privacy standards. Cash Accounts at Wealthfront are insured with the Federal Deposit Insurance Corporation (FDIC) while investment accounts carry Securities Investors Protection Corporation (SIPC) insurance on each platform. You can be confident your money is protected with the highest bank-grade security features and insurance protection for institutional failure and bad actors at both Wealthfront and Schwab Intelligent Portfolios.
Users can be comfortable with the security protocols at either digital investment advisor. However, no investment service protects your money from the fluctuations of the financial markets.
User Experience
Desktop
Wealthfront users will find a clean interface and accessible menu. The home screen includes tabs for Invest, Cash, Borrow, and Blog. Other categories within reach include research, support, and contact.
Schwab Intelligent Portfolios offers an easy to navigate tab-based dashboard. Users can view Portfolio, Goal, Performance, Activity, and Settings at the touch of a button. Clients can easily compare their performance to various benchmarks and view goal performance.
Mobile App
Wealthfront’s mobile app is well regarded with a good user experience on both the Android and iOS platforms. The app approximates the functionality of the desktop version. Anyone can link their accounts and use the Path Digital Financial Planner. This is a benefit for portfolio insights and financial analysis.
Schwab doesn’t have a dedicated Intelligent Portfolios app. Schwab is updating its Android app soon to make access to Intelligent Portfolios easier. That said, you can access most of the desktop features on the mobile app. Users will appreciate that customer service is very convenient to access via the app.
Wealthfront’s mobile app surpass the functionality and features of the Schwab mobile app.
Customer Service
| Wealthfront | Schwab Intelligent Portfolios | |
|---|---|---|
| Phone contact available | 7am – 5pm PST week days | Yes – 24/7 |
| Pre-funding phone consultation with certified advisor | No | No |
| Online chat available | No | Yes – 24/7 with customer service representative |
| Website FAQ section | Yes – Comprehensive | Yes – Comprehensive |
Customer service at Schwab is superior to Wealthfront’s. With 24/7 live access options as well as nationwide branches, it’s easier to receive live help at Schwab. Wealthfront’s phone representatives are well-trained, but phone access is somewhat difficult to find on the website. That said, both platforms offer good quality FAQ and search features.
Fees
Wealthfront charges 0.25% of assets managed, regardless of portfolio size. This is a fair price for the platform’s robust features and significantly lower than a typical financial planner. The tradeoff is that users need to be comfortable with limited human hand-holding.
The Schwab Intelligent Portfolio all digital option doesn’t charge any management fees. The uniform pricing for the Schwab Intelligent Portfolios Premium is $30 per month with a one-time $300 setup fee. This is rock bottom for larger accounts but high for accounts between $25,000 and $72,000. A $50,000 account will cost 0.72% of assets under management (AUM). But once your portfolio hits $300,000 the AUM fee is a paltry 0.12%.
| Category | Wealthfront | Schwab Intelligent Portfolios |
| Management fees for $5,000 account | $12.50 | $0.00 |
| Management fees for $25,000 account | $62.50 | $30.00 per month plus $300 setup fee for Premium |
| Management fees for $100,000 account | $250.00 | $30.00 per month plus $300 setup fee for Premium |
| Termination fees | $0.00 | $0.00 |
| Expense ratios | Average 0.08% to 0.11% | 0.04% to 0.18%, with an average of 0.11% |
| Mutual funds | N/A | N/A |
Schwab Intelligent Portfolios is preferred for investors seeking investment management without a management fee. However, Schwab users will need to accept a modest cash allocation and forgo the customization options available at Wealthfront. Both Schwab and Wealthfront use low fee ETFs within their portfolios.
Our Take
Wealthfront is the winner of both our Best Overall and Best for Goal Planning Platforms. This makes Wealthfront a solid choice for any investor comfortable with an all-digital investment service. The UBS acquisition promises to add the additional services that you find at major financial firms like Schwab. Wealthfront is also the choice for those without the $5,000 minimum required by Schwab. The addition of 200+ ETFs for customization, two cryptocurrency funds, and the Path financial planner places Wealthfront among the best robo-advisors available.
While Schwab Intelligent Portfolios is clearly the low fee choice, wealthier investors seeking a combined human and digital platform might lean towards the Schwab Premium offer. Existing Schwab customers as well as those seeking extensive customer service options or an income portfolio might prefer Schwab Intelligent Portfolios. In the final analysis, both platforms are well-regarded, and the choice between the two depends upon the features and services that you are seeking.
FAQ
Can you have multiple Schwab Intelligent portfolios?
Yes, you can open a different Schwab Intelligent Portfolios account for each goal. The goal tracker will monitor your progress towards each goal separately.
Which is better: Wealthfront or Schwab?
Both Wealthfront and Schwab Intelligent Portfolios are well regarded, diversified, and reasonably priced robo-advisors. Schwab doesn’t charge management fees but requires you to hold cash in the portfolio. Wealthfront offers greater customization options and excellent digital financial planning tools at a lower account minimum and competitive fee. It really does depend on what you are looking for. That said, Wealthfront was our overall winner with the caveat that it works best for those who are ready for truly digital investment management.
Methodology
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 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.