Wealthfront vs. Robinhood

Many people believe the world of investing is an exclusive club, and that only the rich profit off stock market trading. However, online platforms Wealthfront and Robinhood are out to change that. Both promise to create opportunities for a new range of investors, but each takes its own approach to wealth management. . Wealthfront, a robo-advisor, is focused on offering tools that help you reach your financial goals. Meanwhile, Robinhood, an online investment broker, puts you right into basic stock trading with little to no fees. But to understand which platform is right for you, we need to unpack what makes each service unique.

A financial advisor can provide insights into a range of financial strategies, including which trading platform is best for your portfolio.

Overview of Wealthfront vs. Robinhood

Robinhood is designed for low-fuss, no-fee trading. For many, its highlights are its few costs, easy-to-navigate design and cryptocurrency trading option.

Wealthfront offers a more comprehensive range of options for investment, including retirement accounts like IRAs and 401(k)s.

However, Wealthfront’s service does not come at the same “no-cost” level as Robinhood. Still, Wealthfront’s fees are minimal compared to other robo-advisors. It also provides access to extra features, such as automated financial advisement, personalized portfolios optimized with research-based software, and fully mobile financial planning.

Wealthfront vs. Robinhood: Fees

Robinhood stands with other trading platforms like Interactive Brokers and TD Ameritrade in its low-cost business model. However, it takes it a step further by being 100% fee-free (excluding its Robinhood Gold account). So, with Robinhood, you can expect no account minimum, no maintenance fees, no inactivity fees, no trading fees, no transfer fees and no overdraft fees. On top of that, there are no annual fees since all trades are commission-free. However, Robinhood receives payment for order flow from market makers.

As mentioned, there is the Robinhood Gold account which is the site’s premium membership. You can have a 30-day trial of such an account. After that, it costs $5 per month (or an annual $50 payment) but you’ll now earn 4% APY on your money that isn’t invested at any given time. If you can buy margin on your Gold account, which requires a $2,000 minimum, it will charge you interest when you spend over your available cash amount. If you invest on margin, you’ll pay 4.7-5.75% yearly interest on the amount you use over $1,000 since your first $1,000 of margin used is included in Gold.

In contrast, Wealthfront basic membership does come with some user fees; however, it’s competitively priced compared to other robo-advisors. The account minimums are $500 for investment accounts and $1 for cash accounts. Wealthfront charges an annual advisory fee of 0.25% on said investment accounts, one of the few costs. The two main other fees you’ll experience with Wealthfront are the embedded ETF and mutual fund expense ratios, as well as the 529 accounts. The 529 plan’s fee ranges from 0.39% to 0.45% annually.

Like Robinhood, though, Wealthfront does not have any trading commission or fees for transfers or withdrawals. The website also does not charge for financial planning services.

How Robinhood and Wealthfront Compare

	Robinhood	Wealthfront
REGULAR ACCOUNT MINIMUM	$0	$500
ANNUAL FEE	0%	$0.25%
TRADING FEE	None	None
TRANSFER FEE	No ($100 ACAT transfers)	No
MAINTENANCE/MANAGEMENT	No	0.25%
INACTIVITY FEE	No	No
PREMIUM ACCOUNT FEE	$5/month	N/A

Wealthfront vs. Robinhood: Services and Features

Wealthfront and Robinhood both allow users to build a portfolio; but Wealthfront favors a hands-off approach. It follows MPT (Modern Portfolio Theory) and uses complex algorithms to design and manage a portfolio that maximizes returns while minimizing risks.

Robinhood is more hands-on, and more straightforward. Its primary purpose is to facilitate easy investments. You can trade commission-free stock, options, and ETFs. However, Robinhood only supports brokerage accounts, but Wealthfront provides high-interest cash accounts, general long-term investing, retirement investing like IRAs and 529 plans for college savings.

Robinhood also offers itsGold membership for a nominal fee. It comes with access to Level II market data, investment recommendations, and instant transfer. However, Wealthfront contrasts that with free automated financial planning through its program, Path, as well as the PassivePlus feature. The Path presents data based on your financial situation and projects how to reach retirement goals, whereas PassivePlus delivers investment strategies like tax-loss harvesting and risk parity.

Many recent users have sought out Robinhood for its easy cryptocurrency trading rather than its stock investment experience.

Wealthfront vs. Robinhood: Online and Mobile Experience

Robinhood was the first in the industry to put out a mobile trading app. This, along with its low cost, drew new traders to it. But, like the platform’s overall design, the actual app is sometimes considered too simple. It makes trading easy but risky, which has led to criticism that Robinhood “gamified” trading. This can fool beginner investors into believing that there’s not much research involved in stocks, not to mention the problem of the indirect costs of order flow payment.

The lack of bells and whistles might appeal to an experienced trader, but the few trading tools and features can also drive them away. It lacks industry-standard custom stock price alerts and has minimal trading tools for either fundamental or technical analysis.

In comparison, Wealthfront carries over many features onto its mobile experience, including its Path tool and user-friendly experience You can find Wealthfront’s app under “Wealthfront: Save and Invest on the both Apple and Google Play stores.

Who Should Use Wealthfront?

Wealthfront and Robinhood have similar missions: to open up trading to a broader range of people. However, that doesn’t mean each platform offers the same experience. Wealthfront offers a more well-rounded experience but a hands-off approach that may limit advanced investors. Its financial planning and portfolio optimization tools make it a nice introductory platform for novices, that is if the $500 account minimum is affordable for them.

Who Should Use Robinhood?

Robinhood is best for those who want a streamlined experience. It might be better suited to those trading in cryptocurrency than stocks, however. That is because the platform’s “gamified” approach masks some of the risks involved. The chief of the brokerage, Vlad Tenev, had to attend a congressional hearing, during which he was criticized for both his app’s design and for placing trading restrictions on Gamestop shares.

How to Decide Between Wealthfront and Robinhood

Both Wealthfront and Robinhood make investing more accessible, but they appeal to different types of investors. The right choice depends on your financial goals, risk tolerance, and how much involvement you want in managing your portfolio.

You might choose Wealthfront if you prefer a hands-off, automated approach to long-term investing. Its robo-advisor builds and manages a personalized portfolio for you, making it a good fit if you’re focused on goals like retirement, buying a home, or building wealth gradually.
You might choose Robinhood if you want to actively trade stocks, ETFs, options, or cryptocurrencies on your own. Its commission-free trades and simple app are designed for investors who enjoy making their own investment decisions and moving quickly.

Here are some questions to help you decide:

Do you prefer to set a strategy and let the platform handle everything for you? (Wealthfront)
Do you enjoy researching and selecting individual stocks or crypto? (Robinhood)
Are you focused on long-term goals like retirement or saving for a large purchase over time? (Wealthfront)
Are you interested in short-term trading or learning by experimenting in the market? (Robinhood)
Do you value planning tools and automated features like tax-loss harvesting? (Wealthfront)
Do you want the ability to buy and sell quickly whenever you choose? (Robinhood)

Both platforms can play a role depending on your needs, and some investors even use both, one for long-term, automated savings and the other for more active trading.

Bottom Line

Investing is a complex process that involves both the investor and the brokerage they use. More active investors may find that a clean and simple layout like Robinhood offers suits them. Alternatively, those who want to sit back and watch their money grow may prefer an application like Wealthfront. Both platforms offer services at minimal costs compared to their competitors, making them appealing to new investors.

Tips for Investing

Consider working with a financial advisor to get help with your entire investing strategy. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
One of the most important ways to ensure that you don’t take on an excessive amount of overly volatile or highly risky investments is with a proper asset allocation. A free easy-to-use asset allocation calculator can help you keep your portfolio properly balanced.
Wealthfront might be more your speed, but not the right robo-advisor for you. If that’s the case, read up our in-depth brokerage reviews on Betterment and Fidelity Go. You might find the platform that suits your needs.