Wealthfront vs. Schwab

From robo-advisors to mutual funds, there are many investment options for your portfolio, but first, you need to find the right trading platform.. Wealthfront and Schwab are two of the leading trading platforms today, with each specializing in slightly different services. They are both strong choices when you want a proven, reliable trading platform to manage your investments and grow your earnings. If you are looking to expand your financial accounts, this is what to consider when choosing between Wealthfront vs. Schwab.

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Overview of Wealthfront and Schwab

When comparing Wealthfront vs. Charles Schwab, you will immediately notice that they are two very different companies with separate approaches to investing.

Wealthfront was started in Palo Alto, California in 2008 by Andy Rachleff and Dan Carroll. It is a robo-advisor that has won multiple awards over the years. It provides automated investing and curated portfolios that involve a lot of mutual fund options, as well as a high-interest-rate savings account.

Schwab, on the other hand, is a large, multinational financial services company that was founded in 1971. It offers full-service wealth management for individual investors, independent advisors and employers. Where Wealthfront is the new kid on the block that focuses on a specific investing niche, Schwab is one of the world’s largest discount brokerages and also owns another big-name full-service brokerage, TD Ameritrade.

Wealthfront vs. Schwab: Fees

Considering the many differences between Wealthfront vs. Schwab, it should come as no surprise that their fees are also vastly different.

Wealthfront charges a flat annual fee of 0.25%. That means if your account holds $70,000, you’re paying $178.32 for the service.

Schwab is a little more complicated but still affordable. In fact, you can open a Schwab account and pay next to nothing if you just stick to listed securities and skip advisory services. For a non-broker-assisted online trade, there is $0 online commission for listed stocks and ETFs, a $6.95 fee for OTC stocks, a $0.65 fee per options contract and $2.25 per futures contract.

That is just a start. If you add more services, that can impact how much you pay, as well as what investment choices you make.

Wealthfront vs. Schwab: Features and Services

Wealthfront’s core service is its robo-advisor. Consistently ranked as one of the best robo-advisors for investors, Wealthfront features automated investing designed to diversify and balance your portfolio based on the market.

Along with your investment portfolio, you can add 529 college savings plans and retirement plans. On top of that, they offer a high-interest savings account and portfolio lines of credit, where you can borrow up to 30% of your portfolio.

Schwab has their own version of a robo-advisor called Schwab Intelligent Portfolios. There is a basic plan that is free and only requires an account minimum of $5,000. Schwab also offers a Premium plan requiring a $25,000 minimum and is $30 a month with a one-time $300 setup fee.

However, Schwab’s robo-advisor is not its only draw. It also offers investors the flexibility to choose where you invest, ask a human advisor questions and access high-quality educational content. Schwab truly is a full-service brokerage offering banking, money management and financial advisory services across the board.

Wealthfront vs. Schwab: User Experience

Wealthfront and Charles Schwab both offer polished digital platforms, but the experience is built around different types of investors. Wealthfront emphasizes automation and simplicity, while Schwab provides a broader set of tools for investors who want more control over trading, research and account management.

Wealthfront’s interface is designed to make portfolio management relatively hands-off. Investors can choose an automated portfolio based on their goals and risk tolerance, customize allocations and then let Wealthfront handle tasks such as rebalancing, dividend reinvestment and, for eligible taxable accounts, tax-loss harvesting. Users can also link outside accounts to track their broader net worth from the platform.

Schwab offers a more expansive investing experience. Its website and mobile app provide trading tools, customizable watchlists, interactive charts, investment research, market news and access to stocks, ETFs, mutual funds and options. Investors can also manage banking and brokerage accounts, transfer money, deposit checks and connect with customer support through the app.

The greater range of Schwab features may appeal to investors who prefer researching investments and making their own trading decisions, but it also means there is more to navigate. Active traders can additionally use Schwab’s thinkorswim platform for more advanced trading and analytical tools. Schwab also maintains more than 400 branches and offers 24/7 U.S.-based customer support, providing options for investors who want assistance beyond a digital interface.

Wealthfront may feel more streamlined for investors who primarily want automated portfolio management and do not need extensive trading tools. Schwab, meanwhile, offers a wider range of features for investors who want to research securities, place their own trades and manage multiple aspects of their finances from the same platform.

Wealthfront vs. Schwab: Account Types and Minimums

Jars with an increasing amount of coins, and plants sprouting from them.

When comparing Wealthfront vs. Schwab, it is important to review the types of accounts each platform supports and the requirements for getting started.

Wealthfront is designed primarily for long-term investing through its robo-advisor. It supports individual and joint taxable brokerage accounts and trusts, as well as several different types of individual retirement accounts (IRAs), including traditional IRAs, Roth IRAs and SEP IRAs. In addition, it allows 401(k) rollovers, so you can move employer-sponsored retirement funds into a Wealthfront-managed IRA. Wealthfront also stands out by offering 529 college savings plans, which many competitors lack. To open an investment account, Wealthfront requires a minimum deposit of $500, making it fairly accessible for new investors.

Charles Schwab, by contrast, supports a much broader array of accounts. Alongside individual and joint taxable accounts and standard IRAs, Schwab offers custodial accounts for minors, small business retirement plans (like 401(k)s, SEP and SIMPLE IRAs) and even specialized accounts, such as mutual funds, options, futures, bonds, certificates of deposit (CDs) and fixed income investments.

Schwab also supports 401(k) rollovers and employer-sponsored plans through its retirement services division. The account minimums vary, however. You can open a basic brokerage account with no minimum deposit, while robo-advisor services like Schwab Intelligent Portfolios require a $5,000 minimum. If you want to use Schwab Intelligent Portfolios Premium, the bar is higher at $25,000, plus a one-time $300 planning fee and $30 monthly ongoing cost.

For investors who want a low barrier to entry, Wealthfront’s $500 minimum is straightforward, making the service accessible to new investors and those with little money to invest. Schwab, however, provides a wider range of account types and services, making it appealing to families, business owners and high-net-worth investors who want more flexibility.

Wealthfront vs. Schwab: Controversies

Both Wealthfront and Schwab have had their run-ins with the SEC.

In 2018, Wealthfront was fined $250,000 for making false claims regarding a tax-loss harvesting strategy it offers its clients. Wealthfront failed to manage the accounts properly, and at least 31% of participants faced penalties due to the mismanagement.

That is a small change compared to the ruling Schwab faced this year. A court ordered Schwab to pay $187 million for failure to disclose fund allocations and misleading users of Schwab Intelligent Portfolios.

Who Is Wealthfront Best For?

Wealthfront can be the right investment tool for those digital natives who need to build savings and grow wealth but do not have the time or knowledge for trading. Wealthfront gives you the simplicity to choose a curated portfolio you like without option paralysis. Its straightforward annual fee and high-rate savings account can make building wealth easier.

Who Is Schwab Best For?

Schwab can be the right brokerage for those who want options and flexibility. With Schwab, you can use a robo-advisor and also invest on your own. Ultimately, you are in charge of where you put your money. The fees for investing are low, and you have plenty of educational resources on hand.

Bottom Line

An investor comparing Wealthfront vs. Schwab.

Wealthfront and Schwab can both work well for long-term investors, but they are designed for different preferences. Wealthfront focuses on automated portfolio management, tax-efficient features and a streamlined digital experience, while Schwab offers a broader range of investments, research tools, trading platforms and in-person support. The better fit depends on whether you want a largely hands-off investing experience or more control over how you build and manage your portfolio.

Tips for Investing

A financial advisor can offer valuable insight and guidance as you evaluate various investing platforms. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with 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.
If you decide to invest on your own, it pays to know what you’re doing. SmartAsset has you covered there as well. For example, check out our free investment calculator.