At Wealthfront, we’re on a mission to construct a monetary system that favors folks, not establishments. This mission informs each side of how we work together with purchasers, together with how we cost charges for our services and products. Wealthfront’s charges are low, easy, clear, and constant. We’ve charged the identical low, 0.25% annual advisory charge with no minimal charge since our founding 11 years in the past, and we plan to maintain it that approach.
On this publish, we’ll clarify our philosophy on charges. We predict that is vital info for all Wealthfront purchasers to have, and we hope it would even be instructive in eager about your relationship with different monetary establishments.
Wealthfront’s charges are primarily based on long-term alignment of your pursuits and ours
Wealthfront’s method to charges is easy: we earn money with you, not from you. Our selection of enterprise mannequin has all the time been rooted in our need to place our purchasers’ pursuits forward of our personal.
For our Investing accounts, we cost a 0.25% annual advisory charge primarily based on a share of property for a totally automated, customizable, diversified portfolio that helps maximize your risk-adjusted returns and decrease your taxes. We cost primarily based on a share of property fairly than transaction quantity as a result of we need to align our pursuits with yours in constructing long-term wealth. Corporations that cost transaction-based charges, however, are incentivized to encourage folks to commerce continuously which educational analysis persistently finds is prone to harm purchasers’ long-term wealth however assist the corporate’s backside line. Whereas many fintechs and incumbents cost transaction-based charges or hidden charges that permit them to make a fast buck at their purchasers’ expense, Wealthfront takes the alternative method. Wealthfront doesn’t cost any hidden charges, and the charges we do cost are clear and primarily based on the expansion of your wealth over the long run.
We have now charged the identical 0.25% advisory charge (which is a few quarter of what conventional advisors cost) for each Wealthfront Investing account consumer no matter account dimension since we began 11 years in the past. We don’t enhance our advisory charge after we add new options and enhancements, and we don’t penalize purchasers for having a smaller account with us. That is in stark distinction to the frequent charge adjustments, minimal charges, and hidden surcharges (like charges for closing your account and transferring your funds elsewhere, which may be as excessive as $100) you’re prone to discover elsewhere within the business.
For our Money Account, we cost completely no account charges and we go alongside much more curiosity than a lot of our rivals within the type of a excessive APY (which implies our web curiosity margin, which is what we earn on consumer deposits, is relatively low). We’re targeted on incomes your belief, not incomes as a lot as we are able to in your deposits. This permits us to construct a long-term relationship with you so we are able to develop collectively.
Many individuals have requested us how we are able to afford to take such a long-term view. The reply lies in our deal with automation. We run Wealthfront as a expertise firm, not a monetary companies firm. Over half our staff are engineers, and so they take delight in solely constructing services and products that may be totally automated. This method results in an especially low marginal value so as to add new purchasers and only a few human errors. The top result’s a extra pleasant person expertise at a really low value. And since the fee to function the enterprise is so low, we are able to preserve our charges low, too, and deal with the long run.
To ensure that this distinctive method to repay, an organization must have constant income progress over a protracted time frame. Our relentless deal with delighting purchasers builds belief and encourages them to persistently deposit extra money with us as they proceed to avoid wasting. In consequence, our income compounds repeatedly over time and builds a greater enterprise in the long run — a lot in the identical approach our purchasers’ wealth compounds over time and helps them attain their monetary objectives.
Wealthfront’s promise to you
Our long-term focus has enabled us to construct a self-sustaining enterprise by earning money with our purchasers, not from them. Not like others within the business, we don’t have to generate extra income by penalizing smaller accounts, charging hidden charges, or encouraging extreme buying and selling. That might be antithetical to our cause for being, which is to assist our purchasers develop their long-term wealth on their very own phrases. Doing the suitable factor for purchasers is on the coronary heart of what we do. You possibly can all the time depend on us to cost low, easy, clear, and constant charges in an try and go alongside as a lot worth as doable.