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You should always pay attention to commissions and prices for financial products, but this is more important now than ever. One final reminder: Wealthfront , an advisor robot known for its low fees and passive investing options, will soon start charging all new users a 0.25% advisory fee and will automatically enroll wealthy investors into a new fund with a 0.50% commission …
Effective April 1, Wealthfront will end its free management advisory services for the first $ 10,000 investment and will charge new investors a 0.25% management fee annually, regardless of their account size. “Any existing customer who currently enjoys the $ 10,000 free management will continue to receive this benefit for life,” a Wealthfront spokeswoman wrote in an email. According to the website, it does not charge a ” fee for opening an account, a fee for withdrawals or closing an account , the commission for trade / commission or fee for translation account “.
With that in mind, this might be a good opportunity to test other options. Robos is another less expensive bet if you’re a novice investor, but you still have to compare fees: thankfully, the other Robo also charges 0.25 percent, although that still puts two at the low end of the fee scale, per NerdWallet . WealthSimple is a robot that charges nothing from the first $ 5,000 managed for one year. He then charges 0.5 percent up to $ 100,000 and then charges 0.40 percent. The Ellevest robot , created by former Bank of America CEO Sally Kravchek, charges 0.25 percent on the first $ 50,000 in assets under management.
As I wrote here , you can also try to reproduce the asset allocation of the robot for yourself for free as they are usually published on company websites.
Wired was the first to write about the change in the company’s fees, but noted only a 0.50 percent fee attached to the company’s new Risk Parity fund for high net worth investors. According to the company’s website, investors with a taxable investment account balance of at least US $ 100,000 can invest in a fund with an expense ratio of 0.50 percent.
When asked about the article and the new investment fees, the spokeswoman said she was “not sure where some of the information from this article came from.” She noted that the risk parity fund is part of Wealthfront PassivePlus’s investment features, which you can read about here and here . Basically, a risk parity fund “seeks to more sensibly balance your portfolio’s risk budget by exposing your portfolio to more risk for asset classes with higher risk – adjusted returns .”
You should be wary of actively managed funds, but again, investors need a taxable $ 100,000 account balance to invest. One note: A spokeswoman noted that Wealthfront will automatically put 20 percent of your assets in a risk parity fund if you put in $ 100,000, “so there will be no work on your part unless you tell us otherwise.” In other words, you need to opt out of participating in the fund.
So: if you are a Wealthfront investor, remember to change your commission structure and stick to passive investing . But be aware that fees are still low compared to similar products for investors with lower account balances.