Making the right investment choices can be challenging for beginners. Even more complicated are the fees and taxes that can diminish seemingly good returns. You could hire a financial expert for guidance, or you might opt for a digital tool to assist you.
Wealthfront, a startup that has been at the forefront of the robo-advisor movement, is launching a complimentary service that claims to analyze your current investment portfolio to identify unnecessary fees and potential savings. It will also offer strategies to minimize tax burdens and enhance diversification.
Since its inception four years ago, Wealthfront has examined thousands of portfolios. CEO Adam Nash notes that “Ninety-two percent of the portfolios reviewed faced issues related to high fees, excessive cash holdings, and inadequate diversification.”
The new tool isn’t limited to existing Wealthfront clients; it aims to attract those who have yet to engage with its services. Investors can link their current brokerage accounts to the tool for a portfolio assessment. If they find the insights appealing, they can choose to transfer their assets to Wealthfront.
Platforms like Wealthfront and its competitor Betterment are targeting younger investors who are accustomed to using online services for various aspects of their lives, from shopping to dating. Selecting investments through a digital interface may feel more intuitive than speaking with a traditional financial advisor. However, competition is increasing, as established firms like Charles Schwab enter the robo-advisor space, turning the investment landscape into an active battleground for consumer financial management.