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Wealthfront Makes Dash for 75 Million Accounts

By Alex Padalka January 15, 2016

Nine out of ten portfolios in the U.S. are inefficient and Wealthfront is offering to fix them for brokerage customers across the country — for free, Adam Nash, president and CEO of Wealthfront, writes on the company’s blog. The blog pitches directly at retail investors, although advisors may also find the service of interest.

Nash says that after four years of receiving the transfer of thousands of portfolios, Wealthfront found 92% of them suffered from high fees, too much cash or improper diversification — issues that to an “average investor” could lose them hundreds of thousands of dollars over the long-term life of a portfolio.

The company is now offering – for free to clients and non-clients alike – its Portfolio Review service, which performs portfolio analysis and can automate the reshuffling of the portfolio taking into account fees, taxes, cash drag and diversification, according to Nash.

The service is designed to work with most of the country’s brokerages, according to the company, which opens up its potential reach to more than 75 million customers.

For advisors, Wealthfront’s service can review a customer’s portfolio and recommend improvements. For customers, the company has made it easy and tax-efficient to transfer an account or a part of it to Wealthfront.

Wealthfront says its service can detect not only mutual fund costs – which other tools can do – but also product, transaction and advice fees. Its analysis will also estimate the potential benefits of appropriate tax-loss harvesting, review cash allocations across different accounts to ensure there’s no cash drag, and evaluate portfolio diversification based on risk profiles across equity and debt, according to the company.