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Investing money is becoming more and more important in this dynamic age of inflation and unpredictability. Luckily, investing is no longer a privilege available only to those with enough skill or a high starting capital.
Robo-advisors like Wealthfront now provide a service that can automate your investing journey and for a price that’s much, much lower than what traditional financial advisors cost. Fidelity Go is on the same page when it comes to providing a no-hassle investing service, but with a unique perk – free assets.
The robo-advisor industry is always coming up with new innovative solutions and gadgets, but the most important question is and always will be – Can robo advisors make you money?
This article is here to answer just that and explain how these two robos, Wealthfront and Fidelity Go, can help your finances without taking much of your time and energy. Let’s see what perks these two have to offer, and more importantly – Which one is best for you.
|Annual Fees||0.25% Annually||0.35% for IRAs (expense ratios included) 0.39% for taxable accounts (expense ratios included)|
|Provision of 401(k) Assistance||No||No|
|Ideal For||Beginning investors, Intermediate investors, Young investors, Smartphone users, IRA investors, and Goal-oriented investor||Beginner investors, Goal-oriented investors, Investors looking for human guidance, IRA investors, Smartphone users, Users of other Fidelity services|
|Promotions||$5,000 in assets managed for free||None|
Since its humble beginning in 2014, Wealthfront has grown to become one of the most well-known robo-advisory providers in the US. The company currently holds more than $20 billion in assets under management, making it one of the biggest players in the robo-advisory world. Wealthfront’s fully digital, fully automated investing experience and its good track record have made the company very popular, especially among millennial investors.
Fidelity Investment Inc. is one of the biggest financial management companies in the US with about $3 trillion in assets under management. Fidelity offers a full spectrum of financial services through its subsidiaries including a brokerage, bank, insurance, etc.
One of the latest additions to the Fidelity family is Fidelity Go, a robo-advisory service with an interesting pricing model. Namely, the price ratios of index funds are included in the annual management fee, which means that portfolios aren’t burdened with the prices of their assets.
Before a robo-advisor starts trading for you, it needs a plan that caters to your financial aspirations. Luckily, you don’t have to know anything about investing to set up a plan like this. Robo-advisor platforms are designed to make investment strategies based on your financial situation and goals, so anyone can set up a plan like this.
|Account Types||Wealthfront||Fidelity Go|
As soon as you sign up with Wealthfront, the platform will run you through its financial planning system called “Path”. First, you need to complete a questionnaire that will provide Path with information like your age, income, expenses, etc. The questionnaire is very thorough and you can even input important financial events like a sabbatical into the equation.
After you’ve answered all the questions, the platform will crunch the numbers and give you a projection of how your portfolio will look in the future. If this projection doesn’t do justice to your financial goals, you can tweak your information until you get the desired prediction. To change your portfolio’s performance, you can increase or lower the risk tolerance at any time.
The platform’s predictions are based on the current prices and the state of the markets. For example, if you’re saving up for college, Path will check the prices on reputable third-party websites to give you a good idea of how much college will cost in the future.
Once all this is set up, your money will be invested automatically. You can set up multiple financial goals and they will be held separately on the same account. Also, you can link your banking and other external accounts to Wealthfront which gives you a wholesome view of all your finances.
If your portfolio isn’t growing as quickly as planned, the platform will alert you and offer multiple solutions. Maybe you’ll need to transfer money from a long-term goal like retirement to a more immediate one like buying a car. Whatever the case may be, Wealthfront will notify you and offer a solution, so there’s no need to think and worry too much.
Welthfront’s robo-advisory is fully digital and offers no human assistance. However, every part of the investing experience is very easy to understand and get used to, so it’s unlikely you’ll need someone to coach and guide you. If this robo-advisor seems like a good fit for you thus far, check out our full Wealthfront review to see why this service is so popular among the millennial audience.
Setting up an account with Fidelity Go is a very straightforward process. You only need to answer 5 important questions giving the platform information like your age, annual income, etc.
After that, the platform will show you a suggested portfolio which you can tweak by increasing or lowering your risk tolerance. Once you get a growth prediction you like, you have to link your account to a bank account through which the portfolio will be funded.
As you make changes to your portfolio, the platform will show you all the expenses you’ll have to worry about in detail, which is always helpful. You’ll also be advised to set up automatic regular deposits from your bank, so as to make your investing process as hands-free as possible.
However, there’s no option to transfer assets from other accounts or brokerages and you can only fund Fidelity Go with cash.
Unlike Wealthfront, Fidelity Go only allows you to track a single financial goal but you can always open multiple accounts to invest in more than one objective. When you set up a goal, the platform will estimate the likelihood of reaching it and offer suggestions on how you can make your success more probable.
You don’t need to be a customer to use these planning and prediction tools. The financial planning tools & investment guidance on Fidelity’s website are available for non-users as long as they open a guest account. The planning system can take certain milestones into account like getting married, having a baby, getting divorced, starting a business, as well as many other common financial events.
The robo-advisor doesn’t offer banking services, loans, margin investing, etc. However, since it is a part of the Fidelity ecosystem, you can open accounts for other Fidelity services and use them in conjunction with Fidelity Go.
Using the Fidelity Bank to take out loans for your portfolio is a tad more complicated than having all services on one platform, but it’s still a bonus to have all your financial needs met by the same company.
If you want some 1 on 1 time with an advisor, you can upgrade your account to Fidelity’s hybrid-advisor service. This service gives you access to a personal advisor who will help you set up a detailed plan and explain how your money will be invested step by step.
However, Fidelity’s advisors aren’t required to hold CFP or other widely-recognized professional certificates, which is not very reassuring. What’s more, these aren’t dedicated advisors you can call whenever you want, rather they will help you create a portfolio and coach you about what you’re investing in during your 30-minute conversations.
This service incurs extra expenses as well. To get started, you need a portfolio of $25,000 and you’ll have to pay a 0.5% management fee. This brings your expenses to about $50 for every $10,000 invested, which is cheaper than average for this kind of service.
Winner: Fidelity Go. For the most part, Wealthfront and Fidelity Go have very similar planning systems that use a questionnaire. Wealthfront might have a few perks more, but Fidelity Go offers a human advisor to help you with your portfolio. Although it comes at a hefty price, having a financial advisor gives you a more comprehensive planning service.
Very competitive prices are one of the main reasons why passive investors choose to employ a robo-advisor instead of a traditional financial advisor. Both Wealthfront and Fidelity Go are on the cheap side when compared to most robos, but have fundamentally different pricing models. Let’s see what this means and which one is the best bang for the buck.
Aside from the expense ratios of the assets you’re buying, the only fee you need to worry about here is the competitive 0.25% annual management fee. You only need $500 to open an account and start investing, which isn’t the lowest minimum requirement but is very affordable nonetheless. The management fee seems low, but Wealthfront becomes even cheaper once the bonus features kick in.
All accounts start with the “PassivePlus” feature pack which includes basic tax-loss harvesting. This means that Wealthfront will invest your money in a way that will reduce your taxes, which is a common service among robos. Tax-loss harvesting is legally capped at $3,000 per year, but that cost reduction can basically negate the 0.25% management fee in many cases.
Once your portfolio reaches $100,000 you get a few more bonuses, one of which is direct indexing. Instead of buying ETFs and mutual funds that have built-in expenses, Wealthfront will buy individual stocks, making an index just for you. This can save you money by going around the expense ratios of these financial products, so it’s a good thing to have.
Another service that you can enable at the $100,000 mark is risk parity. In theory, this should reduce risks while increasing returns, but the method hasn’t proven effective in all cases. Some customers have accused Wealthfront of underperforming with risk parity, but that shouldn’t be a huge concern since you can easily disable it from the platform’s dashboard.
If your portfolio reaches $500,000, you get access to smart beta. Essentially, Wealthfront’s team of experts will do more research and invest your money with more care if you use this service.
Individually, these services do not do anything mind-blowing, but they can make a sizable difference in the long run by lowering expenses. According to Wealtfront’s data, most portfolios make about 5%-7% returns before tax-loss harvesting kicks in, so the extra cost-reducing services are a good thing to have at your disposal.
If you’re looking for a place to stash your cash, Wealthfront has got you covered. If you’re using Wealthfront’s high-yield cash account, your money will grow at a rate of 0.35% per year. APYs tend to change often, so it’s always a good idea to check the exact number on Wealthfront’s website if you are interested in this offer.
As a client of the robo-advisory, you can take out loans against your portfolio – up to 30% to be exact. Since your portfolio is your guarantee, there’s no need for paperwork or any other complications. This money can be reinvested through Wealthfront, and you’ll need to pay the company a lower-than-average interest rate which is between 2.40% and 3.65%.
Getting started with Fidelity Go is very easy as there is no minimum initial deposit. The only expense you have to worry about is the annual management fee which is 0.35% for tax-advantaged accounts and 0.39% for taxable accounts. This fee is on the expensive side compared to most top robos but it has a unique feature.
Namely, the expense ratios of mutual funds and ETFs in your portfolio are included in the management fee. For all intents and purposes, all expense ratios of your assets are 0 if you’re a Fidelity Go client.
These zero-fee investments aren’t limited to Fidelity’s robo-advisor. The company is well-known in the online investing world for having no commissions on stocks, ETFs, and options. If you’re looking for a discount broker, check out the full Fidelity Investments review to see if this type of self-directed investing suits your preferences.
There is no tax-loss harvesting and you can’t transfer your assets from other platforms to Fidelity Go. The only way to fund your account is through cash, which isn’t great if you have some assets you wish to put under Fidelity’s management.
At least 0.5% of your portfolio must be held as cash at all times and it will earn a 0.1% APY. The 0.1% interest rate is not very inspiring, but Fidelity only requires you to hold a very small part of your portfolio as cash, so it will hardly hurt the growth of your assets noticeably.
The slightly higher-than-average management fee might seem like an unwelcome expense, but the most important factor here is how high the returns you get are. Fidelity Go is a fully-digital service but the clients’ money is invested by Fidelity’s team of experts, and not by an algorithm. So, how much growth can you expect as a user?
The average annual returns during the 2017-2019 period were 6.62% for taxable accounts and 7.57% for IRAs. Although these return rates are impressive, they are not the highest out of all robos. If you want to see how the biggest players in the industry can help you make money, check out the 7 best robo-advisors of 2020 to see if some of them are more suited to take care of your wealth.
Draw. Wealthfront’s pricing scheme is more simple and seems better at first glance. However, Fidelity Go has shown very similar results as far as portfolio growth is concerned, which means its free funds do make up for the higher management fee.
The list of assets you can get through Wealthfront is extensive. The company offers mutual funds, stocks, as well as investments in natural resources, real estate, etc.
Whatever investment category you can think of, Wealthfront likely has an ETF for it. You can get ETFs from 11 different categories and most portfolios are diversified to have 7. The expense ratios of primary ETFs range from 0.04% to 0.14%, which is on the cheap side. Here are some of Wealthfront’s more popular ETFs:
|Asset Class||Primary ETF||Expense Ratio|
|US Govt. Bonds||BND||0.05%|
|Treasury inflation-protected securities||SCHP||0.05%|
Essentially, Wealthront’s offer of investments is great for long-term investing but there is also one more perk. When your portfolio reaches $100,000, you get socially responsible investing. This means that you can choose to buy stocks from a list of “green” companies.
This feature enables you to invest in eco-friendly companies but requires a bit of work on your part since you need to research and select these manually.
Wealthfront has an abundance of profitable ETFs, but it is not the only top robo with this offer. One of the industry’s leaders, Betterment has an arguably more impressive list of financial products, which is one of the reasons why it’s Wealthfront’s biggest competitor.
Check out our Betterment vs Wealthfront comparison to see how the rivalry of the country’s two most popular robo-advisors looks like.
To keep your expenses to a minimum, Fidelity Go uses its own financial products, primarily Fidelity Flex Index Funds. Aside from being free, these index funds cover a very wide range of industries and companies. Here are some of the funds you can get with a taxable account:
|US Large Company Stock||Fidelity® Flex 500 Index Fund (FDFIX)|
|US Medium Company Stock||Fidelity® Flex Mid Cap Index Fund (FLAPX)|
|US Small Company Stock||Fidelity® Flex Small Cap Index Fund (FLXSX)|
|International Stock||Fidelity® Flex International Index Fund (FITFX)|
|Municipal Bonds||Fidelity® Flex Municipal Income Fund (FUENX)|
|Short-Term Bonds||Fidelity® Flex Conservative Income Municipal Bond Fund (FUEMX)|
These funds are free of charge, however, you can’t get anything except Fidelity-managed financial products. What’s more, there’s no socially-responsible investing on Fidelity Go but you can buy fractional shares, which is where Fidelity Go is one up on Wealthfront.
Winner: Wealthfront. Fidelity’s free funds are profitable investments but they are the only assets you can get with this robo-advisor. On the other hand, Wealthfront has an extensive selection of mutual funds and ETFs, as well as socially responsible investing. Simply put, Wealthfront provides more options for the investor, which is an advantage.
The desktop platform has a logical workflow and is easy to use. All the features an investor needs are accessible directly from the main screen of the platform, making it very hard to get lost while looking for the button you want to click on.
The dashboard shows you the current state of your portfolio, its asset allocation, as well as its historical progress in a timeframe of your choosing. All the essential information is right there as soon as you open the platform, so checking your portfolio is near-effortless.
The mobile experience is what this platform was originally designed for. The mobile app has the same functionality as its desktop counterpart but uses less real estate. Despite this lack of space, the workflow is very logical, and using the app isn’t a challenge.
Also, there’s almost no need to type anything. The only times you actually need to type something in is when logging in and while linking an external account to the platform. Everything else is done by swiping and pressing big glowing buttons.
All in all, the mobile app requires minimal effort to use and mirrors the desktop platform’s functionality to the letter.
The browser-based platform is very easy to use and gives you a clear overview of your portfolio and its historical performance. Since a Fidelity Go account can only be dedicated to a single financial goal, you have to set up multiple accounts if you have a more comprehensive plan.
The platform allows you to seamlessly switch between accounts through the main screen, which makes it feel like you have all your goals in the same place.
Your portfolio is displayed as an easy-to-read pie chart and your recent gains/losses are displayed on the dashboard. All features and options are accessible from the main screen which makes managing your portfolio easy as pie (since reading a pie chart isn’t that difficult).
Fidelity Go uses the same app as Fidelity’s brokerage service. To access your Go account, you just have to tap the button which says Fidelity Go, and that’s it. Setting up an account on Fidelity’s website through your phone is easy and straightforward. All in all, the mobile app is easy to use in general and is a solid, bug-free piece of software.
Winner: Wealthfront. Both companies have functional, easy-to-use platforms but Wealthfront’s has more features like account aggregation and the ability to set up multiple financial goals on a single account. You can’t go wrong with Fidelity’s app, but Wealthfront’s software is more feature-rich.
Wealthfront doesn’t have a live chat service but it has very quick and helpful phone and email support. The phone service can be reached 5 days a week from 7 a.m. through 5 p.m. PT and the usual waiting time is 2 minutes.
We sent an email to Wealthfront asking some basic questions about the company’s features. The response arrived in 3 hours, which is a fantastic time for an email service. The answer to our inquiry was informative and included links to relevant information, which was very helpful. Here’s the email agent’s response:
Wealthfront’s customer support agents are licensed professionals who can help with all kinds of questions and problems in a relatively short amount of time. You can also get help via Wealthfront’s Twitter, but that takes much longer than the two aforementioned methods.
Fidelity Go has a good customer service that you can reach via phone and live chat. The phone service is available from 7 a.m. to 12 p.m. EST from Monday through Friday and from 8 a.m. to 10 p.m. during the weekends. The representatives are very competent and professional, and the average waiting time is around 4-5 minutes.
The live chat is available 24/7 and accessible through Fidelity’s website and platform. We sent a simple inquiry to the live chat representatives, who responded almost immediately.
The response wasn’t as useful as we’d hoped because the agent just redirected us to another branch of Fidelity’s customer service. Here’s our little chat:
Winner: Fidelity GO. Wealthfront’s customer service deserves praise, but it can’t help you if you need it during the weekend. Fidelity’s agents might be a bit slower all-around but can provide professional assistance 7 days a week, which is important for a company that’s holding your life savings.
Wealthfront has a very good track record when it comes to user security. The platform employs 256-bit encryption and two-factor authentication which is the industry standard and is considered very safe.
All clients are insured for up to $500,000 by the Securities Investor Protection Corporation (SIPC). Also, Wealthfront is regulated by the Financial Industry Regulatory Authority (FINRA), which is one of the main financial regulatory institutions in the country. Wealthfront Cash clients are protected up to $1 million by the Federal Deposit Insurance Corporation (FDIC) in case their money is somehow lost.
Fidelity Go has the same industry-standard level of security as most other robo-advisors. This includes two-step login authentication, fraud detection, money transfer lockdown, and government-level encryption.
All cash you hold with Fidelity is insured by the FDIC for up to $250,000 and your other assets are insured up to $500,000 by the SIPC. Keep in mind that this insurance only stands in case the company goes bankrupt, breaks its terms of agreement, or mismanages your funds in a major way. If your assets lose value due to a drop in market value, it is considered as your personal loss and won’t be refunded.
Winner: Wealthfront. Both companies have the same industry-standard encryption and account security, which is considered very safe. However, Wealthfront’s accounts are protected with more money by the FDIC, which gives it a slight advantage over Fidelity Go.
Only for oversight, no direct human management available
Only for oversight, no direct human management available
In most regards, these two robo-advisors are similar. However, there are a few crucial differences. Wealthfront is a strong option if you’re looking for a straightforward, fully-digital investing experience that will require very little effort on your part. Clients have access to a plethora of investments as well as socially-responsible investing, which is a very important feature to some.
Fidelity Go has limitations when it comes to investment types but it is part of the Fidelity ecosystem which offers almost all financial services you can think of including banking, insurance, and self-directed investing. You can also upgrade your account and get an actual human advisor to coach you and help set up a solid plan for your future.
These two have different pricing systems but have thus far provided clients with good returns on average. Whichever service you choose, setting up an account is a breeze and you can fully automate your investing journey.
Is Fidelity Go a Roth IRA?
Fidelity Go has a limited number of accounts for retirement investors. Clients can open a traditional IRA, Roth IRA, as well as rollover IRAs. What’s more, Fidelity’s free funds can help with reducing costs and tax expenses for investors.
Can Wealthfront Manage My 401(k)?
The answer is – No. Wealthfront can not manage your 401(k) account with your current employer. However, you can rollover 401(k), 403(b), TSP, 457, and other employer-sponsored retirement plans to a Wealthfront IRA account.