How Wealthfront is FDIC-insured without being a bank. SIPC insurance is quite irrelevant when it comes to asset protection. However, I've had the unfair advantage of having unfettered access to the people, the internal operations and the numbers before making my own decision to join the company. No insurance will protect against the normal volatility of investment markets. Your email address will not be published. Wealthfront safety and security. If you're looking for a safe place to park your cash, Wealthfront has got you covered. This puts Wealthfront cash clients at a distinct advantage when compared to clients who use traditional brick and mortar bank accounts, since Wealthfront clients will not need to visit four different banks in person to access their money. It is safe to say that currently, Wealthfront has one main competitor that challenges it for the number 1 place among automated investment management firms and that is Betterment. This information should not be construed as professional advice. There are still some risks depending on the way the economy is moving. That means that your money is safe. Wealthfront pays more than 20 times that national average. If you’re primarily worried about your personal data remaining secure, you can’t go wrong with either account type. The SEC governs the securities industry and enforces its rules and regulations as well disciplines companies convicted of fraud and other offenses. Wealthfront uses a myriad of security and insurance protections to ensure that your personal data and assets are secure. The short answer is yes, you can trust Wealthfront. This is the same fee as Betterment and in line with other robo providers. The savings account as far as I know is really just a "cash account" with a high interest rate. They do not store account passwords on Wealthfront servers, and they don’t share your data. That said, some larger investment brokers, like Charles Schwab provide added insurance through Lloyds of London above the $500,000 amount. Wealthfront is a simple way to make your money work to reach your investment and savings goals. Wealthfront is appropriate for various types of accounts and investment. Unlike Wealthfront's other accounts, the Cash Account doesn't hold investments. Knowing there are many others with skin in the game is a comforting answer to the questions, “Is Wealthfront safe?” and “Is Wealthfront legit?” Safety in numbers may not be the best way to choose an investment option, but for some, knowing that the brand is well known and recognizable in the robo-advising world may instill confidence. The pros of using Wealthfront Wealthfront's Cash Account is FDIC insured, so in that sense, they're as safe as any other bank. *This article contains affiliate links to help pay for this website. Product Name: Wealthfront Price: $500 minimum balance with % fee, depending on the balance Rating: 7.8 out of 10 Verdict: Now, I am not saying that growing your money from this program is 100% guaranteed. That said, please note that you can lose funds when trading in financial assets. And, most importantly, should you use it? Wealthfront also works with SEC and FINRA, other securities regulators, to protect assets. Wealthfront isn’t the only option for high interest. All investors need to understand that investments go up and down in value, despite the fact that over the long term stock market returns have been about 9%. Wealthfront is always looking to improve their products. Looking for a passive investment strategy. Is Wealthfront Safe and Legitimate? Creating unique and secure passwords is a pain, but just like fastening your seatbelt it’s critical for your safety. Wealthfront does all of this with a feature that it calls Self-Driving Money. The interest rate offered is higher than most traditional banks. Now, if you aren’t confident with automated investments, you can always invest on your own. Yes – bank-level security through a third-party provider; information is not shared. No – there is always a risk that investment portfolios will decrease in value through no fault of the investor or the investment manager (robo-advisor or otherwise). The Wealthfront Cash Account offers high interest checking. Is Wealthfront Safe? This includes downloading malware preventive software and turning on your computer’s firewall. The average interest rate on savings accounts nationwide is only 0.09%, according to the FDIC. They also use RBC Correspondent Services for clearing trades and IRA Services Trust Company for IRA accounts. Wealthfront uses military-grade encryption to keep your information safe. Are you worried about insurance, if your account value surpasses $500,000, since SIPC only covers up to that amount? You don’t need to worry about losing your money in the unlikely event that Wealthfront goes out of business. The cash account offers a competitive yield and is covered by up to $1 million in FDIC insurance. Wealthfront charges an annual fee of 0.25 percent for their investment accounts. Linking does not allow Wealthfront to manage or transfer assets in your linked account. Similarly, cash accounts are protected by FDIC insurance. Because Wealthfront uses numerous banks, your account has total coverage of up to $1 million on cash deposits. Market Realist is a registered trademark. People may receive compensation for some links to products and services on this website. Which is More Secure: Wealthfront Investing or Wealthfront Cash Account? When we put Wealthfront head-to-head with big-bank robos, such as Fidelity Go, we found independently-owned Wealthfront really held its own. Make regular updates and use two-factor authentication to prevent your information from being stolen. Wealthfront is the best choice for those looking for hustle-free investment, those who want to get everything taken care of. From employing third-party, bank-grade security to keep your data secure, to using both FDIC and SIPC insurance to protect you from losses due to broker-dealer failure or sudden closure, Wealthfront has clearly thought of everything. Wealthfront is a robo advisor that claims to "make more money on all your money, with no effort from you." Wealthfront is an online broker. Wealthfront is a robo-advisor firm that specializes in software-driven passive investing.