Wealthfront vs. Acorns: Which Robo-Advisor Should You Choose?
Two top robo-advisors, Wealthfront and Acorns, make investing easy for beginners. We have reviewed over 30 robo-advisor portfolios, and we will help you compare Wealthfront and Acorns with your goals in mind.
SustainFi Updated December 18th, 2021
Some of our posts may contain links from our affiliate partners. However, this does not influence our opinions or ratings. Please read our Terms and Conditions for more information.
At a glance
- Both Acorns and Wealthfront offer good options, so the winner depends on what type of investor you are
- Best for beginners and those struggling to save: Acorns. Acorns is easier to use for beginners and lets you save and invest your spare change
- Best for tax-loss harvesting: Wealthfront. Wealthfront can help you reduce your capital gains taxes and, if you have over $100,000 invested, even exclude stocks you don’t like from your portfolio
Keep reading to learn more.
What is Wealthfront?
Wealthfront is a top robo-advisor with a focus on tax minimization strategies. The investment team is led by Dr. Burton Malkiel, a famous economist and the author of A Random Walk Down Wall Street, an investing best-seller. Wealthfront has over $21 billion in assets under management.
The Palo Alto-based firm was founded in 2008 as Ka-Ching, a mutual fund analysis company, but has long since pivoted to robo-advisory. Today, Wealthfront appears to be pivoting again to allow for more self-directed trading.
As a robo-advisor, Wealthfront is best-known for tax-loss harvesting and customization options.
🔔 Check out the full Wealthfront review.
What is Acorns?
Acorns is a robo-advisor that lets you invest spare change from everyday purchases in diversified portfolios made up of exchange-traded funds (ETFs). The company was launched in 2014 by the father and son duo, Walter and Jeff Cruttenden, to make investing accessible to everyone. Acorns has since expanded to retirement and checking accounts.
The robo-advisor grew its assets under management from $3 billion in 2020 to $4.7 billion in 2021. It has over 9.5 million users.
Acorns is best known for having low minimum balances, letting you save spare change and being beginner-friendly.
Wealthfront vs. Acorns: Account types
Both Acorns and Wealthfront support:
- Individual and joint taxable investment accounts
- Retirement accounts for traditional, SEP, and Roth IRAs, plus rollover IRAs
In addition, Acorns offers custodial accounts (Acorns Early), which let account-holders create UTMA/UGMA accounts for children. Acorns Early is only available if you sign up for the Family Plan.
In contrast, Wealthfront offers 529 college savings accounts and supports trusts. Wealthfront also offers 401(k)s, but it is up to your employer to decide if they want to use them.
💰 The winner: Tie. Both Acorns and Wealthfront offer enough account types to suit most investors. Acorns also has custodial UTMA/UGMA accounts, while Wealthfront offers trusts and 529 college savings accounts.
Wealthfront vs. Acorns: Banking
Both Acorns and Wealthfront can set you up with checking accounts.
Acorns offers checking accounts that come with a metal Visa debit card. The card offers free access to over 55,000 in-network ATMs. Your account is FDIC-insured for up to $250,000 and includes fraud protection, direct deposit and mobile check deposit options. Acorns Earn lets you earn bonus investments when you shop with over 350 brands like Apple, Chewy and Sephora.
Wealthfront also offers a checking account with a Visa debit card. You can set up direct deposits and deposit checks. Plus, you earn a 0.10% annual interest on your cash and get access to 19,000 free ATMs. Your account is FDIC-insured through partner banks.
💰 The winner: Tie. Both Acorns and Wealthfront offer checking accounts with a debit card. Although Wealthfront pays a (low) APY, Acorns will give you access to almost three times as many ATMs and let you earn stock back from retail partners.
Wealthfront vs. Acorns: Minimum investment
Both Acorns and Wealthfront have low minimums compared to working with a human financial advisor, some of whom require $250,000 or more.
Although Acorns has no minimum to open an account, it will start investing your money when you have at least $5 in your account.
The minimum balance to get started with Wealthfront is $500. More sophisticated features, like stock-level tax-loss harvesting, need a $100,000 balance.
💰 The winner: Acorns. A $5 minimum beats the $500 minimum.
Wealthfront vs. Acorns: Management fees
Wealthfront and Acorns have different fee structures. Acorns charges a fixed fee per month, while Wealthfront charges an annual fee of 0.25% of the assets under management. Neither Acorns nor Wealthfront charges any account opening fees.
Acorns has two membership plans that cost $3 or $5 a month. As of September 2021, Acorns Lite ($1/month) is no longer offered. The two plans offered today are:
- Acorns Personal ($3/month), which includes personal investment, retirement, and checking accounts plus a metal debit card
- Acorns Family ($5/month), which includes all the Personal features plus Acorns Early, which offers investment accounts for kids
The fees are competitive for higher account balances. However, $3-$5/month may be expensive if you have very little invested. If you only have $1,000 in your account and sign up for Acorns Family, you are paying 6% each year. (You could argue that it’s still worth it because Acorns helps you save money you would have spent otherwise.)
💰 The winner: It depends. Because Acorns charges a flat monthly fee, it can be more expensive than Wealthfront for small account balances and cheaper for larger balances. For example, if you sign up for the Acorns Personal plan, it costs the same as Wealthfront if you invest $14,400. Acorns is cheaper if you invest over $14,400.
Wealthfront vs. Acorns: Fund expenses
When you invest through a robo-advisor, you also need to pay the fees of the funds in your portfolio. (They are deducted automatically.) The money goes to the fund manager, not to the robo-advisor company.
The expense ratios of the funds in Acorns and Wealthfront portfolios are similar. Comparable portfolios that are in 70-80% stocks only cost 0.05% from both robo-advisors. Socially responsible portfolios cost about 0.16% for the same level of risk.
💰 The winner: Tie. The funds in Wealthfront and Acorns portfolios cost roughly the same. They are also in line with other robo-advisors, like Betterment. Note that the overall cost will change if your risk profile changes, but the difference appears small.
Wealthfront vs. Acorns: Socially responsible investing
Catching on to the ESG investing trend, both Acorns and Wealthfront offer ESG or sustainable portfolios. Wealthfront calls it the Socially Responsible Investing (SRI) portfolio. Broadly speaking, ESG portfolios score better on environmental, social, and governance metrics like carbon emissions, worker treatment, diversity and governance.
Although Acorns invests in more funds, the ETFs in Acorns and Wealthfront ESG portfolios overlap. For example, both robo-advisors choose ESGU, a low-cost sustainable U.S. stock fund from iShares.
However, Wealthfront lets you customize the portfolio by adding new funds. For example, you can add clean energy funds like ICLN. But most robo-advisor clients probably don’t want to design their own portfolios. Wealthfront clients with over $100,000 in investment accounts can also exclude stocks they don’t like from their portfolios. They can do that by putting stocks on the restriction list.
Wealthfront vs. Acorns: Round up your change
Acorns lets you save more through automatic round-ups. When you buy something with your Acorns debit card or another linked card, Acorns rounds up your transaction to the nearest dollar and invests the change into your Invest account portfolio. According to Acorns, the average user invests over $30 a month through round-ups.
💰 The winner: Acorns. Wealthfront doesn’t offer round-ups.
Wealthfront vs. Acorns: Tax-loss harvesting
Tax-loss harvesting is a tax minimization strategy that involves selling funds or stocks at a loss to offset capital gains from investments that have made money.
Wealthfront offers tax-loss harvesting to all of its customers. The robo-advisor will look for movements in ETFs to harvest more tax losses and lower your tax bill. You still benefit from tax-loss harvesting if you invest in the Socially Responsible Portfolio.
Customers with over $100,000 invested get access to stock-level tax-loss harvesting (also known as direct indexing), which is a more advanced version of tax-loss harvesting.
💰 The winner: Wealthfront. Acorns doesn’t offer tax-loss harvesting.
Wealthfront vs. Acorns: Human financial advisors
Neither Acorns nor Wealthfront offers human financial advisors, though both provide some educational resources.
💰 The winner: None. If you are looking for human advisors, you can get advisor access from Personal Capital.
Wealthfront vs. Acorns: Automatic rebalancing
Both Wealthfront and Acorns will automatically rebalance your portfolio. Automatic rebalancing means that the robo-advisors will buy or sell investments to get to your optimal asset allocation, like 80% stocks and 20% bonds.
Sometimes when one asset class, like stocks, does much better than another one, like bonds, your portfolio may “drift” and become riskier (or less risky) than it should be. Automatic rebalancing solves that.
💰 The winner: Tie. Nearly all robo-advisors now offer this feature.
🔔 Want to compare more options? Check out the top 10 investing apps.
- Acorns vs. Stash
- Acorns vs. M1 Finance
- Acorns vs. Robinhood
- Acorns vs. Betterment
- Wealthfront vs. Personal Capital
- Wealthfront vs. M1 Finance
NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.