Wealthfront has been one of the leading automated investing services since their inception, and over the past couple of years they've been adding new features at a furious pace in order to cement their position as the best one stop shops for all of your investing and financial planning needs.
This past month Wealthfront announced a new financial planning experience for all users that should make their automated financial advice even more useful. It's called Path by Wealthfront and they call it “a better way to experience financial planning“.
Today I thought I'd do a brief look at this new financial planning user experience and talk about why they may be just what you were looking for.
Table of Contents
Path by Wealthfront Financial Planning
So what is Path by Wealthfront? At it's most basic, it's an automated financial planning user experience that all Wealthfront clients see every time they log in. Path asks you some questions about yourself, allows you to connect to all of your external checking, savings and investment accounts within Path, and then it will help you to determine just how much you're saving and spending. It will then show you what that means for your ultimate retirement goals, and help you to create what-if scenarios, and ask questions like:
- Can you live the lifestyle you enjoy now, in retirement?
- How much will you be worth in retirement?
- How much should you be saving today in order to reach your goals?
Wealthfront's Portfolio Review tool is now built into the Path experience as well, and it will help you to analyze your outside investment portfolios and brokerage accounts and give you a set of recommendations as to how to improve your returns.
It'll help you to check your investment accounts to make sure you're not paying too many fees, that your investments are tax efficient, that you're not carrying too much cash and that your investments are sufficiently diversified.
Assess Your Financial Health
Many people don't really know what their financial goals should be, and aren't even sure how to figure out if the goals they set are even attainable with their current levels of spending and saving.
Path is built to take a lot of the guesswork out of calculating your financial future, by doing a lot of the difficult work in figuring out what social security income you can expect, calculating inflation levels, expected investment returns and so on. Then it takes advantage of the ability to connect to your outside accounts to assess what your current financial situation actually is. What can you do based on where you currently are?
Setting Up Path
When you first start setting up Path it will take you 5-10 minutes to enter information requested by the system.
- First, answer some basic questions about you and your family.
- Next, link your outside accounts to give Path a complete financial picture.
- Third, find out how you're tracking towards retirement.
- Finally, visualize how changes you could make will affect your future.
Once you've done the basic setup required by Path, the system will do a basic assessment of your financial health, and help you to get an accurate picture of what you can expect given your current levels of spending and saving.
Focus On What You Can Control Today
Once you've looked at your current situation and where you are, the system will help you to visualize how small changes in your saving or spending today, can mean big changes in your retirement accounts down the line.
Path, which can be accessed on the website or via a fully mobile experience in the app, will give you a visual representation of how changes in your savings or spending can affect your retirement account balances.
Try Some What-if Scenarios
Sitting on the train on your way into work and thinking about your future? You can jump into the app and do some what-if scenarios with the handy sliders.
- What if I bump up my monthly savings by $100? What will that mean for my retirement savings?
- What if i get a big raise and promotion? Will that mean I'll be able to spend a lot more than I thought in retirement?
- What if I have more kids than we anticipated, would it mean that I have to work a few extra years?
- What can I do to close the retirement gap between what I want my monthly spending to be in retirement, versus what will be attainable at current savings levels?
Get Recommendations Of Where To Allocate Savings
- It prioritizes contributions in tax-advantaged, low fee accounts.
- Uses your age and income to assess eligibility and contribution limits for each account type.
Path will give you advice that fits your situation. Would you be best served to put half of your money in a company 401k, and then a quarter in a Wealthfront IRA – and a quarter in a taxable account? You'll get those recommendations and you can plan accordingly.
Path will take in the data, crunch the numbers, give you recommendations, and you can move forward how you would like.
College Planning With Path
Wealthfront also just launched College Planning with Path. With the college planning tool in Path Wealthfront will walk you through every important aspect of college planning and deliver a complete, personalized assessment.
How Does it Work?
- Choose a college – Wealthfront connects to every U.S. college for real time expenses that include tuition, room and board, books, etc. You can change the school you’re building towards at any time and the data will update automatically.
- Wealthfront Calculates Financial Aid – Using outside data around the costs of a particular college and their specific approach to calculating financial aid, along with the personal details that you’ve shared through Path, Wealthfront will provide a customized estimate of financial aid per school.
- Watch Your Savings Grow. Choose how much you can save, and Path will show you how far that will go towards covering college expenses. Just like with retirement, you can adjust the inputs to see the impact of increased savings.
With the addition of College Planning, Wealthfront is now the only advisor who can deliver the most cost-effective 529 AND a personalized college planning solution all in one.
Other Recent Wealthfront Updates
The Path user experience isn't the only place Wealthfront has been innovating. There are a slate of new features and functionality that they've released recently.
- The Wealthfront 529 College Savings Plan: College savings plans based on over 20 different “glide paths”, tailored to match both the beneficiary’s age, as well as the account owner’s financial situation and risk tolerance. As you get closer to the child's college years, the assets are continuously allocated to suit where you are.
- Tailored Transfers: Instead of selling everything at once, use Wealthfront's tailored transfer process to migrate your investments tax-efficiently over time.
- Direct Indexing: an enhanced form of tax-loss harvesting for accounts over $100k to boost your tax savings. Wealthfront is the only automated investment service to offer Direct Indexing.
- Advanced Indexing: Advanced Indexing is Wealthfront's improvement on existing Smart Beta ETFs. Wealthfront has implemented a multi-factor investment strategy combined with its Direct Indexing feature, which adds a level of tax efficiency not found in existing Smart Beta ETFs. The feature is offered to clients with $500,000 or more at no incremental cost above the 0.25% advisory fee.
- Selling Plan: Another service unique to Wealthfront. Wealthfront’s Selling Plan helps all employees who hold public company stock to sell their shares tax-efficiently and commission free, at a level of service previously only available to executives.
- Portfolio Line of Credit: Launching on 4/28/17 this line of credit is available for any Wealthfront client with an Individual or Joint Wealthfront account valued at $100,000 or more. There’s no set up – if you’re an eligible Wealthfront client then you already have access. Your line of credit is secured by your diversified investment portfolio, so current rates are as low as 3.25-4.5% (lower than most HELOC loans) depending on account size. Borrow the amount you need (up to 30% of current account value), when you need, for whatever you want. Repay on your own schedule.
People are living busier lives than ever these days, and taking time out every 6 months or a year to visit a financial planner isn't always feasible. With Path by Wealthfront you can cut out that middle man and get automated advice tailored to your specific situation, and get up and running with a plan of action in just a few minutes. Definitely worth checking out.