Wealthfront Brokerage Ups Cash Account Rate to 2.51% APY


Deal Summary: 2.51% APY on balances of $1+

Availability: Nationwide.

Online brokerages are trying to compete with the online banks for deposits. The brokerages are coming out with cash management accounts that function a lot like savings accounts and checking accounts. In the last year, many of these cash management accounts have yields that challenge the online banks. The latest challenger is Wealthfront Brokerage. Two months ago, Wealthfront launched the FDIC-insured Cash Account with a 2.24% APY. According to this Wealthfront blog post, they attracted over $1 billion in deposits in less than a month. The rate increased to 2.29% APY, and early this week, the rate has increased to 2.51% APY.

2.51%$1$1mWealthfrontCash Account
Rates as of June 24, 2019.

In addition to a higher rate, Wealthfront is promoting their Cash Account as having two big advantages over savings accounts at banks:

  1. $1 million of FDIC insurance (standard FDIC insurance at banks is $250k)
  2. No limit on the number of withdrawals per statement period (bank savings accounts are generally limited to 6)

The issue of FDIC insurance and the safety of this Wealthfront Cash Account requires a thorough discussion, but before going into that issue, here’s a summary of the features of the Wealthfront Cash Account:

  • New customers can just open this Cash Account without an Investment Account (per CSR)
  • $1 minimum initial deposit and minimum balance (per FAQ)
  • No monthly service fees (per FAQ)
  • The following services are not available (but may be in the future): debit card, ATM access, direct deposit, bill pay, checks, mobile check deposit (per FAQ)
  • Unlimited, free transfers to/from account at another institution (per FAQ)
  • ACH transfer limit of $250k per day (per CSR)
  • Wire transfers can be done for amounts over $250k (per CSR)
  • ACH transfers (in or out) can only be initiated from Wealthfront’s website (per CSR)
  • Mobile app is available, but not mobile check deposit (per FAQ)
  • Interest will be reported on Form 1099-INT (per FAQ)

One significant advantage over a bank savings account is that there’s no limit on the number of monthly withdrawals. Bank savings accounts are limited by federal regulation to no more than six withdrawals (most types) per statement period.

One noteworthy disadvantage is that Wealthfront is not allowing ACH deposits or withdrawals initiated from another institution. So to withdraw money, you're dependent on Wealthfront's website.

Wealthfront’s customer service isn’t as accessible as you would expect. They don’t list any phone number on their Contact Page. They only provide a contact form that can be used to send them a message. They will respond by email. I used this contact form to receive the answers to my questions. It took about five hours to receive the answers. The only mention of phone support in the Contact Page is this sentence:

If you have an investment account with us and would like to speak on the phone, please login.


The Wealthfront Cash Account is available nationwide. New customers can open the Cash Account without opening an Investment Account. Accounts can be opened at the Wealthfront Cash page by clicking "Get Started" and "Open a Wealthfront account."

Is the Wealthfront Cash Account as Safe as a Bank Savings Account?

Wealthfront makes the claim that it’s safe. This is an excerpt from Wealthfront’s FAQs:

Is this cash account FDIC insured?

Yes. Your cash account deposits are held at multiple unaffiliated banks to provide up to $1 Million in FDIC insurance per account holder. This means that joint accounts may have up to $2 Million in FDIC insurance. This is 4x the amount of FDIC insurance your standard bank account provides. FDIC insurance covers your funds held in the program banks under any circumstance.

This Wealthfront FAQ lists the following four Program Banks: East West Bank, Associated Bank, TriState Capital Bank and Citibank N.A.

More details about how the FDIC insurance works with the cash account and how the funds are handled are provided in the Wealthfront Cash Sweep Program Disclosure Statement:

The Cash Balance in your Cash Account will be automatically swept within 1 to 3 business days after receipt (not including bank holidays or days on which the New York Stock Exchange is closed, such as Good Friday), into one or more Deposit Accounts established by Wealthfront Brokerage on behalf of you and other customers who participate in the Cash Sweep Program at the Participating Banks.

As you can see, there will be periods when funds are not being held by one of Wealthfront’s program banks. The Disclosure describes how SIPC provides protection during these times:

Until the sweep occurs, your Cash Balance will remain uninvested Free Credit Balances in your Cash Account. Because Wealthfront Brokerage is a member of the Securities Investor Protection Corporation (“SIPC”), our customers are protected up to applicable SIPC limits if Wealthfront Brokerage were to go out of business and there were customer securities or funds unaccounted for.

It should be noted that there’s no guarantee that the SIPC will cover a cash management account if the SIPC determines that it’s being used for banking purposes. Below is a relevant excerpt from the SIPC FAQs:

I have a securities account. Isn’t everything in my securities account protected by SIPC?

Not necessarily. In general, SIPC protection is determined on an asset-by-asset basis and extends only to: (1) cash in a customer’s account that is on deposit for the purchase of securities; [...]

This question of SIPC coverage received lots of news coverage in December when the brokerage company Robinhood launched a “Checking & Savings” with a 3% interest rate. Robinhood had claimed this account was covered by SIPC, but the president and CEO of SIPC, Stephen Harbeck, disputed this in media interviews. Harbeck was quoted in this Bloomberg article explaining why SIPC would not protect this Robinhood account:

“The statute that we administer says that we protect money with a brokerage firm that is used for the purchase of securities,” he added. “On Robinhood’s help page, it says that you don’t need to invest to use Robinhood checking and savings, that statement is wrong. If you deposit money for any other purpose, it is not protected.”

After these comments, Robinhood stopped promoting its “Checking & Savings” account, and replaced the mention of this account with the message “Cash management, coming soon.” This message continues as of May 31, 2019.

Even if a brokerage firm is a member of SIPC, it does not guarantee that an account offered by that firm is protected by SIPC. For a cash type of account, the SIPC can decide that an account is not protected.

I can’t say if Wealthfront’s claim of SIPC coverage of its Cash Account is wrong. On its Cash Account webpage, Wealthfront suggests that the account can be used to “save up the cash you need for” things like a “rainy day fund”, “a down payment for a new home” and “saving before you’re ready to invest.” I don’t see any mention that the money deposited is intended to be used for the purchase of securities. In fact, it appears that it’s not even possible to purchase securities using money in the Cash Account. According to this Wealthfront FAQ, they don’t currently provide a way to move money from the Cash Account to the Investment Account:

Can I move money between a Wealthfront Cash Account and Wealthfront Investment Account?

Not yet, but we are working to support internal transfers in the near future. We will let you know as soon as this feature is available.

Based on these issues, I can’t say if the Wealthfront Cash Account has the same level of protection as a savings account or checking account at an FDIC-member bank.

Company Overview

One thing to note is that Wealthfront isn’t a new brokerage firm. According to this 2012 Forbes article, “WealthFront was started in 2008.” Wealthfront is listed at the Financial Industry Regulatory Authority (FINRA) BrokerCheck website. FINRA is an independent, non-governmental regulator for all securities firms doing business with the public in the U.S. According to this FINRA BrokerCheck page, Wealthfront Brokerage received SEC registration and FINRA registration in 2010. The SEC noted that according “to its Form ADV, as of August 16, 2018, Wealthfront had over $11 billion in assets under management.” Wealthfront currently lists assets under management at $13 billion.

Wealthfront received some bad publicity in December from an SEC enforcement action and fine. According to this Reuters article, an “SEC order alleged that Wealthfront, one of the largest independent robo-advisers, had made false statements about a tax-loss harvesting strategy it offered to clients.” Full details are available in this SEC enforcement action document.

How the Wealthfront Cash Account Compares

When compared to the Savings Accounts and Money Market Accounts tracked by DepositAccounts.com that are available nationwide, Wealthfront Cash Account currently ranks second, regardless of minimum balance requirements.

Interest RateAccount NameCredit Union/Bank
2.53% APYEagle Premium Savings ($100k min/no max)Susquehanna Community Bank
2.51% APYCash Account ($1 min/no max)Wealthfront Brokerage
2.50% APYHigh Yield Money Market (no min/$3m max)Western State Bank
2.50% APYeAccess Money Market (no min/$2m max)Investors eAccess
2.50% APYSavings ($1k min/$500k max)WebBank
2.50% APYHigh Dividend Savings ($500 min/no max)USALLIANCE Financial
2.50% APYHigh Yield Savings ($25k min/no max)Customers Bank

To search for the best Savings and Money Market Account, both nationwide and state specific, please refer to DepositAccounts.com’s Savings Account Rates page and Money Market Account Rates page.

The above rates are accurate as of 5/31/2019.

Related Pages: savings accounts, nationwide deals, Internet banks

midas89   |     |   Comment #1
Thank you very much, Ken, for a very detailed and informative article on Wealthfront. As always, your thoroughness makes it so much easier on us when time to make a decision.
RRR   |     |   Comment #2
Pass. There have been recent cases of deceptive "bank alternative" accounts popping up that turned out not to be safe. The details sounded eerily familiar while reading this. Any system designed to circumvent the intent of the law, even if not the letter of the law, is not a good place to invest your money. And for a one basis point advantage over it traditional competitors it's just plain foolish.
Hans Jo
Hans Jo   |     |   Comment #3
Whoa, seriously? Thanks for the heads up!
RRR   |     |   Comment #4
I can't comment on the safety of this particular institution or investment, but it sounds too convoluted and risky to me to justify for a 1 bp advantage over its traditional competitors. I'm not saying it's necessarily a scam, I'm just saying it's not worth the risk.
jeffb1517   |     |   Comment #5
There is some skepticism in the comments. I just want to address the "are they legit" issue. Wealthfront is the 2nd largest robo brokerage in the USA (after Betterment) and 4th biggest robo program (Schwab and Vanguard). It is also one of the inventors of robo investing. They have about $11.5b in AOM in their robo program. Ideologically it is led by Burton Malkiel (https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street) (very big name). They have an excellent reputation for quality investments AFAIK there are 0 allegations of any dishonest or unethical conduct in the decade they've been in business.

I wouldn't be worried about giving them business. They are more ethical than most banks. That being said they aren't a bank and savings accounts are not their primary product.
RRR   |     |   Comment #6
Ethical and honest is it about intent. But intent is only one consideration. My concern would be that what they are doing will be found to be in violation of SIPC, FDIC, or banking regulations. In the event that there is a problem you could find out that in fact you are not properly insured or possibly even incur some kind of liability.
Craig   |     |   Comment #7
I don't see any problem...for the short time the new cash coming in is in the actual brokerae part, it is covered by SIPC up to $500,000 and you can't transfer in more than $250,000 a day with them anyway...Then (likely by the next business day) it moves over to one of the "program banks" where it is fully FDIC insured... The banks they use are large and very reputable...And as far as SIPC covering it...i don't see a problem....if CDs are considered brokerage investments (which SIPC does consider them for money that is an brokerage cash and awaiting investing) then how is a Savings account really any different? Ken seemed to have doubts but sorry i can't agree with that...
Craig   |     |   Comment #8
@ RRR: People buy brokered cds in brokerage accounts all the time...and often buy multiple ones to increase their fdic coverage....common practice...nothing unusual about it....and "sweep program banks" like Wealthfront uses i also common place...yahoo or google it and you will see what i mean...
Att   |     |   Comment #22
The brokered CDs are covered by the bank that issued CD. The 250k limit at any bank includes brokered and CDs that are opened directly with the institution. The brokered CDs in Vanguard note the FDIC # of the missing bank.. I don't know how Weath spreads the individual accounts over numerous banks to give you 1 million dollars in FDIC coverage. If one of these banks goed under and the FDIC makes payouts how are the funds dispersed?

Many questions I would like answered
ChasinRates   |     |   Comment #9
Thank you for taking the time to research this.
HARK!   |     |   Comment #10
I agree with RRR......and besides what's the point?? You can get this exact rate at online banks already. I guess it would be nice if you are an investor in the stock market and have idle cash sitting around from time to time.....but other than that I see no reason.
deplorable 1
deplorable 1   |     |   Comment #11
I hope this is a new trend. I wish my broker had something like this. As it is now I keep next to nothing in my sweep account because it pays next to nothing. This requires me to constantly be moving money in and out of the sweep account as all my dividends are deposited there. A interest rate of 2.5% or better would solve this problem. There was a time when many sweep accounts paid much better rates than even the highest yielding MMA's. This account looks safe to me as it says it is FDIC insured. The rate would need to be at least 3% for me to consider using this account and at that point I would be looking at using their brokerage as well.
Cracker   |     |   Comment #46
Same here. As soon as the dividends are paid, I transfer them to a high yielding bank savings account. There is absolutely no reason to hold the cash in my brokerage account.
Att   |     |   Comment #12
I know they are not exact comparisons but Robinhood came out with an account that was paying a high rate and was claiming SPIC coverage but their were questions. This account has an FDIC component.

Robinhood, a no-fee stock trading app, rolled out its take on the traditional bank account Thursday, promising a 3 percent interest rate on deposits. The Checking & Savings service will be run through the firm’s brokerage arm rather than a bank, which would be insured by the Federal Deposit Insurance Corp. Robinhood said the service will be insured by the SIPC.

“I disagree with the statement that these funds are protected by SIPC,” Stephen Harbeck, president and chief executive officer of SIPC, said in an interview Friday. “Had they called us, I would have told them what I just told you in that I have serious concerns about this. This has gigantic ramifications for the banking industry.”
Craig   |     |   Comment #13
@Att: question is: was Robinhood using regular fdic insurance banks to sweep their cash to? If not then the SIPC would be right, it would NOT be covered while it was in the brokerage cash account...
Are you comparing "apples to apples" here (as it were)?

SIPC covers money in a cash account that it going to be invested in fixed instruments (including stuff like treasuries and fdic insured bank cds) and in Wealthfront's case the money is going to bank (fdic insurance) savings accounts...so i don't see where they would be a problem...
Craig   |     |   Comment #14
@Att: i just read up on Robinhood's Cash Account...sounds like they WERE NOT using participating sweep FDIC Insured banks in their cash account...That is why SIPC didn't cover the money...it wasn't awaiting investment (which is the case with Wealthfront)...so, if that was the case, not the same thing...
Att   |     |   Comment #15
Craig If you read my 1st line not exact comparisons. I wonder if the FDIC has an opinion on this setup just like SIPIC did with Robinhood? Since I'm already earning 2.5% on my savings guaranteed till the end of the year and pays just 1/100th of a percent less I have no intrest in this account I have no opinion and everyone has to make their own choice.
HARK!   |     |   Comment #16
Good point,Att......I don't even see why we are wasting time discussing this. Just go with a regular bank that has FDIC that has this exact rate already. Why even risk it for a second if there is any question. As I said it's great for investors for idle cash.....otherwise no thanks.
Craig   |     |   Comment #17
No need to knock it just because you aren't interested...it offers some nice advantages (like the $1 million coverage and not "6 per month" limit) they also have reasonable high daily transfer limits and no monthly caps...So, they do offer certain advantages of your average "plain jane" online account, for sure...

Just out of curiousity, i did e-mail SIPC just to see what they will say about this particular set-up...If i get a reply next week, i will post it...
HappyPanda   |     |   Comment #18
Craig, EVEN if this brokerage's use of SIPC is proper and legit, the fact that you can ONLY access your funds by using their own web-based system to push/pull funds is unacceptable. I must have the ability to push or pull funds to and from this account via an external bank -- e.g. Ally. They don't even allow direct deposit. That's total nonsense.
Craig   |     |   Comment #19
That's only temporary...You have to remember, although they have been around for a while, this Cash Only account is relatively brand new...they plan on adding the following: Transfers between this and their investment brokerage side...The ability to set them up on external bank's ach transfer systems...bill pay...debit card with atm access...checks...they already have a mobile app but they will be adding mobile check deposit as well... So, as you can see this account is going to have a lot of features, in some cases, even more than some of the other online banks offer...Also, based on what i read on their website, they want to keep the account "competitive" (rate wise)....I opened with them last week, and so far i am very impressed with what they have already and what they will soon have...
Craig   |     |   Comment #20
Oh yes...and Direct Deposit too...
Att   |     |   Comment #21
I wouldn't put a million dollars in a savings account or even close to that amount . When I sold one of my properties I had over 300k split between 2 savings accounts. That money was quickly invested. We are looking at another property that we may purchase next year and will need sizable cash but no where near a million.

Plus no guarantee on their rate which can fluctuate. Northern is guaranteeing 2.5% til the end of 2019. They have been paying 2.5% for sometime and even has checking which I use to pay contractors.
I also have a 2.5% savings with EBSB so I can make a total of 12 transactions using both of these banks.
Sam   |     |   Comment #23
I think everybody missed the point about the FDIC insurance spread over few banks to initiate insurance coverage of $1Mil, however, I spoke with a bank manager and was told that the FDIC insurance does not work unless you have opened account at those banks prior the money were sent to them under your name, in other words, sweeping millions of money overnight in bulk does not insure the individuals FDIC, because wealthfront does not have accounts opened in your name at those banks, something to think about before jumping in.
Joel   |     |   Comment #24
Sam, if Wealthfront sends all of the money to those numerated banks that do not pay any interest back, how the Wealthfront will make money to pay the interest if the money are not in their possession?
I agree, something does not adds up with this arrangement. In order to get FDIC insurance you have to give it to the banks and how are you going to create the income to cover the interest on those money pledged to the banks and give the accumulated interest back to the savers?
How is the profit created?
Craig   |     |   Comment #27
@Joel: The interest is generated through the participating banks...read the faqs on their site...seems like most here haven't and that is what is generating all this wild speculation about them...
Craig   |     |   Comment #25
@ Sam: That is not true..that bank manager gave you incorrect information...With sweep banks ina program or even when one buys "brokered cds" through a broker....you are not opening accounts directly with the banks involved and you are indeed covered up to $250,000 FDIC insurance in each of those banks...Just because he is a "bank manager" does not automatically mean he knows what he is talking about...He isn't involved in these accounts and obviously had not done his research on it...
Craig   |     |   Comment #26
Well, looks like i am one of the few here that appreciate the unique features of this account...i said all i am going to say...i will just sit back now and enjoy my 2.51% (and 1 million total coverage) while most of the rest of you knock and try to find faults with this account...most of which aren't even true (like lack of SIPC coverage while in the cash account and not being covered by FDIC when it goes into the program banks as Sam's bank manager told him....LOL)
Craig   |     |   Comment #28
From their FAQS:
Wealthfront receives a portion of the interest earned on the money in your cash account, just like a traditional bank. However, we keep our operating costs lower than a traditional bank by only building products that we can automate. This means we can provide a higher interest rate with our cash account.
Peter   |     |   Comment #29
From the FDIC website:
The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, municipal securities, and money market funds, even if these investments were bought from an insured bank, Robberies, fraud and Other Thefts. The FDIC insurance limit applies to each account holder at each bank.


If a brokerage company that operates like a bank goes under, first payments goes to SIPC insured customers and then if anything left, goes to the FDIC customers with savings accounts.

If you have not seen the company papers, documents, arrangements and exclusions, you can never be 100% sure of your money being sent to a third party bank for FDIC insurance.
Dunmovin   |     |   Comment #30
What does this mean...”goes to the FDIC customers with saving accounts?”

We are not customers of FDIC. And thus we don’t have savings accounts with them except during a liquidation. FDIC is an insurer.
Martin   |     |   Comment #31
Dunmovin, that applies to brokerages who use banks to enhance the insurance coverage and act as saving account and brokerage account at the same time, E-TRADE used to use external accounts to sweep the daily cash balances into the savings accounts at Chase bank. After a while it became to complicated to manage such accounts and the daily sweeps created fees that nullified the original intend.
deplorable 1
deplorable 1   |     |   Comment #33
You are not alone Craig. I can definitely see the advantage to no ACH withdrawal limit and FDIC coverage. They also plan on adding several more features to this account which would make it a checking account alternative with unlimited bill pay. At that point I would open a account with them for sure. Some people on here are paranoid even with FDIC coverage which cracks me up as I use several corporate debt accounts with no FDIC coverage in order to get unlimited ACH withdrawals currently.
deplorable 1
deplorable 1   |     |   Comment #32
I would not compare this set up to Robinhood because they are using FDIC not SIPC. The FDIC insurance is up to 1 mil. because they are using 4 separate banks for coverage. This is very similar to CDARS which use multiple banks to insure millions by breaking the deposits up. Having unlimited ACH transfers plus FDIC insurance is a win win. If this account was paying 3% I would jump on it. Even as it is now they are planning to add a bill pay feature. I will be watching these type of accounts closely as they could be a very useful alternative to a checking account for paying bills with a much higher interest rate. I wish they would add allowing ACH pulls from external accounts for paying credit cards and other bills, this would be the most important feature for me.
Craig   |     |   Comment #34
Thanks deplorable 1...glad to see there are a few here with more common sense about this...I set up with them last week, and even though they don't have all those new features in place yet, i already like the way it is set up and can only get even better as they add those new features on...They even make it is easy to add beneficiaries in the online account and you can even vary the percentages if you wish...
Interesting you should compare this to CDARS as actually it is kind of similar at that...
Mark   |     |   Comment #35
deplorable 1, planning to add anything in the future may be a ploy. My local bank has been saying to add faster ACH and higher limits for almost 8 years now and it is still the old $5k limit for the ACH and 3-5 business days to clear. Promises are for the fools to accept them as real.
Hans Jo
Hans Jo   |     |   Comment #36
Whoa, seriously? Thsanks for the Heads Up!
Craig   |     |   Comment #37
They are doing well...both as an investment brokerage and this new "cash only" account so they have quite an incentive to add those features...perhaps you local bank isn't doing to well...LOL
Att   |     |   Comment #38
No one has said there is no FDIC insurance but I would like clarification from the FDIC on coverage. If you read the 1st line of my post I mentioned this. The point I was making is that Robinhood made an insinuation that their savings account was insured by SPIC and that came into question from the head of SPIC. Also the rate can be changed at anytime. They may reduce it if they get a large in flow of funds. If you read Ken's post he there are concerns while the money is is waiting for the
1 to 3 day wait before it is swept. As Ken noted
"It should be noted that there’s no guarantee that the SIPC will cover a cash management account if the SIPC determines that it’s being used for banking purposes."
One can also put money in EBSB which is covered up to 250k by the FDIC and the rest by DIF insurance which covers any funds above the FDIC limit.

The fact is they are paying just 1/100 th of a point more than Northern and with Northern you have a guaranteed floor of 2.5% till thevend of the year. Northern has be paying 2.5% for sometime.

There is nothing wrong with questioning their business model.
Hans Jo
Hans Jo   |     |   Comment #39
Wow, a lot of deep to consider, thanks!
Craig   |     |   Comment #40
I just heard Clark Howard (consumer advocate) on the radio and he was discussing SoFi with the caller (they are set up like wealthfront's system) and he HIGHLY recommended them...If he felt this kind of system was problematic he would have no bones about saying so on the air...instead, he praised it and called it highly innovative...
deplorable 1
deplorable 1   |     |   Comment #41
@ATT: Oh I see you are questioning who covers the cash before it is swept into the banks(1-3 days according to their disclosure statement). It looks like the money is SIPC insured until it is swept into the 4 banks and then receives full FDIC coverage. I'm sure after that botched Robinhood roll out they worked out some type of agreement for the cash to be covered by the SIPC until then. It would definitely be covered once this account is linked to the brokerage account and the customer had a brokerage account with them as well.
From the disclosure statement:
" Your Cash Balance while held by Wealthfront Brokerage at its bank and/or while in transit to or from a Participating Bank is not FDIC-insured but is covered by SIPC."
I'm waiting to see if they add some key additional features before jumping in. Until then the combination of Northern and EBSB direct is working out pretty well. It would be great to get a account like this with 2.75%-3% APY and unlimited withdrawals including 3rd party ACH pulls.
Craig   |     |   Comment #42
@deplorable1: I was just looking at SoFi's website...wouldn't you know they are already set up with all the extra features Wealthfront is planning on adding: debit card with atm rebates/bill pay/check/direct deposit/etc...And they are set up just like Wealthfront expect they use two more program banks (6 in all) to give up to 1.5 million coverage...Only one downside: their rate is lower right now (2.25% instead of 2.51%)... Oh, Darn...lol
Craig   |     |   Comment #43
I emailed SoFi...can't add beneficiaries to their account...so i wouldn't consider them on that basis alone...I'll stick with Wealthfront...rates higher, anyway, and eventually they will have those extra features that SoFi has now...
Michael   |     |   Comment #44
I just called the wealthfront about their statement on the front page about the availability of the funds, this what they wrote:

"If you’ve recently deposited money into your cash account, it may take a few extra days to process."

And this is what they said: "It will take 5 business days when you pull money in to become available and then it will take 2-3 business days to send them to another bank."

That is the deal that makes it no deal for me.
LLC   |     |   Comment #45
Michael, that was I told too, that their operations are fully automated and the speed of ACH is delayed by sweeping the money back and forth with the designated banks and the delay is normal part of their operations and they do not anticipate any changes in near future.
Vick   |     |   Comment #47
Now I understand why they peddle unlimited withdrawals, because the float that you will create will eat quit a bit money of your interest and you do not receive interest when they sweep the money to the other banks and when that happens on weekend or holiday or waiting for the funds to clear, extra delay is introduced.
Ben   |     |   Comment #48
I did read most of the comments and came to conclusion that in order to receive the theoretical interest rate of 2.51%, you can not touch the money for at least a year, otherwise, all those delays in sending money to the banks (sweeps in and out)) by wealthfront, waiting for the funds to clear by your own ACHs, transferring money IN or OUT will make that theoretical 2.51% to be less then 2.2% according to the calculations I have done.
Conclusion, you will be better off in a short term CD or any other bank that pay around 2.30% or above in interest. Do not fall for the unlimited withdrawals also, it cost money and delay by creating a float and extra money for wealthfront and not you.
deplorable 1
deplorable 1   |     |   Comment #49
Do we know for sure that no interest is accruing during the time it takes to sweep to the banks and for ACH transactions to process? If so that would be a deal breaker even with unlimited withdrawals.
Craig   |     |   Comment #50
The 6 day hold only applies as far removing the funds from their bank going in...Not the interest aspect...And the funds should generally sweep in next business day, and then interest begins on the funds...
I asked them and they also plan on adding an extra bank or two to increase the fdic coverage even further...along with the other items we discussed here...

When available funds are withdrawn, they will move out pretty quickly and over to your other bank within a day or two...They're not the only Online Bank that puts a 5-6 day hold on incoming funds...a whole bunch of them do...
#51 - This comment has been removed for violating our comment policy.
Hanck   |     |   Comment #52
deplorable 1, the interest starts to accrue when the banks receive the money, not when wealthfront received your money, because the banks are paying the interest and not wealthfront.
Wealthfront receive a finders fee and a small percentage in interest of the money sent to the banks. Wealthfront does not hold any of your money, so when you request a withdrawal, the wealthfront request an ACH from the bank(s) and hold them in your account when received and until those money are in hold or transit, you DO NOT RECEIVE any interest at all. The unlimited withdrawal feature cost lots of money while your money are coming in and then going out to other destinations (banks, CUs and so on).
I confirmed the whole process with a very nice person at wealthfront today.
Craig   |     |   Comment #53
If that were true...let me give you an illustration what happened with my first deposit...They received it ($750.00) on May 31st which just happened to work out to the close date for the statement for May...The transaction history shows a credit of 5 cents of June 1st...How did i make that interest on that deposit, if what you guys saying was true?
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Hans Jo
Hans Jo   |     |   Comment #55
Outrageous misinformation please inform properly.
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dave   |     |   Comment #58
Craig and Pat, plesae be civil.
Att   |     |   Comment #59
They are paying 1/100th more in intrest and doubts about the float. Do you earn intrest on the float? They say 1 to 3 days before swept to FDIC insured account. Deplorable.. Read what Ken and SPIC head says about using sweep accounts for non trade purposes. The area is gray.

One would have been better off opening a Northern Direct savings account last year at 2.5% and guaranteed till the end of the year.
Craig   |     |   Comment #60
@Att: I wrote directly to SIPC and asked them specifically regarding Wealthfront would be covered by SIPC insurance while awaiting sweep into the "program banks" and this is their reply:

Cash that is credited to a customer securities account at a SIPC-member securities broker-dealer and that is on deposit therein “for the purpose of purchasing securities,” including cash awaiting transfer to a bank pursuant to a sweep program of the kind that you describe, is eligible for SIPC protection up to a maximum of $250,000 in the event that the SIPC-member is placed in liquidation under the Securities Investor Protection Act.
Craig   |     |   Comment #61
As far as the float business, i don't see one losing very much interest...Based on me getting interest on 1 days deposit at the end of the statement indicates that the money must have swept in pretty quickly and unless you are making many frequent huge deposits on a very regular schedule, i don't see the big deal about losing a few dollars...Once it is in the banks, it is indeed earning the 2.51%....for the LONG RUN as it were...
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Sue   |     |   Comment #64
Craig, you just confirmed that there is a gray area when the money sent from the banks to the wealhfront, FDIC stops and SIPC takes over, but SIPC only insures up to $250K, what is going to happen to the rest of the $1,000,000 seating at the wealthfront?
Are you exposed to loses should they be closed by SEC or a fraud occurred or theft occurred or they just will say, the money were lost in the system somehow by a computer glitch?
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Sammy   |     |   Comment #68
drake, how it can be 100% save, wealthfront is operating in the gray area of the law, sending money to the banks for $1Mil FDIC coverage and then sanding them back to wealthfront for SIPC $250K maximum coverage and then there is ACH transit delay (the money are in limbo for few days, both ways delays or until they reach the destination) and there is a float, when no interest is paid for few days when depositing or withdrawing.
And what is so special about 2.51% interest rate, my local bank pays 2.75% FDIC insured.
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Craig   |     |   Comment #70
Once the money leaves the program bank it goes back to wealthfront and they then transfer it right out for you to your external bank...most here seem to expect them to be soon "going under" and i don't think it's likely to happen...As far as not believing i am putting that much over there, if i could put up a screenshot of it, i would but unfortunately you can't do that here...I have close to a million and at my age (69) i don't invest in the stock market anymore, only in Savings and Cds... And no, i don't work for them...I just can't believe how many "off the wall" comments i have seen here about them...
Craig   |     |   Comment #71
By the way, from what i read, this brokerage has been around for ten years and is very financially sound, not to mention a tremendous increase in deposits being made by people who aren't squeamish as it appears many here are...Also the model they use is being employed by other brokerages as well (So-Fi for example) so, it's not like they are the only one...
June   |     |   Comment #72
Craig, it only take a single theft or fraud or a rogue employee to do a serious damage while you sleep or SEC to put them under control and freeze your money there for long time.
No, Craig, the sophisticated companies do not go under overnight, they plan the scheme for long time and hide the crime under the rag or until someone exposes the cover up, after the fact.
Sonny   |     |   Comment #73
Craig, why saving account only, why not CDs and some savings, you could get $1000s more without doing nothing more, but opening few extra short term CDs or even no penalty CDs.
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deplorable 1
deplorable 1   |     |   Comment #74
I think this is safe Craig. My only problem is that the interest rate should be 2.75-3% in order to make up for the transfer time back and forth. Any delay in transfers and a straight 2.5% account beats them. If this rate goes up I'm in. I'm earning 2.788% APY in GM right notes currently not FDIC insured but liquid with unlimited withdrawals and no ACH cap. These guys all hate that account as well.
Craig   |     |   Comment #75
Thanks deplorable1: well, in my case, once all the money is in, it will just basically "sit" in the program banks...I may occasionally take some money out but not that often and not huge amounts, so the "impact" i think, should be minor....

I also have money in a Wells Fargo Brokerage where i have just a Vanguard and a Fidelity Money Market Mutual Fund which yields around 2.50%...Wells has $250,000 SIPC plus Private Insurance over 1 billion so well covered! I will bet there are people here that would be afraid to put money in a MM Mutual Fund, thinking the $1 a share could be broken...LOL (that's only happened once and it was during the financial crisis)...Too many "chickens" here, as it were...LOL
deplorable 1
deplorable 1   |     |   Comment #81
VIO bank is now paying 2.52% APY Craig. Only 6 withdrawals per month but no need to worry about long ACH times or SIPC coverage etc.
Craig   |     |   Comment #82
Thanks for the tip...although i am pretty well "settled in" with Wealthfront...they seem to be quite excellent and unlike many here, i am not worried...I just got my first statement, and they even show you how much each bank has of your allocation...I think that unless one is CONSTANTLY making deposits and withdrawals, which i don't do, there is no need to be concerned about the things people here seem to be worried about...

Also, based on my statement it looks like the sweep works a lot faster then one might think...
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Craig   |     |   Comment #83
There were a lot of people here who though it takes several days for money to sweep from Wealthfront to Program Banks...in reality, this is not the case...i have a lot of money over there and did a $250,000 withdrawal yesterday....It was in my external bank account TODAY...so apparently sweep occurs same day and the cash transferred to your external account in 1 day...so no real loss in interest...Probably works the same when money is transferred into Wealthfront...

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