Yes! Unlike a traditional financial advisor, Wealthfront automatically works to minimize the impact of taxes when transferring over outside investments. Specifically, we will apply the following strategies, if applicable, in the following order:
- Incorporate compatible transferred assets (e.g. if your existing portfolio holds an ETF or stock that we would include in your Wealthfront portfolio) directly into your Wealthfront investment mix whenever possible
- Sell assets with losses
- Sell assets with long-term capital gains
- Use short-term capital losses from Tax-Loss Harvesting and Stock-level Tax-Loss Harvesting to offset short-term capital gains and accelerate your transition into the Wealthfront portfolio
- Hold off on selling any other assets with short-term capital gains until they become long-term (owned for at least one year)
- After selling your assets, invest the cash in your Wealthfront portfolio
Collectively, we call this service Tax-Minimized Brokerage Account Transfer.
Unfortunately we are not able to sell the following kinds of assets: mutual funds (including DFA funds), penny stocks, bonds, options, annuities, or any other financial instruments that don’t trade on an exchange.
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