Frec and Wealthfront offer some of the most affordable direct indexing options in the market.
This article contains an in-depth comparison of both platforms. Short on time? Here’s the key difference
- Frec offers a more customizable direct indexing solution with an annual fee starting at 0.10% and a $20K minimum for its standard indices. For more complex index exposures (such as small-cap or total market), the minimum increases up to $50K.
- Wealthfront offers a pure S&P 500 direct indexing option — ideal for a straightforward, U.S. large-cap play — with a 0.09% annual fee and a $20K minimum that leverages automated daily tax-loss harvesting. If you want broader diversification (such as adding international exposure and other asset classes), Wealthfront has a $100,000 minimum and carries a higher fee of 0.25%.
- For someone who prefers a hands-off, all-in-one solution, Wealthfront works. But if you want deeper control over your tax strategy, index choices and stock selection — Frec is a better fit.
Side by Side Comparison: Frec vs. Wealthfront Direct Indexing
| Feature | Frec | Wealthfront |
| Minimum investment: | $20K for standard indices and up to $50K for more complex ones. | $20K for S&P 500; $100K for diversified exposure. |
| Fee: | 0.10% to 0.45% (varies by chosen index). | 0.09% for S&P 500; 0.25% for diversified portfolios. |
| Index options: | 14 options (S&P 500, total market, small-cap, ESG, Shariah, etc.) | S&P 500 (U.S. large-cap) for lowest cost. Diversified model adds international/other asset classes. via ETF. |
| Customization: | Exclude up to 2 sectors; add/remove up to 10 individual stocks. | Can exclude individual stocks (no stated limit). |
| Fractional shares: | Yes. | No. |
| Dividend reinvestment: | Choose to reinvest, pay down credit, or transfer to a high-yield fund. | Automatic reinvestment only. |
Where Frec Wins
Here’s where Frec stands out
- Frec’s customization options are superior to Wealthfront’s. With Frec, you have much greater control over your portfolio, including the ability to exclude specific sectors or set your own allocation targets. While there’s always a risk of over-tinkering and underperforming the benchmark (read my thoughts on pros and cons of direct indexing), Frec provides the flexibility to tailor your portfolio in ways that Wealthfront’s more hands-off approach simply doesn’t allow.
- While Wealthfront offers a highly competitive 0.09% fee on its pure S&P 500 product, Frec’s comparable S&P 500 solution comes in at a marginally higher 0.10%. However, the real advantage of Frec emerges when you seek diversification. Whereas Wealthfront charges a flat 0.25% fee for its diversified portfolios, Frec provides a range of customizable portfolio options across various indices with fees ranging from .10% to .45% allowing you to mix and match exposures and potentially pay less than 0.25% overall.
- Frec’s Portfolio Allocation feature lets you control your own rebalancing instead of being locked into an automated schedule. You can decide when to rebalance—using a one-time cash deposit or even leveraging a portfolio line of credit—to adjust your allocation in a way that suits current market conditions and your personal goals. This flexibility can help you avoid unnecessary taxable events and preserve your tax-loss harvesting benefits.
Get the full breakdown in my in-depth Frec review.
Where Wealthfront Wins
Where I feel Wealthfront wins:
- Wealthfront’s more integrated platform automates rebalancing across both taxable and tax-advantaged accounts (if you hold them at Wealthfront) — maintaining your target allocation while offering advanced Smart Beta options (a factor-based investing strategy aimed at enhancing returns) for accounts over $500K — making it a more hands-off solution. In contrast, Frec focuses on taxable direct indexing, so any rebalancing between your taxable portfolio and tax advantaged accounts must be managed manually.
- Frec is a much newer platform, which introduces some uncertainty regarding its long-term viability and fee stability compared to established providers. In contrast, Wealthfront has a longer proven track record.
- For entry-level exposure, Wealthfront’s S&P 500 Direct Index portfolio is a solid product. Of course when investing at these lower minimums, you want to ensure that you’re actually benefiting from the direct indexing approach. But Wealthfront’s offering is attractive from a low-cost perspective.
- By limiting customization and focusing on an automated, integrated approach, Wealthfront minimizes decision fatigue and potential tracking error.
Final Thoughts
For investors wanting to stick with the S&P 500, Wealthfront offers a solid hands-off solution.
But if you want to diversify outside the S&P 500, Frec shines by letting you mix different indices at much lower fees.
For instance, if you allocate 70% to the S&P 500 at 0.1%, 15% to CRSP US Small Cap at 0.15%, and 15% to S&P Developed Markets ADR at 0.17%, your blended fee would be about 0.12% overall.
In contrast, Wealthfront charges a flat 0.25% fee for diversified portfolios outside the S&P 500.
So, while Wealthfront is great as a standalone S&P 500 index, its fee structure can be more expensive when you branch out beyond the S&P 500.
Disclaimer: The Ways to Wealth is not a client of Frec and did not receive cash compensation for this review, but will receive cash payments for each referral that clicks a Frec link, opens a Frec account, and/or funds a Frec account from their referral. There are no other known material conflicts between Way to Wealth and Frec.
