Comment by hnthrowaway7394

There is a pretty fundamental difference, and it’s that Wealthfront (and M1, Robinhood, Fidelity, etc) are registered broker-dealers. Broker-dealers are regulated just as stringently as banks, but by the SEC and FINRA as opposed to the Fed. Broker-dealers have been running passthrough FDIC programs for decades, and in a lot of ways have more stringent regulations than banks. The most notable is that they are forced to segregate assets (can’t put client assets on the balance sheet, they have to custody them separately), which is the ultimate way banks fail and need the FDIC to bail them out. Source: used to work in broker-dealer auditing