http://www.kitces.com/blog/wealthfront- ... #more-3021
I've been skeptical of their claims, and have warned colleagues about it when they asked for my opinion about Wealthfront. Michael's analysis expresses my skepticism quite well.
It's a long post, but here is a part of the summary paragraph:
I agree with Micheal here, that TLH is not beneficial, or can actually hurt, if it's not done with one's specific situation in mind. Note, Kitces income is based on RIAs and other investment advisors, many of who are competing for the same clients as Wealthfront. So he may not be the most unbiased source, because any growth in "robo-investing" may be perceived as a threat to a traditional investment manager.Yet at the same time, this entire exercise illustrates perhaps the greatest weakness of Wealthfront: that developing broad-based algorithms for investment purposes can miss out on the nuances of individual tax planning - an entirely different core competency that must be integrated into the picture, as advisors routinely do and "robo-advisors" are still struggling to do. The situation is especially true given that Wealthfront will harvest losses for all clients on an ongoing basis, regardless of the fact that for some doing so will eventually drive them into a higher tax bracket and destroy wealth, while for others it should not be done at all because they're young and in the lower tax brackets and eligible for 0% capital gains rates and consequently harvesting gains is the best strategy for them.
Wealthfront charges 0.25% on an AUM basis. If someone absolutely wants to have their investments selected and managed for them, they can hire an advisor for 0.5% who can ensure that any transactions are indeed beneficial to the client.
Neurosphere