More bad news for Wealthfront

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Badger1754
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More bad news for Wealthfront

Post by Badger1754 » Mon Mar 26, 2018 6:48 am

I wrote about leaving Wealthfront in a prior post, citing their pressure to increase revenues to satisfy their VCs by 1) lifting fees, 2) shifting to active management.

It turns out that we were onto something. From a Bloomberg article and also a Reuters article posted this weekend, Wealthfront’s valuation has dropped by a third in their latest funding round (a so-called “down round”) that also allowed some early executives to cash out.

The article further states:
The model pioneered by Wealthfront and its competitors has prompted established financial institutions to launch similar services over the past few years, including Fidelity Investments Charles Schwab Corp and Fidelity Investments. This has led some to question whether the startups can secure enough clients to succeed.

This has prompted startups to diversify their offering with added tools and features.
And
Critics said the move diverged from Wealthfront’s passive strategy and noted it forces customers to opt out of the offering rather than in, automatically placing them by default into a product with a much higher fee.

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Re: More bad news for Wealthfront

Post by oldcomputerguy » Mon Mar 26, 2018 8:32 am

From the Bloomberg article:
Wealth management startups took off shortly after the financial crisis, capitalizing on the rise of passive investing as well as mobile applications and websites that appealed to millennials. But competition has been rapidly increasing from other startups as well as incumbents like Morgan Stanley, Fidelity Investments and Charles Schwab Corp. Each has launched a version of a digital wealth product.
Forgive my ignorance, but what exactly is a "digital wealth product"? The first thing that came to my mind when I read this was Bitcoin, I'm pretty sure that's not what they're referencing.
Announcing the fundraising early this year, Chief Executive Officer Andy Rachleff said it would help push Wealthfront further into financial services and launch new offerings. Just over a month later, the startup announced it was adding a risk parity strategy for clients with more than $100,000 at the firm. The strategy aims to balance risks, so that if one investment takes a dive, losses will be diminished by holdings that tend to move in the opposite direction.
Um, maybe I'm missing the point, but isn't that what we call "diversification"?
Critics said the move diverged from Wealthfront’s passive strategy and noted it forces customers to opt out of the offering rather than in, automatically placing them by default into a product with a much higher fee.
Ah. As Shakespeare once wrote, "ay, there's the rub."
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: More bad news for Wealthfront

Post by Ron Scott » Mon Mar 26, 2018 8:44 am

I have a hard time understanding how ANY organization that holds other people's money as their primary corporate mission is not under pressure to take as much of that money for themselves as possible, by "adding value."

In the late '70s I worked for a "mutual" savings bank (non-profit, owned by depositors) and we were ALWAYS looking for ways to make more money off the depositors, and eventually demutualized as many savings banks did in the early to mid-80s.

Vanguard seems to come as close as possible to placing their interests with their clients but they are run by humans too and can encourage behaviors like active funds investing and the hiring of financial planners at fee.

The best we can do is seek out brokerages with low-fee index investments and ignore whatever pitches we get from them and others.
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Re: More bad news for Wealthfront

Post by fposte » Mon Mar 26, 2018 8:54 am

oldcomputerguy wrote:
Mon Mar 26, 2018 8:32 am
From the Bloomberg article:
Announcing the fundraising early this year, Chief Executive Officer Andy Rachleff said it would help push Wealthfront further into financial services and launch new offerings. Just over a month later, the startup announced it was adding a risk parity strategy for clients with more than $100,000 at the firm. The strategy aims to balance risks, so that if one investment takes a dive, losses will be diminished by holdings that tend to move in the opposite direction.
Um, maybe I'm missing the point, but isn't that what we call "diversification"?
According to Wired, Wealthfront's version is "invested mostly in complex derivatives known as total return swaps." (Wired article here.)

Raabe34
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Re: More bad news for Wealthfront

Post by Raabe34 » Mon Mar 26, 2018 9:18 am

Just the simple math without bringing in the risk parity stuff:

8 Billion X 25 bps = 20,000,000 in revenue, total. They have to be bleeding cash at that level.

So even if they find places to add revenue and continue to add assets they are a long ways from profitability/sustainability. These will not be friendly places very long for low cost investors.

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Re: More bad news for Wealthfront

Post by Captain kangaroo » Mon Mar 26, 2018 9:39 am

Raabe34 wrote:
Mon Mar 26, 2018 9:18 am
Just the simple math without bringing in the risk parity stuff:

8 Billion X 25 bps = 20,000,000 in revenue, total. They have to be bleeding cash at that level.

So even if they find places to add revenue and continue to add assets they are a long ways from profitability/sustainability. These will not be friendly places very long for low cost investors.
Wow, 20,000,000 is definitely low for a company like them. Any idea what fidelity, schwab and vg pull in per year

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Re: More bad news for Wealthfront

Post by nisiprius » Mon Mar 26, 2018 10:02 am

Regardless of the merits of risk parity strategies in general, and/or their product in particular... starting by selling people what was supposed to be a simple portfolio of well-known, name-brand, long-only, low-cost ETFs... and automatically shifting people who bought into that strategy into a big allocation to a controversial, proprietary mutual fund with an 0.50% expense ratio... really seems awful to me.

I am disappointed that Chief Investment Officer Burton Malkiel, who has AFAIK never advocated for risk parity strategies before and does not even discuss them in A Random Walk Down Wall Street has not resigned, out of principle, over this.
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Re: More bad news for Wealthfront

Post by thx1138 » Mon Mar 26, 2018 11:02 am

Raabe34 wrote:
Mon Mar 26, 2018 9:18 am
Just the simple math without bringing in the risk parity stuff:

8 Billion X 25 bps = 20,000,000 in revenue, total. They have to be bleeding cash at that level.

So even if they find places to add revenue and continue to add assets they are a long ways from profitability/sustainability. These will not be friendly places very long for low cost investors.
As of summer of 2017 they had 138 employees. They are based in Redwood City (aka Silicon Valley). So yeah, just their labor with overhead is going to burn through that revenue and then some. But you know by forcing everyone into their more expensive risk parity junk unless they opt out was a clever way to double their revenue in an instant. Of course if there is backlash...

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Re: More bad news for Wealthfront

Post by nisiprius » Mon Mar 26, 2018 1:26 pm

thx1138 wrote:
Mon Mar 26, 2018 11:02 am
...As of summer of 2017 they had 138 employees. They are based in Redwood City (aka Silicon Valley)...
At one point, Wealthfront was, for some reason, trying to aggressively promote that Silicon Valley connection, to the point of even having an array of pictures of their techie clients. The message seemed to be "developed by techies for technies." That lasted for a short time and then they moved on to some other marketing message.

I missed an opportunity back then to say "Beware of geeks bearing grifts."

Here's the Wayback Machine's capture of their 2013 home page.
Image

Back then, when you answered nine typical risk-tolerance questions (and one atypical one, "have you ever been an angel investor?") and it spat out a portfolio like this,
Image
it sound to me as if it was pretty legit and maybe even a fairly good thing. But they keep reinventing themselves every year or two, and I don't think that's a good thing.
Last edited by nisiprius on Mon Mar 26, 2018 2:58 pm, edited 1 time in total.
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Re: More bad news for Wealthfront

Post by nisiprius » Mon Mar 26, 2018 1:31 pm

Actually, this thread, Burton Malkiel, Wealthfront CIO makes very interesting reading today. Rick Ferri's comment "Umfundi's" response are particularly interesting:
umfundi wrote:
Wed Mar 27, 2013 6:28 pm
Rick Ferri wrote:Sorry, I didn't explain myself well. It's not the investment management side that's valuable, it's the software side. The portfolios allocation that they offering clients are are nothing to write home about. Yes, Burton Malkiel anointed them, but that not going to make this company worth $100 million. Wealthfront the software company is worth something to Schwab (or even Vanguard). They have created good technology for the industry; account transfer, rebalancing, tax-loss harvesting software, client reporting, etc. Large firms can either recreate this wheel or buy it outright. I think a publicly traded company like Schwab would just step in and buy it for $100 million. They have done it in the past. With Wealthfront having a billion $ under management helps sell the company because there is immediate cash flow coming in. That's my view.

Rick Ferri
Rick, yes. But ...

(Sorry, but this is what I do for a living, opine on software and strategies.)

If Wealthfront's software is so good, why are they flailing about looking for a plausible investment strategy business model?

Is their software so good that if the idea is successful, its functionality cannot easily be copied?

If their business model is so good, is it so unique that it cannot be copied?

Would anyone in their right mind pay $100 million to get $1 billion AUM? At less than a 0.25% fee? I believe that works out to paying $40 for $1 of yearly revenue.

I agree that consumer-oriented financial software and web interfaces in general suck. The industry has no clue compared, for example, to gaming and porn. But, there's not enough consumer demand to do much of anything different. Ask MS Money and Financial Engines.

Please don't get me wrong. I am very much in favor of democratizing and simplifying low-cost investing. I just do not see that Wealthfront has any secret sauce.

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Re: More bad news for Wealthfront

Post by Phineas J. Whoopee » Mon Mar 26, 2018 2:14 pm

I had understood Wealthfront to be disruptive. Was I wrong?
PJW

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Re: More bad news for Wealthfront

Post by wootwoot » Mon Mar 26, 2018 3:02 pm

Wealthfront treats me great in their free tier. No derivatives, no fees, and free TLH.

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Re: More bad news for Wealthfront

Post by nisiprius » Mon Mar 26, 2018 3:20 pm

wootwoot wrote:
Mon Mar 26, 2018 3:02 pm
Wealthfront treats me great in their free tier. No derivatives, no fees, and free TLH.
There's a free tier? No 0.25% uniform asset charge for you?

Oh, I see, it says here:
Wealthfront does not charge an advisory fee on the first $10,000 of assets under management for all clients who sign up prior to April 1, 2018.* On all amounts over $10,000, we charge a monthly advisory fee based on an annual fee rate of 0.25%.
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Re: More bad news for Wealthfront

Post by Ron Scott » Mon Mar 26, 2018 3:25 pm

So the whole Rick Ferri post--from 2013--is as follows, with the key point highlighted:

Rick Ferri wrote:
Wed Mar 27, 2013 2:23 am
Venture capitalists (VCs) have committed over $27 million to Wealthfront by my count. That might seem absurd given the fact that they have very little in assets ($170 million) and charge a 0.25% fee. A RIA of similar size and fee might be worth $1.3 million (3x annual fees).

I thought the VCs were nuts at first, then after thinking about this for a long time, and after visiting Wealthfront and meeting several people including Andy Rachleff, this might turn out to be good venture capital investment. Why? Because this a technology company first and an investment management firm last.

My predictions is that Wealthfront will sell to Charles Schwab or another large investment company for between $80 and $120 million in cash over the next 2-3 years. This won't be because they're a huge success at gathering assets. Rather, it will be because Schwab or another firm will see the value in the technology and be able to apply it across their entire platform. It's a wealth multiplier for Schwab or whomever.

Here's how I see Wealthfront (formally KaChing) and where I predict they're going:

1) I see Wealthfront as a technology company. They write software that's intended to change an industry - in this case, personal investing.
2) They're showcasing their software through an investment company (formally KaChing and now Wealthfront).
3) The company first tried to attract clients as KaChing by picking active managers begining in the fall of 2009.
4) Although "KaChing" reportedly attracted $100 million in assets in the first year, it's not enough to continue the model.
4) In October 2010, Rachleff does a 180 by adopting passive investing using exchange-traded funds (ETFs) and changing the name of the company to Wealthfront.
5) New business acquisition is slow They wait for Linkedin and Facebook IPO and capture some of that money, although not nearly the level anticipated. What's missing is credibility. Rachleff wisely brings on Burton Makiel as CIO and puts his touch on the portfolios and his face on the advertisements. Assets increase due to some good press. They also hire heavy-hitting former Linkedin marketing talent. This leads to round-two of $20 million in VC funding.
6) The company announces this $20 million is to be used to market the firm and improve technology (getting on with big custodians like Schwab would be a big improvement also, IMO.)

I believe spending $XX million in marketing will buy the company at least $1 billion in assets and perhaps $2 billion, but it won't buy $40 billion. That's the number Rachleff said he Wealthfront needs make this a VC success in it's own right (see my earlier post).

Here is the catch - Wealthfront doesn't need $40 billion to make the VCs happy, they may not even need $2 billion.

I say again, this is a technology company first and an investment management firm last. Wealthfront RIA is a showcase for software. It's the techology that makes the company worth worth $80-$120 million to Scchwab or another large boker-dealer. They can use the software as a force multiplier in different ways to attract many billion in assets and grow their own AUM.

That's the story behind Wealthfront, or at least the way I see it on this 27th day of March, 2013.

Rick Ferri
Bottom line, the prediction was wrong. No one seemed willing to essentially buy software for $100M.

Why? You tell me, but whether the additional functionality is valuable to a large brokerage is questionable--5 years after the quote was posted--and you can write A LOT of code for $100M...
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Re: More bad news for Wealthfront

Post by renue74 » Mon Mar 26, 2018 3:39 pm

I actually found Wealthfront in 2014....after reading about a Silicon Valley founder who sold his business and was touting he had put some of his funds into WF.

Back then, I had a FA and considered moving part of our portfolio to WF and self managing the rest in Vanguard, getting rid of the FA.
The WF fee was attractive and they were really pushing the TLH side of things as a way to squeeze out more return.

I actually came to this forum and learned...then decided splitting the portfolio was not the best choice.

At some point...WF has to make money....enough to justify it's existence to VC folks backing it. How do you make money? Increase customer base, Increase rates, Add new profitable products, or reduce expenses.

Competition in that space is growing. Folks who were planning to "jump ship," to go to a WF or other robo advisor are being woo'ed by the big guys because they now have their own robo product.

I'm glad I didn't go to a robo advisor. I learned TLH here and only had to use it 2x in the last 2 years. Plus, I like to be more in control of my portfolio.

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Re: More bad news for Wealthfront

Post by nisiprius » Mon Mar 26, 2018 4:31 pm

Phineas J. Whoopee wrote:
Mon Mar 26, 2018 2:14 pm
I had understood Wealthfront to be disruptive. Was I wrong?
PJW
Like many startup companies, they meant to be disruptive--and maybe they even were--but they aren't the ones profiting from the disruption. Think Edwin H. Armstrong and FM radio... Palm Inc. and the PalmPilot... Xerox and the Alto...
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Re: More bad news for Wealthfront

Post by Phineas J. Whoopee » Mon Mar 26, 2018 4:59 pm

nisiprius wrote:
Mon Mar 26, 2018 4:31 pm
Phineas J. Whoopee wrote:
Mon Mar 26, 2018 2:14 pm
I had understood Wealthfront to be disruptive. Was I wrong?
PJW
Like many startup companies, they meant to be disruptive--and maybe they even were--but they aren't the ones profiting from the disruption. Think Edwin H. Armstrong and FM radio... Palm Inc. and the PalmPilot... Xerox and the Alto...
Well, sure, but consider the success of the Osborne 1. Now that was disruptive, popular, and highly profitable.

Come to think of it, so was the design of the Osborne 2. Except for the popular and highly-profitable aspects.

If only the late Adam Osborne had resisted the temptation to brag. Now that was disruptive.

PJW

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Re: More bad news for Wealthfront

Post by KSActuary » Mon Mar 26, 2018 10:02 pm

Just need to look at their returns to know to stay away.

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Re: More bad news for Wealthfront

Post by wootwoot » Tue Mar 27, 2018 12:12 am

KSActuary wrote:
Mon Mar 26, 2018 10:02 pm
Just need to look at their returns to know to stay away.
Got a link?

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Re: More bad news for Wealthfront

Post by youdiditr2 » Tue Mar 27, 2018 12:25 am

thx1138 wrote:
Mon Mar 26, 2018 11:02 am
Raabe34 wrote:
Mon Mar 26, 2018 9:18 am
Just the simple math without bringing in the risk parity stuff:

8 Billion X 25 bps = 20,000,000 in revenue, total. They have to be bleeding cash at that level.

So even if they find places to add revenue and continue to add assets they are a long ways from profitability/sustainability. These will not be friendly places very long for low cost investors.
As of summer of 2017 they had 138 employees. They are based in Redwood City (aka Silicon Valley). So yeah, just their labor with overhead is going to burn through that revenue and then some. But you know by forcing everyone into their more expensive risk parity junk unless they opt out was a clever way to double their revenue in an instant. Of course if there is backlash...
$20 millions in revenue with over 138 employees based in Redwood City??? Jeez, once the funding is gone, they won't be around. Can't stay in business charging 25bps...except you're based in India.

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Re: More bad news for Wealthfront

Post by KSActuary » Tue Mar 27, 2018 10:25 am

wootwoot wrote:
Tue Mar 27, 2018 12:12 am
KSActuary wrote:
Mon Mar 26, 2018 10:02 pm
Just need to look at their returns to know to stay away.
Got a link?
https://www.wealthfront.com/historical-performance

Go to Methodology in footnotes. Look for historical returns. You can then look at risk value (8.0 for example) and then go to benchmark description to better understand allocation since 2013.

Any questions, please ask.

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Re: More bad news for Wealthfront

Post by bert09 » Tue Mar 27, 2018 11:30 am

I also posted about leaving recently - right now I have turned off TLH and am waiting for the funds to return to the primary Vanguard ETFs just because it isn't really hurting anything to have them there and to make the impending transfer have the fewest # of funds possible.

What would be the hypothetical scenario if they "went under"? Would they get acquired by someone else, and then I would have to do the in-kind transfer from that new entity? Would them getting acquired cause a bunch of extra tax paperwork?

Basically I am wondering if, since I was planning on doing it anyways, I should go ahead and expedite the transfer rather than waiting around to do it.

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Re: More bad news for Wealthfront

Post by Whakamole » Tue Mar 27, 2018 11:54 am

bert09 wrote:
Tue Mar 27, 2018 11:30 am
I also posted about leaving recently - right now I have turned off TLH and am waiting for the funds to return to the primary Vanguard ETFs just because it isn't really hurting anything to have them there and to make the impending transfer have the fewest # of funds possible.

What would be the hypothetical scenario if they "went under"? Would they get acquired by someone else, and then I would have to do the in-kind transfer from that new entity? Would them getting acquired cause a bunch of extra tax paperwork?

Basically I am wondering if, since I was planning on doing it anyways, I should go ahead and expedite the transfer rather than waiting around to do it.
If they went under (and there could be reasons why nobody would want to buy Wealthfront, they may not want exposure to the "total return swaps" and lawsuits related to that), my understanding is the assets would be transferred to another brokerage firm. Then you'd have a mess of ETFs or whatever funds they invested in to deal with. There was someone here not long ago who listed all the funds Betterment had gotten them invested in, it looks like a hassle compared to the ease of the three-fund portfolio and doing the occasional TLH by hand.

https://www.brokerage-review.com/articl ... krupt.aspx

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Re: More bad news for Wealthfront

Post by bert09 » Tue Mar 27, 2018 12:03 pm

Whakamole wrote:
Tue Mar 27, 2018 11:54 am
If they went under (and there could be reasons why nobody would want to buy Wealthfront, they may not want exposure to the "total return swaps" and lawsuits related to that), my understanding is the assets would be transferred to another brokerage firm. Then you'd have a mess of ETFs or whatever funds they invested in to deal with. There was someone here not long ago who listed all the funds Betterment had gotten them invested in, it looks like a hassle compared to the ease of the three-fund portfolio and doing the occasional TLH by hand.

https://www.brokerage-review.com/articl ... krupt.aspx
Thanks - right now, since I didn't opt-in to more of their "advanced" features I have at most 14 ETFs (7 to comprise the portfolio with an alternate for TLH), half of which are Vanguard funds that I would be fine with holding anyways so it isn't as bad as some of the situations people have posted about, like where they had enabled direct indexing and had ~100 individual stocks.

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Re: More bad news for Wealthfront

Post by Whakamole » Tue Mar 27, 2018 12:50 pm

bert09 wrote:
Tue Mar 27, 2018 12:03 pm
Whakamole wrote:
Tue Mar 27, 2018 11:54 am
If they went under (and there could be reasons why nobody would want to buy Wealthfront, they may not want exposure to the "total return swaps" and lawsuits related to that), my understanding is the assets would be transferred to another brokerage firm. Then you'd have a mess of ETFs or whatever funds they invested in to deal with. There was someone here not long ago who listed all the funds Betterment had gotten them invested in, it looks like a hassle compared to the ease of the three-fund portfolio and doing the occasional TLH by hand.

https://www.brokerage-review.com/articl ... krupt.aspx
Thanks - right now, since I didn't opt-in to more of their "advanced" features I have at most 14 ETFs (7 to comprise the portfolio with an alternate for TLH), half of which are Vanguard funds that I would be fine with holding anyways so it isn't as bad as some of the situations people have posted about, like where they had enabled direct indexing and had ~100 individual stocks.
You may be fine, but keep in mind the current offering was opt out. You should ask yourself if it is worth the time and effort to keep an eye on Wealthfront to make sure you didn't end up in some ETF that had liquidity issues or wasn't the type of investment you wanted.

I would not mind a service that did very basic rebalancing and TLHs, maybe tax optimization based on your preferences, and that was it. I think this would best be offered by a broker like Vanguard/Schwab/Fidelity since they'd make revenue off both the ETFs (presumably theirs which I would be fine with) and whatever modest fee was charged for the service.

My problem with the way Wealthfront/Betterment charge for the TLH service is that that it is structured to give benefits to new investors but take the bulk of money from established investors. Think of it this way: say you started investing in the S&P 500 index fund of your choice since 1990. Whatever you invested in 1990 has grown substantially and there is almost certainly no TLH to be gained, yet they are happily charging you a fee on those assets. They're charging you more than the S&P fund charges! What gets investors to join Wealthfront or Betterment for the TLH is that TLH is most useful (absent large market crashes like 2007-2009) on very recent investments. Someone new will see an immediate benefit because the next time the stock market dips, the service will TLH them into another fund and they get a tax write-off. The other side to this is that this is all done by software, which will happily handle an infinite number of TLH partners, but a human being cannot and it effectively locks them into the platform. That may be their goal - by the time you've got six or seven figures, there are so many holdings that it is easier and "cheaper" to continue to pay them to administer it.

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Re: More bad news for Wealthfront

Post by tchoupitoulas » Tue Mar 27, 2018 2:14 pm

Whakamole wrote:I would not mind a service that did very basic rebalancing and TLHs, maybe tax optimization based on your preferences, and that was it. I think this would best be offered by a broker like Vanguard/Schwab/Fidelity since they'd make revenue off both the ETFs (presumably theirs which I would be fine with) and whatever modest fee was charged for the service.
What you're describing is something that Schwab already offers. They call it "Schwab Intelligent Portfolios." They don't charge anything for it because, as you suspected, they put you in Schwab ETFs. As others have noted before, they also make money by maintaining a pretty significant cash position in your account (9%), which they can then loan out. I don't have the mathematical chops to figure out how much drag a 9% cash allocation would have over the long term, but I imagine it is some sort of downside (Betterment does not do this).

Notably, they also now offer something called "Schwab Intelligent Advisory," which has features that will be familiar to Betterment users (things like tracking external accounts, "probability of success" planning tool, etc. For that service they charge 28 bps, more than Betterment's 25. I think I could do without this stuff, but I do think it adds value. As a Betterment customer, I would certainly be interested to see an analysis of how you compare a 25 bps annual charge with a 9% cash allocation "hidden charge." Which is more expensive? I don't know.

I've been following this thread with some trepidation. So far I'm happy to see that Betterment appears to have stuck to its guns much more faithfully in terms of its investment philosophy, but I do sometimes feel apprehensive about the long-term viability of the company. I hope they make it.

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Re: More bad news for Wealthfront

Post by RetiredNewbie » Tue Mar 27, 2018 4:56 pm

wootwoot wrote:
Tue Mar 27, 2018 12:12 am
KSActuary wrote:
Mon Mar 26, 2018 10:02 pm
Just need to look at their returns to know to stay away.
Got a link?
Here is a comparison of Wealthfront with other robo advisors, from BackendBenchmarking's Robo Report. Betterment is highlighted because that is what I use. As you can clearly see, Wealthfront's performance is nothing to brag about...
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More detail from the report here...
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Your attitude about risk changes significantly when the bear begins to maul you.

KSActuary
Posts: 379
Joined: Fri Jan 13, 2012 10:53 pm

Re: More bad news for Wealthfront

Post by KSActuary » Tue Mar 27, 2018 8:30 pm

RetiredNewbie wrote:
Tue Mar 27, 2018 4:56 pm
wootwoot wrote:
Tue Mar 27, 2018 12:12 am
KSActuary wrote:
Mon Mar 26, 2018 10:02 pm
Just need to look at their returns to know to stay away.
Got a link?
Here is a comparison of Wealthfront with other robo advisors, from BackendBenchmarking's Robo Report. Betterment is highlighted because that is what I use. As you can clearly see, Wealthfront's performance is nothing to brag about...
Image

More detail from the report here...
Image
Provides more opportunity for tax loss harvesting..........?

Betterment stopped reporting their performance......

User avatar
nisiprius
Advisory Board
Posts: 37051
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: More bad news for Wealthfront

Post by nisiprius » Tue Mar 27, 2018 9:18 pm

Fanfare

Aaaaaaaaand, they're off!

Source
Image

It's a beautiful day for the race, folks. Safety Pin has been scratched, Girdle is in the stretch, Chewing Gum is sticking to the rail...

Vanguard Total Bond Fund, VBMFX, is in yellow. It isn't comparable to risk parity funds.
Invesco Balanced Risk, ABRZX, is in green.
AQR Risk Parity is, AQRIX, is in orange.
And Wealthfront Risk Parity Fund, WFRPX, is in blue.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Biffer
Posts: 116
Joined: Wed Jan 30, 2013 4:34 pm

Re: More bad news for Wealthfront

Post by Biffer » Wed Mar 28, 2018 4:40 pm

nisiprius wrote:
Mon Mar 26, 2018 1:26 pm
I missed an opportunity back then to say "Beware of geeks bearing grifts."
Better late than never.

plependu
Posts: 1
Joined: Fri Mar 30, 2018 4:46 am

Re: More bad news for Wealthfront

Post by plependu » Fri Mar 30, 2018 4:52 am

nisiprius wrote:
Mon Mar 26, 2018 10:02 am
Regardless of the merits of risk parity strategies in general, and/or their product in particular... starting by selling people what was supposed to be a simple portfolio of well-known, name-brand, long-only, low-cost ETFs... and automatically shifting people who bought into that strategy into a big allocation to a controversial, proprietary mutual fund with an 0.50% expense ratio... really seems awful to me.
Yep. That made me mad. So I liquidated all assets. Worst: they claim it was opt out, but I never got notification! Never even got the chance to opt out.

Support insists they emailed me, but I use Gmail. Nothing gets deleted. They never emailed me! So mad.

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