UBS Acquires Wealthfront for $1.4B • Hacker News Board

Re: UBS Acquires Wealthfront for $1.4B

#31

Post by jmacd » Wed, Jan 26, 2022, 5:52 PM UTC

propter_hoc wrote: post #15

Super interesting. Wealthfront has approximately $27 billion USD in AUM according to this article [0]. Meanwhile the leading robo-advisor in Canada, WealthSimple recently raised funds at a $5 billion CAD valuation, on a $7.7 billion USD AUM [1]. I have felt for a while like the robo-advisory market is in roadrunner mode - has run past the edge of the cliff but hasn't quite yet fallen. Maybe this is the first sign tha…

Wealthsimple now has in house advisors who email and call you to discuss your account. There is nothing 'robo' about the business model anymore and instead they are just focused on growing AUM by talking to people and convincing them to move more of their savings/TFSA/RRSP over to them.

Re: UBS Acquires Wealthfront for $1.4B

#32

Post by devoutsalsa » Wed, Jan 26, 2022, 5:52 PM UTC

endisneigh wrote: post #6

How much better has wealth front done vs SPY, fee adjusted? Imho all robo advisers are a waste of money. If they were actually effective they’d use their own services themselves as opposed to sell them to retail. The latest crop of businesses really are marketing value adds. See: https://longbets.org/362/ Other people have done similar bets and they all lose on a risk adjusted, fee adjusted basis.

I use Wealthfront. Performance vs SPY is comparable, but it can depend on your risk preferences. I like it because it abstracts away the underlying securities & I don’t have to worry about it. I also like their feature that lets you borrow against your portfolio at a fairly low rate (less than 4% for me), which is a painless way to tap into credit if you need to for pick a reason. I think it’s a great option for anyone looking to keep investing as simple as possible.

Re: UBS Acquires Wealthfront for $1.4B

#33

Post by kaesar14 » Wed, Jan 26, 2022, 5:52 PM UTC

lotsofpulp wrote: post #16

dartdartdart wrote: post #12

Anyone know of any other product offer that will take excess after direct deposit and invest it for you? I've called Fidelity and Betterment and both do not offer an automated way like wealthfront does. Really sad to see wealthfront being the only player in that space. Edit: by automated I mean something like "everything over $10k after bills, invest". It takes a couple of clicks per month manually, but it's been pre…

Is there really that much utility in automating that? It takes a few clicks to move money from a checking account in Schwab/Fidelity to a target date fund or index ETF.

There's utility in automating anything you do manually the exact same way repeatedly and regularly

Re: UBS Acquires Wealthfront for $1.4B

#34

Post by endisneigh » Wed, Jan 26, 2022, 5:52 PM UTC

astura wrote: post #22

endisneigh wrote: post #6

How much better has wealth front done vs SPY, fee adjusted? Imho all robo advisers are a waste of money. If they were actually effective they’d use their own services themselves as opposed to sell them to retail. The latest crop of businesses really are marketing value adds. See: https://longbets.org/362/ Other people have done similar bets and they all lose on a risk adjusted, fee adjusted basis.

>robo advisers are a waste of money For the informed investor, yes, however they are a giant step above the "financial advisors" (mostly insurance salesman) that uninformed investors otherwise would end up with. If you otherwise wouldn't invest or would go to a non-fiduciary advisor, then the fee is worth it.

I don’t disagree but my point is that an uninformed investor would be better off financially with a straight index.

Re: UBS Acquires Wealthfront for $1.4B

#35

Post by tinyhouse » Wed, Jan 26, 2022, 5:52 PM UTC

endisneigh wrote: post #11

lotsofpulp wrote: post #9

Earlier quoted context omitted.

These investing middlemen have all been obviated by automation. No one is beating the 0.03% to 0.15% expense ratios for index ETFs/Target Date Retirement Funds from Vanguard/Schwab/Fidelity.

Agreed completely. I don’t know how anyone can justify 10 times the fees using wealthfront for non trivial amounts of money. I personally have many friends who are very happy with betterment and wealthfront which is good. When I ask them about their returns in the past couple years they say that the stocks have done amazingly. When I tell them SPY would’ve given them higher returns and lower fees they’re skeptical, a…

I don't know what are Wealthfront's fee, but not everyone wants to put all their eggs in SPY. Wealthfront (and other similar services) let you pick a risk score, and based on that invest in lots of different things. Most people have very diversified Wealthfront portfolios. They also claim to help with tax harvesting. Since SPY had an amazing run it performed better than your friends' accounts, but it doesn't mean it will keep outperforming in the future. It's a riskier investment.

Now, obviously you can also create a very diversified portfolio by yourself. That's totally fine if you know what you're doing and OK spending the time doing it.

Re: UBS Acquires Wealthfront for $1.4B

#36

Post by Beaver117 » Wed, Jan 26, 2022, 5:53 PM UTC

endisneigh wrote: post #6

How much better has wealth front done vs SPY, fee adjusted? Imho all robo advisers are a waste of money. If they were actually effective they’d use their own services themselves as opposed to sell them to retail. The latest crop of businesses really are marketing value adds. See: https://longbets.org/362/ Other people have done similar bets and they all lose on a risk adjusted, fee adjusted basis.

The tax savings I get from them is much more than the annual fee. I converted the portfolio to 100% US stocks btw. Sure I can harvest losses myself but that introduces emotion and watching the market carefully.

Re: UBS Acquires Wealthfront for $1.4B

#37

Post by endisneigh » Wed, Jan 26, 2022, 5:53 PM UTC

devoutsalsa wrote: post #32

endisneigh wrote: post #6

How much better has wealth front done vs SPY, fee adjusted? Imho all robo advisers are a waste of money. If they were actually effective they’d use their own services themselves as opposed to sell them to retail. The latest crop of businesses really are marketing value adds. See: https://longbets.org/362/ Other people have done similar bets and they all lose on a risk adjusted, fee adjusted basis.

I use Wealthfront. Performance vs SPY is comparable, but it can depend on your risk preferences. I like it because it abstracts away the underlying securities & I don’t have to worry about it. I also like their feature that lets you borrow against your portfolio at a fairly low rate (less than 4% for me), which is a painless way to tap into credit if you need to for pick a reason. I think it’s a great option for anyo…

The comparison isn’t really performance. It’s more fee adjusted returns. Obviously Wealthfront likely has an index itself that it uses, but the fees are 10X (0.03 for Fidelity be around 0.3 for Wealthfront).

Re: UBS Acquires Wealthfront for $1.4B

#38

Post by JumpCrisscross » Wed, Jan 26, 2022, 5:53 PM UTC

TuringNYC wrote: post #5

I'm honestly shocked at how primitive the big firms' offerings are. For example, JPMChase's bank account is smart enough to see a payroll deposit and give you a comment modal suggesting that you invest the money with JPM's investment platform (YouInvest/whatever) Log into the investment platform and you're back in 1993. They literally have no drip-investment style offering. They want to charge you 100bps to "manage"…

> Why the heck isnt JPMChase buying one of these platforms?!?]]

Broadly speaking, the retail market can be segmented on two axes: net worth and involvement.

Low net worth, high involvement are day traders: they are profitable through fees, PFOF, et cetera. High net worth, high involvement doesn’t tend to exist long enough to specialise in; they’re, professionals, have better things to do or lose their money.

Low net worth, low involvement is patient capital. Not super profitable per se. But the most likely to develop into the last category: high net worth, low involvement; the money maker.

Robo-advisers targeted the third category. They got more of the first. Those not only bolted to crypto and Robinhood. They also incurred higher costs to the firm while promising less development potential to the fourth category. The actual third category participants, to a large degree, don’t need much more than was available in 1993, or at least are savvy enough not to find themselves paying for it.

Re: UBS Acquires Wealthfront for $1.4B

#39

Post by lotsofpulp » Wed, Jan 26, 2022, 5:54 PM UTC

all2 wrote: post #27

lotsofpulp wrote: post #16

Earlier quoted context omitted.

Is there really that much utility in automating that? It takes a few clicks to move money from a checking account in Schwab/Fidelity to a target date fund or index ETF.

I have to remember to do those few clicks, though.

Should people not be remembering to login to their accounts on a monthly or at least bimonthly basis to save statements/verify transactions/check to make sure they are not being stolen from?

Re: UBS Acquires Wealthfront for $1.4B

#40

Post by cbhl » Wed, Jan 26, 2022, 5:54 PM UTC

laluser wrote: post #26

propter_hoc wrote: post #15

Super interesting. Wealthfront has approximately $27 billion USD in AUM according to this article [0]. Meanwhile the leading robo-advisor in Canada, WealthSimple recently raised funds at a $5 billion CAD valuation, on a $7.7 billion USD AUM [1]. I have felt for a while like the robo-advisory market is in roadrunner mode - has run past the edge of the cliff but hasn't quite yet fallen. Maybe this is the first sign tha…

It probably depends on what adjacent financial products they are selling and how good of a job they are doing at selling those to existing customers. Wealthfront is always suggesting different financial products, cards, etc. There is little money in managing your money since these are mostly served by large funds like Vanguard, but there is a lot of money in referrals selling you other products. It's possible Wealths…

For what it's worth, Wealthsimple exited the US market last year and transferred all their US customers to Betterment. They seem to still be adding new products in Canada though (like a Venmo-like cash transfer system.)