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UBS Acquires Wealthfront for $1.4B

reuters.com

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Re: UBS Acquires Wealthfront for $1.4B

#181

Post by xur17 »

NavinF wrote: post #160
kmonsen wrote: post #155

Earlier quoted context omitted.

But why go with wealthfront when you can buy a target date fund from vanguard? It gets you most of what you really need?

If you just buy and hold a target date fund, you miss out on loss harvesting. A free loan on taxes owed can be turned into free money.

While true, note that the effects of tax loss harvesting are really only significant for a few years after acquiring the asset (since stocks tend to go up over time), but you will pay the Wealthfront fee for the rest of your life (especially since they do direct indexing, which makes switching away complicated).

And fwiw, tax loss harvesting sounds complicated, but it really isn't that hard to do. If I notice stocks have gone down a lot recently, I'll hop into Vanguard, and swap anything that is underwater with another similar, but not identical fund. I have one for international and one for US stocks. Took me a few hours to get a system down, and now it's a few minutes to do the harvest once every few years.

Re: UBS Acquires Wealthfront for $1.4B

#182

Post by boring_twenties »

lotsofpulp wrote: post #173
boring_twenties wrote: post #154

Earlier quoted context omitted.

> Just to be clear, we are talking about clicking on a bookmark, letting the password manager fill in the login info, and the clicking login or pressing enter? Close, you forgot the part where you need to locate your 2FA device, possibly connect it to a charger and wait for it to boot if needed, and then of course actually get the 2FA code and type it into the website. edit: Oh, and I forgot the part where if you nee…

If I am using a previously used device, I do not get asked for 2FA on Schwab or Fidelity. Also, macOS/iOS automatically fill in SMS 2FA which is nice.

Ah, that's nice, I hate sites that don't do that -- which includes the one I am currently forced to use. Hilariously, the mobile app allows using the fingerprint scanner instead of entering my password -- but still requires me to enter the 2FA code every time, which of course is on the same device, so it's not doing anything other than just wasting my time.

Don't use SMS 2FA, though.

Re: UBS Acquires Wealthfront for $1.4B

#183

Post by colordrops »

lzrs wrote: post #131

I've been researching robo-advisors quite a bit recently. They are really interesting and innovative. I'll preface by saying that I have been talking to a lot of financial planners (at top-tier institutions). They basically set you up with a good set of ETFs, hedge funds, etc. and rebalance occasionally. Sometimes they do tax-loss harvesting. They also provide a few other nice little services. But at the end of the d…

Does Fidelity have robo-advising? Because all the big companies I've worked at use them for retirement funds, and I've found most of the management is heavily manual at Fidelity.

Re: UBS Acquires Wealthfront for $1.4B

#184

Post by borski »

lzrs wrote: post #147
mushufasa wrote: post #139

Earlier quoted context omitted.

Many people who start off with Robos like Wealthfront actually leave once their net worth rises and pay more for human advisors. If you need to invest a small/decent amount of money into stocks, Robos work wonderfully. It's a mass production angle -- good quality service at lower cost to many people; the Ford Model T of investing. Early robot just had a couple of investment options, and now there are more options but…

Yes, completely agree. That happens when all of the other estate planning costs begin to vastly outweigh the cost of investment advising. I'm no expert, but I am under the impression that although these automated strategies are a smaller part of the whole picture for high net-worth individuals, the strategies are still the same. I'm interested to see if UBS can add value in those ways you mentioned, while still using…

The one exception is alternative investments like real estate and private equity. Once you are HNW or at least high enough to have enough investable assets that you qualify, PE can be an attractive investment class that Wealthfront won’t touch.

Also, human advisors can manage, or at least access, investments across brokerages; that is, you don’t have to worry as much about wash sale rules and can do tax loss harvesting because they can see your sales elsewhere. I have to have TLH turned off on Wealthfront because it has no way of knowing about what things I’ve sold elsewhere.

Not financial advice, YMMV, etc.

Re: UBS Acquires Wealthfront for $1.4B

#185

Post by rco8786 »

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"…

> how primitive the big firms' offerings are

My take (as a previous employee at Betterment): Wealthfront/Betterment/et al came out to much fanfare and the promise of disrupting the traditional wealth management industry.

At first, it seemed like they were right. AUM growth was looking like a hockey stick...this caused some panic at the big firms' who hurried to launch their own offerings (this is like 2015-ish) which were minimal at best, and still mostly just "marketing products" - a thin roboadvisor veneer designed to drive users into their traditional businesses.

Over the next 2-5 years and up to now, it is becoming/has become obvious that roboadvisors are not, in fact, going to disrupt the industry and it's rather a race to the bottom in pricing with razor thin (or non-existent) margins...so the actual robos have largely stagnated and the big firms stopped investing into their own solutions.

Re: UBS Acquires Wealthfront for $1.4B

#186

Post by tinalumfoil »

xur17 wrote: post #141
prepend wrote: post #45

Earlier quoted context omitted.

When I looked at it the fees were way to high to justify to bogelheads. What is strange to me about robo advisors is that they are still charging a management fee instead of a flat fee. The algorithms are really basic and don’t have any real time changes so it seems weird to charge 25-50 basis points for what’s basically just an interview and time based rebalancing with some formulas that aren’t really better than ex…

Agreed. To me target date retirement funds honestly make more sense for most people.

I'm not sure about that. Targets funds fees are generally a percent not flat, you have less control over your money (which if you're doing a robo-advisor you probably have somewhat bespoke investing requirements) and they only make sense for tax-advantaged accounts (see [1]).

Plus, people invest for reasons other than dated retirement targets.

[1]: https://www.wsj.com/articles/vanguard-target-retirement-tax-...

Re: UBS Acquires Wealthfront for $1.4B

#187

Post by throwusawayus »

TuringNYC wrote: post #97
Spooky23 wrote: post #68

Earlier quoted context omitted.

They can’t compete at scale for small potato clients. They want high net worth people to work with a guy. Ie the stereotypical dentist. Honestly it’s probably a good thing. Chase is pretty awful at basic retail banking. Really only makes sense if you live in Manhattan or something where there are like 3 mega banks in every corner.

I'm surprised to hear this take. I find Chase to be the best bank I've ever worked with -- personal accounts, business accounts, everything. Customer service is top notch. Website is great. I'd love to hear your choices for a top retail bank. Yes, i'm in the NY area, so true on branch location issue. But how often do you have to visit a branch if you have good systems? The branch is usually for when systems fail. Not…

I fully agree with GP, my experiences with Chase have been quite poor even in the NYC region.

Ahead of buying a home in ~2015, I was holding a lot of cash, and Chase upgraded me to Chase Private Client. Seemed good at the time, perks like free museum visits and such, and they said I could retain the status for at least a year even after reducing my account balances.

Private Client sucked. My "private banker" was irritating at best. Constant sales pressure shilling their investment products, which had a 1% management fee, on top of being a basket of a hundred different actively-managed mutual funds which also had their own high fees. Hard pass.

I looked up my "private banker" on LinkedIn and he was literally a parking attendant at his previous role.

I moved out of NY not long after this, and switched out of Private Client, although I did keep a small amount in a lower Chase tier.

A while into the pandemic, I started getting emails from Chase about how "my local branch" was closing (always some random Chase location in Manhattan). Happened repeatedly for different branches, sometimes ones I'd only visited a single time while running errands somewhere in the city. This despite the fact that when I moved out of NY many years ago, I fully updated my address in Chase's systems, and they should surely know I do not live in NY anymore.

Re: UBS Acquires Wealthfront for $1.4B

#188

Post by borski »

onphonenow wrote: post #166
matteotom wrote: post #153

Earlier quoted context omitted.

I know someone who's been doing wealth management for like 20 or 30 years now. Based on what they've told me, I'd separate clients roughly into 3 categories: 1. people who don't want to think about it - they pay for everything to be taken care of properly 2. people who want to be wined and dined - they end up paying to be taken out to dinner a few times a year and hear about what the firm is doing to survive bear mar…

The wined and dined people also often really don't want to deal with a website and they want someone to call who can "get things done" if needed. So for wealthfront and friends, let's say a family member is closing on a property purchase. You said you'd put in $500K. Closing comes and you try to wire the money over. But wait, it doesn't work. 1) First you have to sell investments 2) Trades have to SETTLE (T+2 or more…

This is honestly a huge deal - when I make an angel investment, I send a text and/or wire info via the Merrill Lynch app, and I know it will be taken care of (by the same people every time) same day or next day, depending on when I send it.

That plus introductions and referrals to tax accountants, estate attorneys, etc., and access to investment vehicles I otherwise wouldn’t get (easily), definitely makes the 0.7% fee worth it for me.

[quick edit] Honestly, as someone who comes from an impoverished background, they also act largely as “financial therapists.” That is, I don’t make emotional decisions about money, but that doesn’t mean I don’t have tons of anxiety when I spend money on something large; they generate a wealth plan, allow me to see how my assets will change, allow me to (based on models) see if I’m overfunded, underfunded, etc., and I don’t have to do a thing other than send a text. That is insanely helpful to me, personally.

Re: UBS Acquires Wealthfront for $1.4B

#189

Post by PascLeRasc »

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…

We could also tell you that VOO gives you the returns of SPY with 1/3 the fees, or that VT gives you much better diversification.

Re: UBS Acquires Wealthfront for $1.4B

#190

Post by borski »

adrr wrote: post #170
lzrs wrote: post #131

I've been researching robo-advisors quite a bit recently. They are really interesting and innovative. I'll preface by saying that I have been talking to a lot of financial planners (at top-tier institutions). They basically set you up with a good set of ETFs, hedge funds, etc. and rebalance occasionally. Sometimes they do tax-loss harvesting. They also provide a few other nice little services. But at the end of the d…

Does Wealthfront actually buy individual stocks? Most robo-advisors buy ETFs. So you're paying double management fees. I'm not aware of any robo-advisors that actually buy individual stocks.

Once you cross a threshold of investable assets at which it makes sense (usually a few hundred thousand), most robots have an active indexing strategy in addition to or instead of ETFs.
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