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UBS Acquires Wealthfront for $1.4B

reuters.com

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Re: UBS Acquires Wealthfront for $1.4B

#221

Post by sgustard »

mushufasa wrote: post #139
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…

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…

You can pay for both human advisors and robo-investing. A human advisor will charge 1% of assets to manage your money for you, and the results may not differ much from what the robot picks at much lower cost. I'm happy with the robot's asset allocation and I pay an expert for taxes, trusts, and so on.

Re: UBS Acquires Wealthfront for $1.4B

#222

Post by ivalm »

mushufasa wrote: post #139
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…

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…

> Once you have estate planning and complicated tax issues, human advisors provide a lot of guidance to people that is hyper specific to you and your location / niche, which Robos just don't cover. Wealthfront, for example, won't arbitrate a dispute between beneficiaries of a family trust.

I agree fully that estate planning/making a trust is something most people would benefit from a human advisor, but this is something you can target with an estate lawyer. I don't think this is something you would need advice on regular basis.

For taxes, I am guessing vast majority of people, even wealthy people, never need human advice nowadays. Anything that is just combination of W2+1099DIV+1099B+1099INT+1099NEC is handled well with robo tools. Tax loss harvesting is pretty simple (even without robo advising!) as long as you know wash sale rules and distinction between long/short term capital gains.

Re: UBS Acquires Wealthfront for $1.4B

#223

Post by Spooky23 »

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…

The best banks for most individuals are almost always small regional banks or credit unions.

The credit union I use has 7% lines of credit, mortgage rates that are consistently within 5 basis points of the lowest and average hold time to an agent I think big banks tend to never be great customer experiences becuase the internal incentives aren’t there. Retail banking is a sales funnel, and why would a brilliant leader want to run retail? It would be a pay cut. The “brand name” of a major bank used to mean you could cash your checks anywhere, etc. that’s all dead.

Re: UBS Acquires Wealthfront for $1.4B

#224

Post by Scoundreller »

jldugger wrote: post #214
Scoundreller wrote: post #23

Earlier quoted context omitted.

One US strategy that can beat ETFs is the part where the first $3k in capital losses per year can be applied against income. So if you owned every stock in the index directly, one could cycle the losers around a bit (there will be at least some each year) to maximize this write off against income.

Setting aside whether TLH is saving money or simply borrowing it from future tax liabilities, how much is 3k in capital losses worth to you? At what point does the 0.25 expense ratio cost more than the benefit to you? By my calculations, the breakeven AUM is around $240k, assuming you always have 3k cap gains to offset.

It’s more of an argument for how lots of individual holdings could beat an ETF, in USA anyway. If your commissions are free anyway. Lots of paperwork tho.

For all I know, these robo-advisers just buy you ETFs.

Re: UBS Acquires Wealthfront for $1.4B

#225

Post by jmacd »

blobbers wrote: post #67
jmacd wrote: post #31

Earlier quoted context omitted.

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.

Speaking of TFSA/RRSPs etc. is there a canadian version of bogleheads we should know about?

Canadian Couch Potato is the closest.

Re: UBS Acquires Wealthfront for $1.4B

#226

Post by extesy »

xur17 wrote: post #181
NavinF wrote: post #160

Earlier quoted context omitted.

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…

> 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)

This is true only if you invest once in your life and then hold those assets forever. But if you invest every quarter then you can do TLH on those new lots individually. And since those new lots will keep coming, your TLH will always have something to work with.

Re: UBS Acquires Wealthfront for $1.4B

#227

Post by mbesto »

blobbers wrote: post #2

A lot of you likely invest in a boglehead style. Wealthfront was an attempt to automate that while adding some bells and whistles on top; tax loss harvesting, smart beta, etc. Curious to see how they succeed as part of UBS. I thought Marcus/Goldman was going to buy them personally, so a bit surprised UBS is getting in on this game.

boglehead here. Switched off of Wealthfront awhile back. AFAIK they wouldn't outperform a three-fund portfolio.

I actually wouldn't mind a platform that uses my brokerage as a backend and lets me do % allocations on 3~4 funds, automatically identifies rebalance opportunities and tax loss harvesting. Basically nudging me like 3~5x per year. I'd pay a flat fee to do that.

Re: UBS Acquires Wealthfront for $1.4B

#228

Post by moneywoes »

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…

Why not use a Vanguard target date fund

Re: UBS Acquires Wealthfront for $1.4B

#229

Post by subsubzero »

Arcuru wrote: post #114
skeeter2020 wrote: post #101

Earlier quoted context omitted.

>> I pulled my money out and invested into stocks I chose and never looked back(typically get 10-15% returns a year) You must be one of: 1. lucky 2. a genius 3. a crook 4. haven't invested on a long enough timeframe.

Given the stock market returns over the last five years, it's definitely #4. Everybody invested in broad market index funds has been making those returns the last few years.

well it helps that stocks have mostly gone up in the past 7-8 years :) but I typically avg. about 10% a year, one year was a down year but most years its about that.

Re: UBS Acquires Wealthfront for $1.4B

#230

Post by jcampbell1 »

bonestamp2 wrote: post #218
zie wrote: post #191

Earlier quoted context omitted.

* Edward Jones will do it for you for ~ 2%/yr, which is ridiculously high. * Any of the big banks or brokerages will do it for less than Edward Jones. * Almost any financial advisor will do it for about 1%/yr in fees(not ridiculously high, but not remotely cheap) or fee-based for a few hundred an hour with a 1st time setup of $4-10k, more than $10k is unreasonable. * The robo advisors(of which their are dozens with b…

> At least one firm will do it for $200 first year and $100/yr after that Can you share that one? PM me if preferred. I'm on a similar quest and so far I've found pretty much everything else you've found. My wife is a high income earner too and she's happy with the 1%/yr people that she likes, but I think we can get similar results for noticeably less. Even 0.5% would be reasonable. As you know, from $1m to $2m that…

It can be hard convincing people that 1% is a big number. I assume that you are on average going to see 6-7% return after inflation. The 1% represents 15% of the return. So you give the tax collector 25% and the money manager another 15%. You can defer the taxes but the manager gets theirs once a quarter.

When you are in the $1m+ AUM, it is pretty easy to explain. You are going to be paying for your kids to go to college and one of theirs as well. Make sure you really like them.

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