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UBS Acquires Wealthfront for $1.4B

reuters.com

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Re: UBS Acquires Wealthfront for $1.4B

#11

Post by endisneigh »

lotsofpulp wrote: post #9
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.

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, and lo and behold when I actually show them they’re shocked.

I feel these companies survive on sheer inertia

Re: UBS Acquires Wealthfront for $1.4B

#12

Post by dartdartdart »

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 pretty relieving not having to do that every month.

Re: UBS Acquires Wealthfront for $1.4B

#13

Post by cheonic8492 »

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.

> Imho all robo advisers are a waste of money.

Robo and human financial advisors provide emotional hand-holding and comfort.

Same reason why you trust a doctor, despite doctors underperforming (intelligent) self-directed health and nutrition research.

Re: UBS Acquires Wealthfront for $1.4B

#14

Post by cj »

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.

> How much better has wealth front done vs SPY, fee adjusted?

That comparison isn't really a good way to evaluate based on since it doesn't account for risk, only reward.

Re: UBS Acquires Wealthfront for $1.4B

#15

Post by propter_hoc »

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 that the party's ending.

[0] https://www.roboadvisorpros.com/robo-advisors-with-most-aum-...

[1] https://financialpost.com/investing/wealthsimple-valuation-s...

Re: UBS Acquires Wealthfront for $1.4B

#16

Post by lotsofpulp »

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.

Re: UBS Acquires Wealthfront for $1.4B

#17

Post by 2bitencryption »

really interesting takeaways from the Wealthfront landing page[0]:

* every example is shown as a smartphone app - not a single "desktop-oriented" screenshot to be found. I guess we are finished with the days where every service has an app. Now, every service is an app.

* In the first example, an investment portfolio is shown where roughly 10% of the holdings is in a group called "single stock bets." Yikes! Though maybe this a case of "know your audience"? maybe they are trying to convert the hordes of GME-pumpers to try something a bit less risky?

* lots of emphasis on "emerging markets", "socially responsible funds", crypto. I've always heard the best long-term advice is to simply throw your money into an ETF tracking the s&p500 or nasdaq, but clearly wealthfront is targeting those who want some emotional connection to their savings.

all in all, seems like a cool service, especially if it helps convince those to begin saving who would otherwise not be saving.

[0] https://www.wealthfront.com/

Re: UBS Acquires Wealthfront for $1.4B

#18

Post by endisneigh »

cheonic8492 wrote: post #13
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.

> Imho all robo advisers are a waste of money. Robo and human financial advisors provide emotional hand-holding and comfort. Same reason why you trust a doctor, despite doctors underperforming (intelligent) self-directed health and nutrition research.

> Same reason why you trust a doctor, despite doctors underperforming (intelligent) self-directed health and nutrition research.

I’m skeptical of this claim. What’s “intelligent” research mean?

Index funds are literally sit it and forget it. Even easier than robo advisers. With year retirement funds you even get auto balancing with the same ease.

Re: UBS Acquires Wealthfront for $1.4B

#19

Post by tedsanders »

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.

My understanding:

The biggest benefit of Wealthfront is automated tax loss harvesting, not stock picking.

The biggest cost of Wealthfront is that when you leave you either (a) keep a humongous pool of individual stocks to eventually unwind or (b) liquidate and incur unnecessary capital gains.

Re: UBS Acquires Wealthfront for $1.4B

#20

Post by RandomLensman »

cheonic8492 wrote: post #13
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.

> Imho all robo advisers are a waste of money. Robo and human financial advisors provide emotional hand-holding and comfort. Same reason why you trust a doctor, despite doctors underperforming (intelligent) self-directed health and nutrition research.

Self-directed surgery? Joking aside, providing structure to investments and investment decisions is probably helpful for some.
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