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UBS Acquires Wealthfront for $1.4B

reuters.com

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Re: UBS Acquires Wealthfront for $1.4B

#211

Post by jbullock35 »

wayne wrote: post #159
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?

Even a few months ago, I was recommending the same to friends. But late in 2021, Vanguard unexpectedly hit all their Target Date funds with large tax bills: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=366566 The speculation online is that it's because they lowered the minimum for their institution class funds, many large employer retirement funds sold their holdings of the non-institution funds, leaving eve…

Useful Wall Street Journal article on this point: https://archive.is/3i800.

Re: UBS Acquires Wealthfront for $1.4B

#212

Post by rjj »

maxclark wrote: post #174
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…

I started with and was a Wealthfront customer for many years. I'm appreciative and credit them with starting my education and understanding on investing. What caused me to leave? - They aren't global portfolio aware. Bonds belong in tax advantaged accounts, then taxable. If you've maxed out your 401k/IRAs in Bonds that $ as an absolute percentage should be accounted for in your taxable portfolio construction. - They…

Why do bonds being in tax advantages accounts? My gut would suspect the opposite, since on average stocks will have higher return so you'll want them getting the tax break.

Re: UBS Acquires Wealthfront for $1.4B

#213

Post by echelon »

zie wrote: post #191
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…

* 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…

> * Bogleheads.org will do it for free as long as you follow their template.

phpBB with a custom "web1" frontend reminiscent of Craigslist. That's something I haven't seen in a long time.

My first impression was honestly to trust it more.

Thanks for sharing!

Re: UBS Acquires Wealthfront for $1.4B

#214

Post by jldugger »

Scoundreller wrote: post #23
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.

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.

Re: UBS Acquires Wealthfront for $1.4B

#215

Post by clamstar »

sharx wrote: post #202
maxclark wrote: post #174

Earlier quoted context omitted.

I started with and was a Wealthfront customer for many years. I'm appreciative and credit them with starting my education and understanding on investing. What caused me to leave? - They aren't global portfolio aware. Bonds belong in tax advantaged accounts, then taxable. If you've maxed out your 401k/IRAs in Bonds that $ as an absolute percentage should be accounted for in your taxable portfolio construction. - They…

I've heard that when you leave direct indexing you end up with all the individual stocks in your new portfolio, or you have to sell them and eat the capital gains tax. Was that your experience?

You end up with a bunch of individual stocks in your new brokerage account. It's a pain. I separate account at etrade specifically for my "WF500" shares, and still just treat them as a single organism.

Re: UBS Acquires Wealthfront for $1.4B

#216

Post by clamstar »

rjj wrote: post #212
maxclark wrote: post #174

Earlier quoted context omitted.

I started with and was a Wealthfront customer for many years. I'm appreciative and credit them with starting my education and understanding on investing. What caused me to leave? - They aren't global portfolio aware. Bonds belong in tax advantaged accounts, then taxable. If you've maxed out your 401k/IRAs in Bonds that $ as an absolute percentage should be accounted for in your taxable portfolio construction. - They…

Why do bonds being in tax advantages accounts? My gut would suspect the opposite, since on average stocks will have higher return so you'll want them getting the tax break.

Taxes on dividends.

Re: UBS Acquires Wealthfront for $1.4B

#217

Post by itake »

rjj wrote: post #212
maxclark wrote: post #174

Earlier quoted context omitted.

I started with and was a Wealthfront customer for many years. I'm appreciative and credit them with starting my education and understanding on investing. What caused me to leave? - They aren't global portfolio aware. Bonds belong in tax advantaged accounts, then taxable. If you've maxed out your 401k/IRAs in Bonds that $ as an absolute percentage should be accounted for in your taxable portfolio construction. - They…

Why do bonds being in tax advantages accounts? My gut would suspect the opposite, since on average stocks will have higher return so you'll want them getting the tax break.

bond dividends/interest are taxed like regular income. stocks (capital gains) are taxed at a lower rate.

Re: UBS Acquires Wealthfront for $1.4B

#218

Post by bonestamp2 »

zie wrote: post #191
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…

* 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 1% fee goes from $10k to $20k and they're not doing anything more for that extra $10k/yr so the value proposition starts to break down for me. $10k in one year isn't a big deal, but over 20 years that's $200k, which might affect my retirement activities and definitely impacts how much is left for my kids (which they're going to really appreciate as life is so much more expensive for their generation).

Re: UBS Acquires Wealthfront for $1.4B

#219

Post by rco8786 »

hotpotamus wrote: post #209
rco8786 wrote: post #185

Earlier quoted context omitted.

> 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…

> it's rather a race to the bottom in pricing with razor thin (or non-existent) margins Isn't that the point of automation? Doesn't the saying go, "your margin is my opportunity"?

If you can get the volume, yea. But seems like the total robo market is smaller than everyone thought.

Re: UBS Acquires Wealthfront for $1.4B

#220

Post by bonestamp2 »

sanjiwatsuki wrote: post #148
whitej125 wrote: post #142

Earlier quoted context omitted.

>> Because fear. What's funny is... whenever you call an FA (financial advisor) in a moment of panic... they answer always is "don't act emotionally and stick to the plan". Maybe a real "robo-advisor" should just be a chatbot that responds to any message it gets with "HODL". >> Because unfamiliarity. This one is going to be interesting to watch evolve and I see it becoming less of an edge for financial advisors. More…

I do recall that one of the features that Wealthfront had was to design their UX in a way that discouraged behaviors like frequently checking the valuations, making it annoying to make emotional transactions, etc, etc. Rather than having a human tell you to be calm, they tried to mediate behavior through UX patterns.

That's interesting. I did notice that the Wealthfront UX was really well done.

For example, during the onboarding they direct you to set up recurring investments and they show you in real time what that small investment might become by retirement age. That simple mechanic, which nobody else seems to do in that way during onboarding, makes it really obvious that you need to set that recurring deposit to be as high as you can possibly afford.

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