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UBS Acquires Wealthfront for $1.4B

reuters.com

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Re: UBS Acquires Wealthfront for $1.4B

#51

Post by lotsofpulp »

dymk wrote: post #30
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.

There is. Logging into those accounts is a pain in the ass, and requires active effort to remember doing. Automating things like bill-pay, deposits, and other "set it and forget it" tech is the best thing since sliced bread.

>Logging into those accounts is a pain in the ass

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?

>requires active effort to remember doing

Checking up on one's assets is something that should be on a periodic to do list. We even have devices that can be scheduled to alert us when it is time.

Re: UBS Acquires Wealthfront for $1.4B

#52

Post by Glyptodon »

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.

Schwab at least has terrible UI and doesn't always have accurate numbers. (For example, their GL/share for one of my mutual funds reports the wrong price/share, using the same value for every purchase, while viewing the history tab I can see the actual prices from reinvested dividends...)

Not saying they aren't saving you the fees, but not a lovely experience.

Re: UBS Acquires Wealthfront for $1.4B

#53

Post by sethdandridge »

2bitencryption wrote: post #17

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 may…

I don't think having 10% of your equity investments in single stock bets is a yikes-worthy level of irresponsibility. It may not be the best way to perfectly optimize your long-term return, but for the vast majority of people it won't mean the difference between retiring comfortably and destitution—especially if actively managing a portion of your portfolio encourages a higher level of overall saving.

Re: UBS Acquires Wealthfront for $1.4B

#54

Post by tennis_sort »

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"…

JPM have just made a $12b investment to fix that: https://www.jpmorganchase.com/news-stories/tech-investment-c...

I'm aware that these investments often go south. I've seen HSBC's foray into "Fintech" and it was rough.

Re: UBS Acquires Wealthfront for $1.4B

#55

Post by lotsofpulp »

tinyhouse wrote: post #35
endisneigh wrote: post #11

Earlier quoted context omitted.

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…

A target date fund suffices for most people. And I would need evidence to believe that Wealthfront's fees are offset by the tax savings and increased complexity for 95% of people.

Re: UBS Acquires Wealthfront for $1.4B

#57

Post by TuringNYC »

JumpCrisscross wrote: post #38
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 ne…

>> 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.

I'd disagree with this. In 1993, you couldnt do fractional shares, or auto-invest, or pie-based investments. In 1993, you couldnt purcahse $500/wk of BRKB/AMZN/TSLA because there was no product like that short of paying a mutual fund 150bps. You couldnt tax-loss harvest (like with WealthFront)

You can get that now with M1, FolioFN (GS), ShareBuilder (RIP). It is low investment and high-stickiness.

You're noting net work and involvement and profit, but I think stickiness is another factor to focus on.

Re: UBS Acquires Wealthfront for $1.4B

#58

Post by endisneigh »

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.

This doesn’t do what you think it does. It’s tantamount to timing the market which generally is a losing strategy. Not sure if you’re being sarcastic

Tax loss harvesting really only works in the long run if you know which stocks won’t recover.

Re: UBS Acquires Wealthfront for $1.4B

#59

Post by liber8 »

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…

Maybe I'm misunderstanding, but nearly every bank I've ever used offers this feature. I currently have auto-transfers and auto-investments set up in Fidelity. If you receive a paycheck, you can easily set up Fidelity so that it automatically transfers $xxxx dollars per month to whatever account you like. You can also set up each account to automatically purchase $xxxx dollars worth of whatever equity you want.

Re: UBS Acquires Wealthfront for $1.4B

#60

Post by vmception »

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…

All about the revenue they make off of that AUM and a multiple of that revenue for the purchase price
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