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What's The End Goal for Wealthfront and Betterment? (2016)

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Re: What's The End Goal for Wealthfront and Betterment? (2016)

#71

Post by caleblloyd »

toomuchtodo wrote: post #10
mfrykman wrote: post #6

In the article, it states that Chase is offering 0% funds, yet Betterment claims that their "All-in Actual Cost" for a 100k fund is better than Chase's due to cash drag and a lower expense ratio. (Found here: https://www.betterment.com/comparison/schwab-intelligent-por... ) This is confusing and hard to fact check. Who do I believe?

Neither option is better than a Vanguard account with one of their target date funds (or funds targeted by level of aggressiveness). Vanguard is a mutual company; they exist for the benefit of their users. Hard to compete against that. Disclaimer: moved from Betterment to Vanguard

I am also moving from Betterment to Vanguard. I like Vanguard's selection of funds better than Betterment's one-size-fits-all option.

For example I am a cautious investor right now. At Betterment this means I have to lean more towards their Bonds option, which yielded a very low return over the past year. At Vanguard, I can invest in the Income fund which is a mix of high dividend paying stocks and bonds. Still cautious but much better returns.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#72

Post by asr »

krallja wrote: post #31
fullshark wrote: post #9

Earlier quoted context omitted.

Makes sense, is there any data from 2017?

Betterment has $8B as of March 16, 2017: SEC form ADV page 8, "Regulatory Assets under Management" https://www.adviserinfo.sec.gov/IAPD/content/ViewForm/crd_ia... edit: Wealthfront $5B https://adviserinfo.sec.gov/IAPD/content/ViewForm/crd_iapd_s...

Always great when someone is willing to go out and collect actual info -- this comment was worth more than the article. Thank you!

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#73

Post by matwood »

Ductapemaster wrote: post #11
toomuchtodo wrote: post #10

Earlier quoted context omitted.

Neither option is better than a Vanguard account with one of their target date funds (or funds targeted by level of aggressiveness). Vanguard is a mutual company; they exist for the benefit of their users. Hard to compete against that. Disclaimer: moved from Betterment to Vanguard

Could you explain a bit more? Are you making a better ROI? I currently have a Betterment account and would consider switching if there's a good reason.

Fees are one of the main items you control in investing. Why pay Betterment when you can go to brokers like TD or Schwab and buy exactly the same funds commission free? You can then spend an hour each quarter rebalancing.

If you don't want to even rebalance, then go buy one of the target date funds from the likes of Vanguard.

TLH is extremely oversold. I don't need to repeat what is easily found in a google search though.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#74

Post by matwood »

zazpowered wrote: post #48
narrator wrote: post #44

Why can't I buy VTI and dividend reinvest? I compared that to Betterment since 2004 and it wins handily. What am I missing? Tax loss harvesting sounds fancy but what's the actual bottom line benefit after fees?

VTI is less diversified, you basically only have US stocks. I probably wouldn't mind being only invested VTI but some people want more diversification.

Yeah, I would consider VTI to be one of my portfolio pillars along with international, bonds, and REITs.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#75

Post by frgtpsswrdlame »

I think that he's definitely right about consolidation and then acquisition.

I work in HNW wealth management and I think that there needs to be better education on what for example a young person's IRA should look like. An ideal robo-advisor would make buy recommendations, ask you to never sell, and use education along the way to help prevent you from making the same mistakes most people fall trap to. I also think that if any of these companies have a desire to stay around for a while they need to be targetting the IRAs of young, high-income programmers. With a good fee and good education and assistance they can probably retain these customers, encourage them to max out contributions into their IRA (you should!!) and slowly build up a long tail of decent-sized accounts from people that may have only been interested from a tech perspective initially.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#76

Post by frgtpsswrdlame »

_wgnp wrote: post #53

Since this is a community of programmers, you might be interested in doings things like this yourself instead. There are a couple of options: - Quantopian ( http://quantopian.com/ ): Python based, kinda a little bit open source (backtesting only), live trades on Interactive Brokers or Robinhood. Has a big community for stocks. - QuantConnect ( http://quantconnect.com/ ): .NET based, more open source (includes live tr…

I'd just like to quote an old comment here:

>One thing I see every once in a while on HN is people with the belief that they can spend a week or two knocking out an algorithmic trader and start raking it in. In order to break this illusion I would recommend: http://financial-math.org/ http://www.quantresearch.info/

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#77

Post by matwood »

sulam wrote: post #64
narrator wrote: post #44

Why can't I buy VTI and dividend reinvest? I compared that to Betterment since 2004 and it wins handily. What am I missing? Tax loss harvesting sounds fancy but what's the actual bottom line benefit after fees?

I don't use a robo-advisor, but TLH saves me 6 figures in taxes every year. Sadly I'm not comfortable disclosing the size of my portfolio. It's big enough to have an account with most bankers, but not big enough to require dedicated staff. :)

> but TLH saves me 6 figures in taxes every year.

This is a bit misleading since the only way to save 6 figures on capital gains every year from TLH is to have realized > 6 figure loss at some point in the past.

The offset on regular income is also maxed at 3k/year.

The losses/gains must also be in a taxable account.

https://www.bogleheads.org/wiki/Tax_loss_harvesting#Using_a_...

TLH can be useful in certain situations (like yours), but I think generally it is oversold by the likes of Wealthfront and Betterment.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#78

Post by mabbo »

nateberkopec wrote: post #13

I haven't switched to a roboadvisor product for a few reasons, but one of them is that saving for retirement is a decision you make on a 30+ year timeline. Most startups hardly last 3 years, much less 30. Why would I trust my money to an industry where the typical case is a flameout in only a few years?

If their companies go under, it shouldn't affect your assets- that's not part of their balance sheet. You can move then elsewhere after they flame out, and have paid only 25 bps for a few years in the meantime.

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#79

Post by [deleted] »

eeeeeeeeeeeee wrote: post #69

This article didn't mention it specifically, but Betterment already put in a rate hike. You used to be able to get 10 basis points if you had over 100k and they just increased that to 25 in a really underhanded way. I had been using Betterment for about 2 years when they did this. I had been happy with Betterment but it's clear that they want to get as many people in under the low rates and slowly increase it on you,…

[deleted]

Re: What's The End Goal for Wealthfront and Betterment? (2016)

#80

Post by mattzito »

frgtpsswrdlame wrote: post #75

I think that he's definitely right about consolidation and then acquisition. I work in HNW wealth management and I think that there needs to be better education on what for example a young person's IRA should look like. An ideal robo-advisor would make buy recommendations, ask you to never sell, and use education along the way to help prevent you from making the same mistakes most people fall trap to. I also think th…

Sorry for the naive question - but if you're contributing to a 401k, aren't you ineligible for tax-deductible contributions to an IRA?

If so, it would seem like an even better business would be getting into administering 401k plans cheaply with employers and then keeping people on the platform post-employment.

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