What's The End Goal for Wealthfront and Betterment? (2016)
larrysukernik.com
What's The End Goal for Wealthfront and Betterment? (2016)
1–10 of 134 posts
Re: What's The End Goal for Wealthfront and Betterment? (2016)
#2The failure of articles like this is that they take a snapshot of a company at a point in time and assume that the company's business model and reach doesn't change. This is the same mistake that many analyst make on early stage companies.
Companies evolve over time and grow in terms of scale. Take a look at Facebook and Google as an example.
Re: What's The End Goal for Wealthfront and Betterment? (2016)
#3Wealthfront has raised ~$100M and Betterment has raised ~$200M. If they are only burning $4M/year to grow as fast as they are, they are doing fantastically well. I suspect though that the author's burn rates are off by an order of magnitude.
Re: What's The End Goal for Wealthfront and Betterment? (2016)
#4The failure of articles like this is that they take a snapshot of a company at a point in time and assume that the company's business model and reach doesn't change. This is the same mistake that many analyst make on early stage companies. Companies evolve over time and grow in terms of scale. Take a look at Facebook and Google as an example.
LOL! This is exactly why Wall St can't make early stage investments.
Clearly these are speculative bets on Wealthfront being as large as a mutual fund. The fact that the author doesn't see this means they're overvaluing a mutual fund manager and thinking that an algorithm can't come close to matching that performance. These startups have two major cost advantages over incumbents: 1) no researchers 2) no salespeople. They have higher profitability, so they'll be better equipped to spend on sales & marketing to achieve fast growth. This leads me to think that at least one of these companies is going to grow to the size of a large mutual fund and "WIN".
Re: What's The End Goal for Wealthfront and Betterment? (2016)
#5The failure of articles like this is that they take a snapshot of a company at a point in time and assume that the company's business model and reach doesn't change. This is the same mistake that many analyst make on early stage companies. Companies evolve over time and grow in terms of scale. Take a look at Facebook and Google as an example.
I think their growth has slowed though. At least I remember them bragging about 3 billion under management a year ago.
Re: What's The End Goal for Wealthfront and Betterment? (2016)
#6In 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?
Re: What's The End Goal for Wealthfront and Betterment? (2016)
#7Gurley's post [1] (from 2014) gives one possible end goal: "Learning about Yu’e Bao gave us an epiphany that Jack Ma likely had years ago. If you want to truly disrupt the financial services industry, perhaps you need to stop attacking the transactional experience and launch a competitive product on the asset gathering side. Once you have the assets, all the disruptive things that Silicon Valley types want to do will be easy. The hardest part has been getting access to the funds."
[1]: http://abovethecrowd.com/2014/06/18/disrupting-finance-from-...
Re: What's The End Goal for Wealthfront and Betterment? (2016)
#8The failure of articles like this is that they take a snapshot of a company at a point in time and assume that the company's business model and reach doesn't change. This is the same mistake that many analyst make on early stage companies. Companies evolve over time and grow in terms of scale. Take a look at Facebook and Google as an example.
I think their growth has slowed though. At least I remember them bragging about 3 billion under management a year ago.
This article is from January 2016, by the way.
Re: What's The End Goal for Wealthfront and Betterment? (2016)
#9Re: What's The End Goal for Wealthfront and Betterment? (2016)
#10In 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