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I think that there are 2 things that will likely continue to help robo advisors: 1) Vanguard or Charles Schwab products that do automated investing likely take

I think that there are 2 things that will likely continue to help robo advisors: 1) Vanguard or Charles Schwab products that do automated investing likely take an opinionated approach towards only owning their own assets. This means that the amount of the investable market I can actually buy into at any point is much smaller, and possibly less optimal. I imagine this also has an impact on how effective the robo advisor can tax loss harvest. 2) Betterment has shown their cards (in my opinion) once they started allowing users to link external accounts. Initially it has been exposed as a way to track networth and investment progress towards your goals. However, I'm not convinced it will stop there. The obvious next step is that Betterment will manage your asset allocation, monitor wash sales, etc across all of your investment accounts, regardless of whether they actually have the money invested through them directly. In this way, they are an ambivalent service that you pay for.

saryant 11y ago
#1 doesn't make sense because Vanguard and Schwab products own the entire market, unless you're talking asset classes beyond typical equities and bonds.
- ffumarola 11y ago
  There are many funds that own the entire market (or subsets of the market like small cap, mid cap, etc). And if I want to TLH, I need a similar asset to buy when I sell the asset that is losing money. Unless Vanguard has a lot of funds that serve similar purposes but are slightly different, you won't be able to do that using only Vanguard funds AFAIK.
  - chollida1 11y ago
    Well whether or not Vanguard has a similar ETF is irrelevant as the IRS is very clear that if you sell an asset to do tax loss harvesting you can't buy it or any similar product back over the next 30 days if you want to collect the tax loss. I mean you can buy a similar product to the one you sold within the 30 days, you just don't qualify for the tax loss in that instance:) The below link discusses this pretty well and I've got way more experience wit this than I really care for. http://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp http://www.investopedia.com/articles/taxes/08/tax-loss-harve...
    - ffumarola 11y ago
      Not necessarily. The rules don't say "similar" they say "substantially identical." It isn't clear how they treat two index funds from different issuers (e.g., Vanguard and Schwab) that track the same index. While the IRS has not issued any guidance to suggest that such two funds are “substantially identical,” a more conservative approach when dealing with an index fund portfolio would be to repurchase a fund whose performance correlates closely with that of the harvested fund, but tracks a different index.

saryant 11y ago

#1 doesn't make sense because Vanguard and Schwab products own the entire market, unless you're talking asset classes beyond typical equities and bonds.

ffumarola 11y ago
There are many funds that own the entire market (or subsets of the market like small cap, mid cap, etc). And if I want to TLH, I need a similar asset to buy when I sell the asset that is losing money. Unless Vanguard has a lot of funds that serve similar purposes but are slightly different, you won't be able to do that using only Vanguard funds AFAIK.
- chollida1 11y ago
  Well whether or not Vanguard has a similar ETF is irrelevant as the IRS is very clear that if you sell an asset to do tax loss harvesting you can't buy it or any similar product back over the next 30 days if you want to collect the tax loss. I mean you can buy a similar product to the one you sold within the 30 days, you just don't qualify for the tax loss in that instance:) The below link discusses this pretty well and I've got way more experience wit this than I really care for. http://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp http://www.investopedia.com/articles/taxes/08/tax-loss-harve...
  - ffumarola 11y ago
    Not necessarily. The rules don't say "similar" they say "substantially identical." It isn't clear how they treat two index funds from different issuers (e.g., Vanguard and Schwab) that track the same index. While the IRS has not issued any guidance to suggest that such two funds are “substantially identical,” a more conservative approach when dealing with an index fund portfolio would be to repurchase a fund whose performance correlates closely with that of the harvested fund, but tracks a different index.