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Average Wealthfront account is 44k according to their form ADV, far less than the 420k threshold you gave. It seems reasonable to guess that the account sizes f
by hendzen 9y ago
Average Wealthfront account is 44k according to their form ADV, far less than the 420k threshold you gave. It seems reasonable to guess that the account sizes follow a Pareto distribution so probably more (potentially much more) than 50% of accounts are below 44k. So for the majority, (potentially the vast majority) of their customers TLH makes their service a net positive.
Of course that assumes users with small account sizes actually have enough losses to harvest, but that seems likely when there is a market downturn like last week.
- loeg 9y agoYou can't state that authoritatively, as most customers will probably also be in lower tax brackets than 35%, which produced the $420,000 figure. And who knows if they are hitting $3k/year, every year. > Of course that assumes users with small account sizes actually have enough losses to harvest, but that seems likely when there is a market downturn like last week. Exactly -- small account sizes have fewer losses to harvest. Maybe they see a slight benefit over totally passive investment net of fees, but the magnitude will be small. And you can easily tax loss harvest without the robo-adviser anyway.