3 ms·
The way they and their competitor, betterment, work is that they distribute your funds to a real bank or up to 4 of them for that 1m FDIC insurance. The real r
by throwaway13337 7y ago
The way they and their competitor, betterment, work is that they distribute your funds to a real bank or up to 4 of them for that 1m FDIC insurance.
The real risk I see using them is the money transition period from your current bank to their partner banks while moving the funds. It's why I opted for a traditional bank with high yield savings but not as high as theirs.
I'd be interested to know how they explain FDIC insurance during the transitional period. I could be wrong and they have that covered, too.
- tdhoot 7y agoIt's not FDIC covered during the transitional period, and they don't say how long the transitional period is either.
- jakelazaroff 7y agoWhat is the transitional period? Is it that when you make a deposit, you're actually transferring to Wealthfront, which distributes it to the real bank accounts they keep your money in?
- tdhoot 7y agoYes, that's my understanding. But there's no guarantee that Wealthfront transfers to the FDIC-insured bank accounts as soon as possible. For all we know, Wealthfront could hold on to it for weeks.