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For those looking for financial institutions that don't gouge you here are some recommendations: * Vanguard - They have been around since the 1970s and started

For those looking for financial institutions that don't gouge you here are some recommendations: * Vanguard - They have been around since the 1970s and started the whole war on investment fees. Wealthfront tries to sell how advanced they are, but it's mostly a re-packaging of what Vanguard has been doing for decades. Customers are shareholders so you don't have misaligned incentives. They have tons of well managed low fee index funds. Vanguard works for most people * Ally Bank - they don't charge many fees, reimburse atm fees, and give competitive savings rates * Local credit unions - there are many local credit unions that have very fair policy and terms. I find it ironic that this article hypes all these vc driven startups who are largely have the same incentives as the existing greedy banks and ignores existing institutions that have fair governance models and have been delivering fair and affordable financial products for decades.

whiddershins 7y ago
S/gauge/gouge
daxelrod 7y ago
> Wealthfront tries to sell how advanced they are, but it's mostly a re-packaging of what Vanguard has been doing for decades. Can you elaborate on this? My understanding is that Vanguard provides a variety of passively managed funds, but does not give automated financial advice based on the specifics of clients' situations and needs. (Maybe you could consider target date funds the equivalent of this, but they're based on at most one dimension of client needs.) Wealthfront, on the other hand, provides passively managed portfolios with financial advice based upon questions they ask their clients. The portfolios may be equivalent to Vanguard's funds, but the value-add is the financial advice. Maybe you don't value that advice, but it doesn't seem fair to characterize this as simply a repackaging. (Note that this comparison will change once Vanguard launches its own roboadvisor, which was announced in October.)
- sdnlafkjh34rw 7y ago
  > Wealthfront, on the other hand, provides passively managed portfolios with financial advice based upon questions they ask their clients. The portfolios may be equivalent to Vanguard's funds, but the value-add is the financial advice. Maybe you don't value that advice, but it doesn't seem fair to characterize this as simply a repackaging. So I worked at a competitor of Wealthfront and while this is how a robo-advisor is marketed, this isn't actually what Wealthfront does. There is no real personalization of the product; you merely fill out a survey and it comes up with a risk score that adjusts your asset allocation. I know how those surveys work (because I built one) and it is laughably close to a Buzzfeed survey that guesses which game of thrones character you are closest to. The survey gets a measure of risk, which is really just one of a million inputs that you need to give proper financial advice. The truth is relevant financial advice requires inputs beyond a generic 15 question survey. You need to do a data dump of all your assets, your financial goals, and then you need a human (or robot) to do analysis to figure out the path forward. Wealthfront doesn't do that. It doesn't adjust my asset allocation in my wealthfront account because I already have existing funds in those areas in other brokerages. It doesn't tell me about the backdoor Roth IRA trick which will maximize my retirement savings. It doesn't analyze my 401k funds to tell me which funds make the most sense. It literally is a re-packaged target date fund that is customized based on one data point (client risk). For 99% of Americans it doesn't do any more than a target date fund or a mix of index funds do. Yes, I guess it works for the 1% of americans who's biggest financial issue is that their passive index funds don't exactly match their risk profile. I'm a personal finance junkie, and in the last year I've talked to a lot of people about their financial goals and challenges and I've yet to speak to one where the main solution to their problems was a robo advisor. It's just not a real use case. Here are real use cases I've encountered: * Figuring out how loan refinancing can reduce debt burdens long term * Figuring out how to contribute to their kids future education expenses * Figuring out the size of an emergency fund you need and where to put it (the answer is a high yield savings account) * Figuring out a reasonable living budget based on income and debt * Figuring out how to maximize tax burden through a combination of 401K, IRAs * Figure out how to get tax savings once you hit income limits on IRAs The point I'm trying to make is this "variable mix of index ETFs based on a 15 question survey" is not as much of a gamechanger as the roboadvisor's tout. It's a very limited product that is actually quite easy to build, and doesn't really help most of Americans (but it sounds cool). For me the sharedholder structure of a credit union and Vanguard is way more revolutionary than the current Wealthfront product.

whiddershins 7y ago

S/gauge/gouge

daxelrod 7y ago

> Wealthfront tries to sell how advanced they are, but it's mostly a re-packaging of what Vanguard has been doing for decades. Can you elaborate on this? My understanding is that Vanguard provides a variety of passively managed funds, but does not give automated financial advice based on the specifics of clients' situations and needs. (Maybe you could consider target date funds the equivalent of this, but they're based on at most one dimension of client needs.) Wealthfront, on the other hand, provides passively managed portfolios with financial advice based upon questions they ask their clients. The portfolios may be equivalent to Vanguard's funds, but the value-add is the financial advice. Maybe you don't value that advice, but it doesn't seem fair to characterize this as simply a repackaging. (Note that this comparison will change once Vanguard launches its own roboadvisor, which was announced in October.)

sdnlafkjh34rw 7y ago
> Wealthfront, on the other hand, provides passively managed portfolios with financial advice based upon questions they ask their clients. The portfolios may be equivalent to Vanguard's funds, but the value-add is the financial advice. Maybe you don't value that advice, but it doesn't seem fair to characterize this as simply a repackaging. So I worked at a competitor of Wealthfront and while this is how a robo-advisor is marketed, this isn't actually what Wealthfront does. There is no real personalization of the product; you merely fill out a survey and it comes up with a risk score that adjusts your asset allocation. I know how those surveys work (because I built one) and it is laughably close to a Buzzfeed survey that guesses which game of thrones character you are closest to. The survey gets a measure of risk, which is really just one of a million inputs that you need to give proper financial advice. The truth is relevant financial advice requires inputs beyond a generic 15 question survey. You need to do a data dump of all your assets, your financial goals, and then you need a human (or robot) to do analysis to figure out the path forward. Wealthfront doesn't do that. It doesn't adjust my asset allocation in my wealthfront account because I already have existing funds in those areas in other brokerages. It doesn't tell me about the backdoor Roth IRA trick which will maximize my retirement savings. It doesn't analyze my 401k funds to tell me which funds make the most sense. It literally is a re-packaged target date fund that is customized based on one data point (client risk). For 99% of Americans it doesn't do any more than a target date fund or a mix of index funds do. Yes, I guess it works for the 1% of americans who's biggest financial issue is that their passive index funds don't exactly match their risk profile. I'm a personal finance junkie, and in the last year I've talked to a lot of people about their financial goals and challenges and I've yet to speak to one where the main solution to their problems was a robo advisor. It's just not a real use case. Here are real use cases I've encountered: * Figuring out how loan refinancing can reduce debt burdens long term * Figuring out how to contribute to their kids future education expenses * Figuring out the size of an emergency fund you need and where to put it (the answer is a high yield savings account) * Figuring out a reasonable living budget based on income and debt * Figuring out how to maximize tax burden through a combination of 401K, IRAs * Figure out how to get tax savings once you hit income limits on IRAs The point I'm trying to make is this "variable mix of index ETFs based on a 15 question survey" is not as much of a gamechanger as the roboadvisor's tout. It's a very limited product that is actually quite easy to build, and doesn't really help most of Americans (but it sounds cool). For me the sharedholder structure of a credit union and Vanguard is way more revolutionary than the current Wealthfront product.