Is it possible to transfer your holdings from within a robo advisor to a service like Vanguard?
I think it probably is, but then you have to manage those holdings manually going forward which can be a real challenge when you own so many different securities.
Re:How Discount Brokerages Make Money
by kingnothing on Wednesday June 26, 2019 @04:08PM
(#20288614)
I don't quite follow what the challenge is to take your money elsewhere. If we're talking about post-tax investments, you can easily liquidate and buy in to whatever else you want.
1) For any given dollar you put into a robo-advisor any tax lost harvesting gains to be made based on that dollar will generally happen in the first 1-3 years. After that gains will generally approach zero. However, the fees you pay the robo-advisor will last as long as you keep your money there.
2) Once you make the decision to use a robo-advisor which purchases hundreds of stocks on your behalf, there is a lot of lock in. Automation becomes essentially required to continue to maintain the account.
You do have the option of selling everything and going back to an ETF based approach but at that point you'll incur capital gains completely negating any positive impact you got up from by loss harvesting.
These points were not clear to me when I began using one of the popular robo-advisors some years ago. I kind of wish they had been.