I think it's opposite, if you have more of money, you likely will have more options and don't want to have your money on some random roboadvisor startup.

Part of Wealthfront mission was to encourage younger people to save. They had a nice "savings tool" that you could play around with. Similarly how Robinhood got lot of people in to stock investing because the app was engaging and easy to use (for good or bad).

Fidely and Vanguard apps and websites are quite horrible to navigate and there are many more hoops to go through just to open an account and then you need to figure which funds to pick and how balance etc. With Wealthfront you just download the app on your phone, add some info, your bank account and set like that you want to invest like $250 twice a month and then forget about it.

> set like that you want to invest like $250 twice a month and then forget about it.

I don’t believe Wealthfront actually supports this. If they did, I would use it.

They have you set targets for your cash account. Then any amount of money over that target gets invested into Wealthfront[0].

Vanguard does actually support this [1].

[0] https://support.wealthfront.com/hc/en-us/articles/3600451894...

[1] https://support.vanguard.com/tutorials/automatic-investments

Wealthfront absolutely supports automated investments and has for years, please edit or delete this as it's incorrect. https://support.wealthfront.com/hc/en-us/articles/3600292269...

I don't have their cash account but I set up repeat bimonthly transfers of a set amount from my checking account easy enough.

Automated deposits? Yes they have that, I use it myself

Kind of contrarian view I like to read on HN. If I may add, maybe the reason people used robo advisory here is potentially ( mainly) because they are not aware of the other tool.

I must admit myself that the focus over fees charged is not something, as new comers, you would look at priority. Especially as sales person in the sector would not put that out.

> maybe the reason people used robo advisory here is potentially ( mainly) because they are not aware of the other tool

Is there a term for self-aware aversion to the Dunning-Krueger effect? Where one recognizes a task is outside their circle of competence, and so avoids making off-piste judgements in its respect?

Not sure I got your point. Can you elaborate?

I looked into fee only advisors in my area for investing and 100% of them charge a minimum of 1% AUM in order to "do their thing" with it. It was pretty crazy experience to go through. Most of these advisors are creating a portfolio using ETF index funds, so it is a pretty outrageous price to pay.

I did find one that sold hourly consultations and she was really helpful at confirming my plan and that another situation I may have gotten myself into was not a good deal for me.

I say all of this because $500-1000 for a fee-only advisor is something I literally could not find. Additionally, advisors I researched have minimums in the hundreds of thousands range.

I ended up following bogleheads methodology and I think I'll be happy. It's still pretty new so no real data yet.

Vanguard seems to offer advisors at a certain point -https://investor.vanguard.com/advice/financial-advisor but honestly I'm not sure what they can really provide beyond the standard bogleheads.

A separate advice session from a tax guy can be worthwhile but always remember that the tax guys work to minimize taxes, which isn't necessarily always the goal.

The bogleheads forum is great for general advice, even if you only read it: https://www.bogleheads.org

Even simpler than that, is there any reason not to go with something like a Vanguard Lifestrategy which implements something quite close to a Bogleheads mix? Asking sincerely as that’s what I’m using now, and it’s just so easy it feels like there must be some unanticipated downside.

Those funds have higher costs. If you want to do that (and it's a good idea) look at the portfolio allocation and then buy the ETF version of the underlying assets.

This is really the only downside (beyond them being perhaps too conservative - but you can adjust by selecting a different “year”).

I agree. Buy some low cost diversified funds through Vanguard. I cannot understand why the average investor needs anyone else in the loop.

That’s not a fee-only advisor. A fee-only advisor will charge an hourly rate for time you’re actually meeting or a flat dollar amount. Never a percentage of AUM.

Just to be very clear for anyone else who comes across:

Fee-only simply means they are paid an agreed on price from you and they don't get kickbacks, commissions, any type of reward for where you put your money. Fee-only fiduciaries will also have a link on their website to a PDF that very clearly describes the relationship and pricing.

There are hourly fees and AUM fees. I have only seen hourly fees apply for the creation of a financial plan. I did not see any offering in my area of someone managing a portfolio for less than 1% AUM.

The cost of a financial plan was quoted to me at least $6500, so not cheap.

I talked to a "normal" financial advisor as well—they get kickbacks. They tried to put me in super aggressive setups, life insurance, etc. It was not discussed upfront what their cuts are and it was very clear that it wasn't best for me. Be very very cautious if you ever go down this route.

This is not true, I used to believe that and then I met with a fee only advisor, and they did in fact want a percentage of AUM. What the fuck!

Here's what NAPFA says, https://www.napfa.org/financial-planning/what-is-fee-only-ad...:

"Fee-Only financial advisors may be paid hourly, as a retainer, as a percentage of assets (AUM), or as a flat fee, depending upon the planner you choose."

What you are describing is advice-only not fee-only. That's what I want, an advice-only advisor. Good luck finding one. I can't.

I'm probably better off just taking the Series 65 myself for now to see what parts I don't know.

Percentage of AUM is a common structure for wealth management/financial advisors.

It’s extremely common, but it’s not fee only.

Fee only takes an up front fee, sometimes fixed, sometimes hourly.

https://www.investopedia.com/articles/investing/102014/feeon...

The article you're quoting directly contradicts your view, e.g.

>Generally, though, most agree, fee-only refers to payment from fixed, flat, hourly, or percentage-based fees.

That’s right! Did you know there’s a name for the subset that don’t?

No, you have that wrong. The opposite of "fee-only" is "commissioned-based" - where you don't have transparency into the cost of the advice (which is free at the point it's offered) because it's kicked-back to the advisor by the funds etc. that are being offered.

A fee based on AUM is an entirely standard way of paying a fee-only adviser.

ref. https://www.napfa.org/financial-planning/what-is-fee-only-ad...

For ongoing management. Yes. That’s NOT what people need most of the time.

Yes but that is the opposite of fee-only

Not true. There’s AUM fee only, and flat fee only.

The term fee-only universally applies to flat fee. Anything AUM based is not fee only.

Could you look at some of the links in this thread applicable to the issue, rather than simply repeating your (minority) opinion as though it's gospel?

I think you have things flipped. Since the fee is a percentage, roboadvisors are perfect for someone with relatively low assets. If you have millions you benefit more from spending the time to manage/rebalance everything yourself and also gain access to different investment opportunities/vehicles/services.

> If you have millions you benefit more from spending the time to manage/rebalance everything yourself

Robo-advisors probably also save a ton of time come tax season. I've never used the traditional ones but if you're doing the management yourself I imagine they don't automate it like the robo-advisors do...

My experience is that they usually complicate your taxes. In particular, past a certain asset threshold, Wealthfront will do something called "direct indexing", which basically invests your money in individual stocks the way an ETF would. It has TLH benefits, but at the cost of a massive 1099-B that you have to deal with every year.

Wealthfront has a turbotax import option. You tax accountant can press it too.

> Wealthfront has a turbotax import option. You tax accountant can press it too

Two issues: complexity of return and efficiency of turning pre-tax into post-tax income. Wealthfront is good at the former. It's half decent at the latter for moderate income levels. Above some threshold between $500k and $2mm, it's not the best.

And if you do all your dirty work in an IRA or other privileged account, nobody cares.

I am one of those people that have less than $57,000 in Wealthfront. I just checked and I paid $.11 in August for advisory fees. I wonder when it becomes worth it to pay someone $500 like you mentioned, if I’m only paying a couple dollars per year in advisory fees.

It becomes worth it if you want someone to tell you things you don't know. For example, auditing your retirement contributions, cash flow, planning for future cash flow, etc. It can be really comforting to have someone that knows the landscape give you advice or confirmation.

For actual investments, I am basically bought into the "bogleheads" methodology. So, I don't think it's worth it to pay for an advisor.

BTW, Wealthfront minimum fee is 0.25% annually. I only say this because if you have more than 500$ in WF then your fee should be higher than $.11

It seems like GP has about $528.

I wouldnt want to pay a fee only advisor but this is actually cheaper than vanguard or fidelity until you get $2k or something.

I’ve done the math on it and the losses I can declare on and deduct from my taxes from their tax loss harvesting cover their fee. Am I missing something?

The tax harvesting feature can be worth it for many people.

- There can be diminishing returns with higher balances and over time, since one can ordinarily deduct a net of $3000 from income a year and carry forward further losses, so one may at some point be carrying forward losses every year and only deduct $3000 from income. However the fee would continue to grow proportional to the balance. It may make sense to reevaluate whether the service is still worth the fee once one has several years of losses to carry forward. - Depending on how much effort one wants to put in, one may be able to get much of the benefits of tax loss harvesting by doing it oneself. - One may have significant balances in tax advantaged accounts. If those are managed by Wealthfront, one may not be able to get the benefits of tax loss harvesting on those balances.

According to their marketing, tax loss harvesting more than covers their advisory fee for 96% of customers:

https://www.wealthfront.com/pricing

If you want to save a few more bucks, you could check your portfolio every morning, invest in 100s of stocks manually, track wash sales and comparable stocks, then enter each trade into your tax software instead of just using the 1099 computations their computer does for you.

Or, maybe spend that time relaxing or being paid to do something more valuable. They charge $212 a month to manage a million dollar portfolio.

Assuming I could earn minimum wage doing something else, the lost wages from the time it would take me to do all that every weekday would be more than $212.

Or you could look at your vanguard dashboard every year on December 20th, look at the annual losses and sell those reinvesting in something else similar.

I think people get $1MM by avoiding $2500/year expenses. I plan on investing for 20-50 more years so saving $50-125k seems like a good exchange for an hour or so work every year.

You kind of have to review your holdings manually anyway as even if I had a personal advisor I would still check my own stuff.

In general I don’t think anyone trades daily. You rebalance quarterly and tax loss harvest annually or maybe semi annually.

If you traded daily you would run into tracking error quickly as you ran out of similar funds to jump between for your tax loss harvest.

Tax loss harvesting are just realizing those losses earlier. You would have eventually gotten them anyway so if you’re investing in the long term then it doesn’t matter much.

Aside from getting money earlier mattering for compounding, this also breaks down if you donate stocks to charity.

Or read the Bogleheads wiki for free.

They start with less and transferring out is complicated.

There are much worse decisions like not being invested at all.

>> It’s strange to me how people with such low assets .. The average size of a Robin Hood account is $4k. The average IRA is like $150k, but lets assume that most of the larger balances are held by people close to retirement age.

Wealthfront is new(ish) and technical. They probably have customers averaging less than 40 years old. People like that who have saved up $57k are likely to ultimately be much wealthier than the average American. If they won't need an advisor, who would?

> People like that who have saved up $57k are likely to ultimately be much wealthier than the average American. If they won't need an advisor, who would?

There are fixed costs to wealth management. Traditionally, someone with less than ~$250k wouldn't be worth bespoke advice; practically, that limit is closer to $1 to 3mm. Wealthfront uses technology to reduce service costs, thereby bringing some of the perks of that upper tier of advice to folks with less money. It would be reductive, however, to expand that service offering to the PWM/MFMs of the world.

You're exactly right.

Index funds beat most other investment strategies in the longer term