Comments on: How online investment advisers add value http://blogs.reuters.com/felix-salmon/2013/12/10/how-online-investment-advisers-add-value/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: alphainvestor http://blogs.reuters.com/felix-salmon/2013/12/10/how-online-investment-advisers-add-value/comment-page-1/#comment-50026 Fri, 20 Jun 2014 17:31:03 +0000 http://blogs.reuters.com/felix-salmon/?p=22865#comment-50026 Betterment just announced that now offer TLH. Has anyone heard about this? What are your initial thoughts? They seem to do this better than their main competitor Wealthfront (they say 2x better), and with a lower minimum.

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By: blindersoff http://blogs.reuters.com/felix-salmon/2013/12/10/how-online-investment-advisers-add-value/comment-page-1/#comment-49726 Fri, 11 Apr 2014 10:41:47 +0000 http://blogs.reuters.com/felix-salmon/?p=22865#comment-49726 What is Vanguard’s personal investment strategy? This thread makes no sense.

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By: jbrown6820 http://blogs.reuters.com/felix-salmon/2013/12/10/how-online-investment-advisers-add-value/comment-page-1/#comment-48817 Thu, 12 Dec 2013 17:00:58 +0000 http://blogs.reuters.com/felix-salmon/?p=22865#comment-48817 Great post, both of these services have a lot to offer and I’m excited to see how they keep forcing change across the industry.

One thing that seemed odd is this: “Wealthfront also does rebalancing the smart way — by using inflows to buy the asset classes which have dropped in value, rather than selling the assets which have risen in value and thereby generating capital gains.”

As someone who has had accounts with both firms, Betterment not only does the exact same, but does it better imho. Since they can do fractional trading they are able to invest the dividends as they come in and not have cash sitting. I still don’t understand fully how they do it, but as far as complexity goes I give them the edge on that for sure.

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By: clearance42 http://blogs.reuters.com/felix-salmon/2013/12/10/how-online-investment-advisers-add-value/comment-page-1/#comment-48805 Wed, 11 Dec 2013 19:30:16 +0000 http://blogs.reuters.com/felix-salmon/?p=22865#comment-48805 @factorinvestor

Why do you feel commodities and munis are questionable asset classes? As noted in the article, Wealthfront doesn’t necessarily invest in these – but it DOES include them in the investable universe.

I’m also curious as to why you believer Wealthfront doesn’t employ Fama/French (or some other factor model) to determine asset allocation. Not saying you’re wrong, but I’m skeptical. Also – Fama/French does not apply solely to equities. Having more asset classes available for implementation is a benefit, not a detraction.

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By: tomcooper http://blogs.reuters.com/felix-salmon/2013/12/10/how-online-investment-advisers-add-value/comment-page-1/#comment-48801 Wed, 11 Dec 2013 13:55:48 +0000 http://blogs.reuters.com/felix-salmon/?p=22865#comment-48801 The great debate on gold as an investment a safe haven asset during times of impending stress has been argued from time immemorial.

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/12/10/how-online-investment-advisers-add-value/comment-page-1/#comment-48799 Wed, 11 Dec 2013 07:12:35 +0000 http://blogs.reuters.com/felix-salmon/?p=22865#comment-48799 Great post, Felix.

One question: is Wealthfront’s tax loss harvesting alpha overstated here, because taxes are merely deferred? Said differently – at any point, the “value” of an appreciated investment portfolio is overstated relative to its after-tax value if turned into cash. A Weathfront portfolio has a lower cost basis, and hence more taxes would be due.

I agree that deferring taxes has value because it allows an investor to compound gains. I am not doubting that Wealthfront can generate value through tax harvesting, but I do question if the numbers are as large as presented on what I’ll call an “investment life cycle” basis, meaning looking atinvesting cash all the way through to selling an investment and spending that cash.

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By: FactorInvestor http://blogs.reuters.com/felix-salmon/2013/12/10/how-online-investment-advisers-add-value/comment-page-1/#comment-48795 Tue, 10 Dec 2013 20:24:57 +0000 http://blogs.reuters.com/felix-salmon/?p=22865#comment-48795 I actually think Betterment has a superior asset allocation to Wealthfront. The Betterment portfolio includes tilts to Small and Value stocks which have historically produced higher returns (Fama/French). Their international and bond allocations are also better. Wealthfront has no Small/Value tilts and also invests in questionable asset classes like commodities and municipal bonds. Investors looking for a higher rate of return are better off with the Betterment portfolio.

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