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Comment by matwood | Hacker News Reader

> Wealthfront markets itself as cheaper than vanguard etfs

Do they? I always saw them as an alternative to a traditional advisor which can be 1%+ of assets. Even Vanguard can be overwhelming for some people who have to make choices on allocation[1]. For someone who wants auto-rebalancing and a set it and forget it manager, .25% isn't all that much. Obviously if you want to manage the money yourself you can always open a TD account where most of the ETFs used by Wealthfront/Betterment can be purchased commission free. But then the user is left doing buys, rebalancing, etc...

[1] For a complete no-brainer solution open a Vanguard account and dump everything into one of their target funds. Some people want something between the target fund and managing their own though.

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> Even Vanguard can be overwhelming for some people who have to make choices on allocation[1].

What's wrong with their Target Retirement 20?? funds if you don't want to choose your own allocation?

Nothing is wrong with that fund (in fact the target funds are always my recommendations to friends when they are starting out), but there is a space filled by the robo-advisors between target fund buckets and more of a sliding scale of risk. Although, at that point if someone is picking more precise allocations through a risk proxy then they might as well skip the robo-advisors and do the work themselves.

Idea: as you get closer and closer to the target retirement year, start investing in the newest target retirement fund that year. For example, if you are investing in TR2060 now, start contributing to TR2070 in 2025 instead of sticking with TR2060. That way you can "choose" between multiple TR funds with varying levels of risk each year.

This is why I switched to Wealthfront.

I inherited an actively managed Morgan Stanley portfolio which has fees around 2-3% annually. I initially looked at managing everything myself, but didn't want to have to worry about all the finer points of managing one's own account. I may be losing the additional half of a percent, but in my mind, I am gaining far more.

There are also degrees of self management. You can see how the robo-advisor splits your money and with just a bit more work open a brokerage account and do the same split with the same funds (or very close). Then you just do buys once/month or quarter. Many of the ETFs used are also commission free at many of the brokers.

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