Comparing Robo-Advisors

[jk]

Re: Comparing Robo-Advisors

to take responsibility for managing your own money means being able to accept uncertainty and cope with the consequent anxiety. most people would rather be reassured by someone with a pleasant manner and an air of [fictitious] certainty.

[DSpencer]

Re: Comparing Robo-Advisors

Here is a great assessment on Betterment diversification and written by a former Hedgefund manager https://www.thefelderreport.com/2016...ngerous-dogma/

I think diversification is BS. If I had wisely ignore diversification when a was a wee lad and only invested in Bond funds I would have made way more $$$.

Sorry but the folks who don't really well for them selves are not diversified. Lets look at EJ of itulip as a mentor. Bonds - (gold and Silver (out of that at the top) and he was heavily exposed to tech in the 97-99-00 through Angel investing).

Diversification crap that Betterment is selling is just a spin on the Modern Portfolio theory of personal finance.

I respectfully agree to disagree. Advisor are interested in maxxing out the AUM as is Betterment

The real magic comes when people make the time to learn about money. Come to grips with the fact they will make a bad investment.

For example, I have a friend who was sold a Cloud Computing ETF and this friend has a Master degree. I begged hime to sell, but his advisor assured him its a good investment. My friend is going to lose 50-70% of his money buying at a Peak.

People love money, but the hate to read about it or to understand it.

The main complaint of the author of that article is that Wealthfront is overweight in equities. I don't use Wealthfront, but in my Betterment account I have a slider between stocks and bonds that goes from 0-100. I can literally change my allocation between the two in under a minute (although the trades would not be instantaneous).

Yes, if only you had known the future of the markets when you made your investments you would have done better.

I don't even understand what you are advocating as an alternative.

[BK]

Re: Comparing Robo-Advisors

I'm advocating personal responsibility. Making your own choices of financial instruments ad living with your mistakes and success.

I have a degree in Accounting and when I reflect on my education had no discussion about what is money!

Bull markets in bonds and equities make innovations like Betterment to look safe and a great alternative. My fear for you and all users of Betterment is the coming few years will remind everyone that software is no different than being over reliant on a financial advisors.

Regards,

[GRG55]

Re: Comparing Robo-Advisors

to take responsibility for managing your own money means being able to accept uncertainty and cope with the consequent anxiety. most people would rather be reassured by someone with a pleasant manner and an air of [fictitious] certainty.

TNL@TB selling high fee mutual funds, for example.

[The nice lady at the bank]

[DSpencer]

Re: Comparing Robo-Advisors

I'm advocating personal responsibility. Making your own choices of financial instruments ad living with your mistakes and success.

I have a degree in Accounting and when I reflect on my education had no discussion about what is money!

Bull markets in bonds and equities make innovations like Betterment to look safe and a great alternative. My fear for you and all users of Betterment is the coming few years will remind everyone that software is no different than being over reliant on a financial advisors.

Regards,

Do you also advocate "personal responsibility" when it comes to every other area of life? Should we all be our own doctors, lawyers, electricians, mechanics, engineers, etc.?

Every butcher, baker and candlestick maker should spend their free time deciding whether Google's search algorithm represents a sustainable competitive advantage? They should look at Walmart's financial statements and decided whether the company is fairly valued at today's stock price? Or judge the default risk of a bond being offered by their local hospital?

And if it just so happens they have no aptitude for finance, tough luck. They just have to suck it up and take their losses because that's what it means to be personally responsible. Or maybe anyone who is not financially savvy should just be forced to put their money in a savings account?

If your real point is that Betterment is not going to save it's investors from a bear market, you are totally right. But how do you think picking their own investments is going to be any better? For every smart/lucky person that sells at the peak, someone else is buying.

If your point is that Betterment won't get better returns than a financial advisor, that's probably true also. But if your financial advisor charges you 1% for the same returns that Betterment charges you .15%, that is a big difference over the years.

[DSpencer]

Re: Comparing Robo-Advisors

TNL@TB selling high fee mutual funds, for example.

[The nice lady at the bank]

This is exactly why I think that robo-advisors are better than what most people end up with instead.

Is there ever a situation where someone should buy a mutual fund with a 5% sales charge and 1% net expense ratio? I can't think of one.

[thriftyandboringinohio]

Re: Comparing Robo-Advisors

Do you also advocate "personal responsibility" when it comes to every other area of life? Should we all be our own doctors, lawyers, electricians, mechanics, engineers, etc.?

Every butcher, baker and candlestick maker should spend their free time deciding whether Google's search algorithm represents a sustainable competitive advantage? They should look at Walmart's financial statements and decided whether the company is fairly valued at today's stock price? Or judge the default risk of a bond being offered by their local hospital?

And if it just so happens they have no aptitude for finance, tough luck. They just have to suck it up and take their losses because that's what it means to be personally responsible. Or maybe anyone who is not financially savvy should just be forced to put their money in a savings account?

If your real point is that Betterment is not going to save it's investors from a bear market, you are totally right. But how do you think picking their own investments is going to be any better? For every smart/lucky person that sells at the peak, someone else is buying.

If your point is that Betterment won't get better returns than a financial advisor, that's probably true also. But if your financial advisor charges you 1% for the same returns that Betterment charges you .15%, that is a big difference over the years.

You make a good point, DSpencer.
I feel it most often when I need to choose new suppliers for natural gas and electricity at my home.

Since deregulation, I have a couple dozen choices. All I know for sure is that only one of them is the best value, and I need to spend a few hours trying to figure it out.
I'm a good business person and very comfortable reading small print contracts, but I resent having to spend so much time doing it.
I much prefer the old regulated days, when the Ohio Public Utilities Commission worked on my behalf to control costs with the one regulated monopoly utility for gas and the one for electricity.

All deregulation did for me was put a couple dozen shady middle-man brokers lined up at my door and make me catch them in their lies.
My costs have not decreased noticeably, but my new annual hassle is real and vivid.

[DSpencer]

Re: Comparing Robo-Advisors

You make a good point, DSpencer.
I feel it most often when I need to choose new suppliers for natural gas and electricity at my home.

Since deregulation, I have a couple dozen choices. All I know for sure is that only one of them is the best value, and I need to spend a few hours trying to figure it out.
I'm a good business person and very comfortable reading small print contracts, but I resent having to spend so much time doing it.
I much prefer the old regulated days, when the Ohio Public Utilities Commission worked on my behalf to control costs with the one regulated monopoly utility for gas and the one for electricity.

All deregulation did for me was put a couple dozen shady middle-man brokers lined up at my door and make me catch them in their lies.
My costs have not decreased noticeably, but my new annual hassle is real and vivid.

A financial advisor will be happy to charge you 1% of your yearly utility bill and then pick one at random.

I have the same issue (also in Ohio). I'm ashamed to say that I've basically never tried to make an intelligent choice and just stick with the same provider. I guess you are living up to your username!

[BK]

Re: Comparing Robo-Advisors

If people would spend less time amusing themselves with television or Facebook post they could educate themselves.

1. Saving account can be one of the Worst places to keep money.

I think Betterment will be put out of business in the next BEAR market. Five years from today - Betterment will not exist. Asset will leave Betterment during the next Bear market (which probably began six months ago) like rats fleeing a sinking ship.

Look at the team of experts: https://www.betterment.com/experts/

The number one worry for me is when a company is run by a guy who hasn't made is money on his own.

Jon Stein , CEO of Betterment, is grandson of Ann Harden Babcock - http://www.hardenfurniture.com/About-Harden.aspx https://www.nysenate.gov/legislation...ons/2011/k1267 Mr Steins weddding announcement here, http://www.nytimes.com/2012/08/05/fa...tein.html?_r=0

My point is that Betterment is a financial illusion brought to you by the FED. Lots of twenty somethings/thjirty somethings are trusting these new computerize systems - its bunk! Mr Stein would not be in this role with out his family network. That is a problem because he really doesn't know anything about making or managing money. How do you assemble a team of experts to run or invest money when you don't have a clue how to make it for your self??

If someone like EJ of itulip or a Kyle Bass launched a Betterment platform - well I would sing a different tune.

[charliebrown]

Re: Comparing Robo-Advisors

As I am getting older ..., and my job prospects grow dimmer.

I cannot afford a big loss any more. I have been playing around with asset allocations, couch potato portfolio's etc.
Almost every one of these and robo back tested alogorithms suffer from the bubbles in bonds and stocks that have occurred over the last 35 years.
I am in an 80 - 20 (treasury vs stock) portfolio because that has the lowest long term volatility. But my eyes are wide open that when
interest rates rise in earnest, I think this model will no longer work, as will many of the robo models. Bonds will get crushed, and
overly leveraged companies whose earnings will get crushed when they have to roll their pile of debt will get crushed too.

It might be an interesting idea that instead of bond vs. total stock market, be selective in the stocks you own and buy under leveraged
companies. I don't know if there is a fund that does that or not. I certainly don't want to hold individual issues because it is too much
work for a grunt like me.


Another site I have been playing with is portfoliovisualizer. They have tools to back test asset allocations.
Instead of paying these robots, I just opened up an account at vanguard where I can trade vti,vgit for free and
they have tiny fees to manage the etf's.

I also have a portfolio that models the permanent portfolio which holds phys, vgtl, vgsh, and vti.
If this is too boring for you, you can try to guess which class will do best and tilt the holdings by 5% in either direction.
I do this, but half the time I am wrong .... ha ha ha. Right now I am 28% phys, 30% vgsh, 21% vglt and vti 21%

Oh, and P.S. you can do asset class correlations at porfoliovisualizer, and what I have found is that there are
so many highly correlated assets. A lot of these asset-allocation type portfolios have assets that are highly
correlated. For example there is a 90+ correlation between the total stock market and small cap stocks, so
for those portfolios that have both total stock and small cap are they really more diversified???? Or does
this just add complexity, and costs?

[jk]

Re: Comparing Robo-Advisors

As I am getting older ..., and my job prospects grow dimmer.

I cannot afford a big loss any more. I have been playing around with asset allocations, couch potato portfolio's etc.
Almost every one of these and robo back tested alogorithms suffer from the bubbles in bonds and stocks that have occurred over the last 35 years.
I am in an 80 - 20 (treasury vs stock) portfolio because that has the lowest long term volatility. But my eyes are wide open that when
interest rates rise in earnest, I think this model will no longer work, as will many of the robo models. Bonds will get crushed, and
overly leveraged companies whose earnings will get crushed when they have to roll their pile of debt will get crushed too.

It might be an interesting idea that instead of bond vs. total stock market, be selective in the stocks you own and buy under leveraged
companies. I don't know if there is a fund that does that or not. I certainly don't want to hold individual issues because it is too much
work for a grunt like me.


Another site I have been playing with is portfoliovisualizer. They have tools to back test asset allocations.
Instead of paying these robots, I just opened up an account at vanguard where I can trade vti,vgit for free and
they have tiny fees to manage the etf's.

I also have a portfolio that models the permanent portfolio which holds phys, vgtl, vgsh, and vti.
If this is too boring for you, you can try to guess which class will do best and tilt the holdings by 5% in either direction.
I do this, but half the time I am wrong .... ha ha ha. Right now I am 28% phys, 30% vgsh, 21% vglt and vti 21%

you might enjoy playing with some of the calculators and model portfolios at this free website.

[charliebrown]

Re: Comparing Robo-Advisors

Thanks I am playing there while we speak

[DSpencer]

Re: Comparing Robo-Advisors

you might enjoy playing with some of the calculators and model portfolios at this free website.

Thanks for linking this (again). I had not stumbled across it already despite a lot of reading in this area. The information is presented very nicely.

[Southernguy]

Re: Comparing Robo-Advisors

http://www.counterpunch.org/2016/03/...s-chart-means/

I think it's a "must read" for anyone considering coming into de stock market these days. Jeremy Grantham sees, as well, a bad seven years time for the US stock market. He says emerging markets perspective is better. Find his arguments compelling.