RIABiz

News, Vision & Voice for the Advisory Community

RIABiz

Wealthfront calls its smart beta approach 'superior' to Dimensional Fund Advisors largely because DFA works with RIAs

The Redwood City-based robo-advisor's CIO Burton Malkiel says his firm's robo-approach to factor investing convinced him to reverse his stand on passive investing as unbeatable

Author Brooke Southall November 17, 2017 at 2:21 AM
Admin:
no description available
Mark Matson: They've gone from smart beta is stupid to we're the ones that can pull it off. It's hypocritical at best and they're applying it completely wrong.

Paul Damon

Paul Damon

November 17, 2017 — 7:45 PM
And not to mention DFA sub-advises multi-factor strategies available to anyone via relatively low cost ETFs by John Hancock.....
Randy Bullard

Randy Bullard

November 21, 2017 — 4:33 PM
The sum total of this issue or disagreement comes down to whether an investor should or will pay the typical 1% fee that an advisor charges vs. the 25bps that Wealthfront charges. The difference between the multi-factor smart beta approaches utilized by DFA and Wealthfront are so minor as to be irrelevant. Tax loss harvesting within a sampled SMA portfolio vs. using pooled vehicles has greater opportunity to create usable losses, but comes at a cost of incremental trading and is ultimately of limited value. So again... this really comes down to an argument from Wealthfront that investors shouldn't pay 1% to an RIA. The 75bps advisory fee differential is real, but the arguments around that fee differential aren't based on the merits of one smart beta approach over another. This is about cheaper digital advice vs. more expensive traditional full service advice.
Wisefactors

Wisefactors

September 25, 2018 — 6:55 AM
Thanks for the useful blog. Looking forward for more.

Related Moves

RIA Quick Takes: Orion deepens DFA embrace by using it as portfolio manager-inside-ETF ~ Hardship withdrawals surge at Vanguard and Fidelity ~ Schwab hires 400 ~ Fidelity flips six funds into ETFs ~ Kitces makes list before Christmas ~ Amit Dogra has $1 billion of good news from his new Portland gig

Americans are struggling, though jobs are plentiful; Larry Fink's ESG zeal costs BlackRock another client, just as the Vatican issues ESG guidance; UBS says we didn't like you anyway to mass affluent and Michael Kitces and Craig Iskowitz join forces.

December 3, 2022 at 3:16 AM

Wealthfront cedes to four years of investors clamoring for crypto by taking on expensive third-party vendor that Betterment rules out

The Redwood City, Calif., robo-advisor turned a hard 'no' into a soft 'yes' by dealing with Grayscale and its 200 basis-point-plus fees, which its robo rival in NYC -- also without a crypto path -- finds ludicrous.

August 14, 2021 at 2:20 AM

Wealthfront's unlikely tapping of Sheila Bair and Tom Curry signals likely push to gain a bank charter, analysts say

The Redwood City robo-advisor's addition of two renowned former chief banking regulators brings legitimacy and guidance that could lead to a margin-fattening bank charter and help solve the robo-advisor's problem of high client acquisition costs.

December 31, 2020 at 4:37 AM

After adding an ex-iShares product chief to call the shots and -- oye -- lowering fees, Dimensional Fund Advisors humbly and belatedly charges into ETFs and should score $5 billion in two years, an analyst says

DFA nabbed Nicole Hunter's BlackRock ETF playbook and committed to ETF-level fees to show the industry it plans to play to win assets -- even if some come from within.

November 12, 2020 at 4:43 AM

See more related moves

Mentioned in this article:

Wealthfront
Portfolio Management System
Top Executive: Andy Rachleff



RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING


RIABiz Directory sponsored by:

Directory Sponsor Logo