By |Published On: July 8th, 2015|Categories: Research Insights|

Wealthfront’s CEO recently posted a hard-hitting blast against Betterment. The core argument was against Betterment’s fees charged to small accounts ($3 / month for accounts with less than $10k and no auto-deposit turned on). If you turn on auto-deposit of $100 per  month,  the fee is 35bps.  Last time I checked, 35 bps is pretty darn cheap for customized financial advice…

A sample:

“During Betterment’s most recent fundraising, I was shocked to learn through investor due diligence that the company brags about how much of their revenue comes from this $3 fee. Almost one-third. It’s really disappointing that Betterment has decided to build their business preying on those who can least afford it…”

Much of what Adam says is super reasonable and I imagine all independent, client-friendly advisors believe in the same credo:

The world doesn’t need another Wall Street.
We believe in our clients, and we’re willing to align our future with theirs.
Vanguard took the right path.

But why the angst?

Can’t we all just get along and focus on financial advisors/brokers with serious conflicts of interests?

About the Author: Wesley Gray, PhD

Wesley Gray, PhD
After serving as a Captain in the United States Marine Corps, Dr. Gray earned an MBA and a PhD in finance from the University of Chicago where he studied under Nobel Prize Winner Eugene Fama. Next, Wes took an academic job in his wife’s hometown of Philadelphia and worked as a finance professor at Drexel University. Dr. Gray’s interest in bridging the research gap between academia and industry led him to found Alpha Architect, an asset management firm dedicated to an impact mission of empowering investors through education. He is a contributor to multiple industry publications and regularly speaks to professional investor groups across the country. Wes has published multiple academic papers and four books, including Embedded (Naval Institute Press, 2009), Quantitative Value (Wiley, 2012), DIY Financial Advisor (Wiley, 2015), and Quantitative Momentum (Wiley, 2016). Dr. Gray currently resides in Palmas Del Mar Puerto Rico with his wife and three children. He recently finished the Leadville 100 ultramarathon race and promises to make better life decisions in the future.

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