Thursday, August 30, 2012

Reinventing Investment Service

When the going gets tough, investors need fiduciaries, as we posted recently. Private banks and trust companies and legions of registered investment advisers can fill the bill. Provided you're High Net Worth.

Not so rich? Can't afford fees and expenses of two or three percent a year?  That's a problem. To obtain guidance inexpensive enough to please John Bogle, you would need to settle for an adviser whose previous job was flipping burgers.

O.K. Let's think outside the box. How about a virtual fiduciary? See The Wealth Manager For Rich Geeks.

This virtual fiduciary is called Wealthfront, and its CEO says, “We add very little value, and we price accordingly.” Wealthpoint offers ETF portfolios created by algorithm.  Fees and expenses are minimal.

Check out Wealthfront's inviting web site, a marvel of simplicity. Notice the promotional video

For comparison, I visited Vanguard, Fidelity and T. Rowe Price online. Each site was full of information, but none offered a simple, easy path for putting one's money to work. (I'm guessing fund companies would find it difficult, for legal and other reasons,  to create such a path.)

With skimpy stock and bond returns expected for a while, a truly inexpensive investment service has clear appeal. Even John Bogle might applaud a service that takes advantage of ETFs while removing the temptation to trade them.

Is Wealthfront on to something?


Related Post: Wealthfront's CEO is the same Andy Rachleff we linked to in "Private Banking " Dissected.

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