Wealthfront account closed

Last week I indicated that a couple of decisions needed to be made. I’ve made the first. I decided to close the Wealthfront test account. There were several reasons why this one was chosen.

First, Wealthfront and Betterment were the two most similar accounts, as demonstrated by the 0.97 correlation between the two in weekly moves.

Next, Betterment is aimed at smaller accounts. Because they use fractional shares, they can more easily reinvest dividends in an effort to re-balance in smaller accounts. Wealthfront would work better with larger accounts. The test accounts will always be on the smaller side.

Finally, I personally am not comfortable with Wealthfront. This began when I first started this blog and published my evaluation analysis. I was contacted by one of the founders of Wealthfront saying that my math was wildly wrong and offering to help fix it. This led to several interchanges. I spent a couple of days cleaning up my spreadsheets before sending them to him. He responded that he didn’t have time to look at them and sent me parts of his spreadsheets. These didn’t make sense to me and after a few more exchanges, the matter was dropped without resolution. The bottom line was that neither of us ended up with much respect for the work of the other.

Later when I opened the test accounts and indicated that I planned to track them, I received the following tweet from someone else at Wealthfront. “Pls keep in mind short term evaluation of long term investment account is not a good idea. Better to evaluate us on what we claim.” I agree with the first sentence, but not the second.

I think Wealthfront is likely a good company and I’d have no problem recommending them to someone. They’re just not at the top on my list.

About an hour before close on last Friday, I went to their web site and liquidated my holdings. I received an Email asking me to confirm my intentions. The trades are scheduled to settle today, and it will take a few more days to transfer the funds back to my bank. I’ll update you with my weekend update. Follow me on Twitter @billlanke to know when this update is posted.