Author Topic: Betterment for taxable holdings.  (Read 24166 times)

Dodge

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Re: Betterment for taxable holdings.
« Reply #50 on: February 09, 2015, 07:05:45 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

How do the benefits of tax-loss harvesting stop after a short period of time ?

If you're investing with the expectation that your money will grow, you must also acknowledge that Tax Loss Harvesting on any one particular deposit will eventually not be possible (there will be no losses to harvest).

What about dividend re-investment or additional funds ? Won't my year 2 contributions also be eligible for tax-loss harvesting ?

Yes, your year 2 contributions will be eligible, but that won't help your year 1 contributions.  If you keep making bigger and bigger contributions, you can mask the fact that your earlier contributions have lost more in fees than they've gained in harvesting, but that doesn't change the underlying numbers, and eventually it will catch up to you.

It is inevitable, for the simple reason that the fees are both percentage based (so they get higher as your account grows), and forever (each and every year, for the rest of your life), while the tax loss harvesting benefit on each individual deposit is temporary.

Dodge

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Re: Betterment for taxable holdings.
« Reply #51 on: February 09, 2015, 07:11:44 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

I feel like this logic is true if you were to lump sum and then set and forget, but if you contribute annually (or monthly) in relatively equal amounts, the TLH should help you as long as you regularly contributing. Obviously once you are in the withdrawal phase, the strategy is less advantageous.

It helps to visualize this, if you consider each individual deposit a separate container.  This is useful, because that's exactly how the government sees it, as individual "tax lots".  Each deposit is essentially a lump sum "set and forget" account.

I did the math on how long it takes you to get past break even in the other Betterment thread, the point where even the gains from new deposits are dwarfed by the higher fees on the old deposits.  It doesn't take long.

tj

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Re: Betterment for taxable holdings.
« Reply #52 on: February 09, 2015, 07:47:14 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

I feel like this logic is true if you were to lump sum and then set and forget, but if you contribute annually (or monthly) in relatively equal amounts, the TLH should help you as long as you regularly contributing. Obviously once you are in the withdrawal phase, the strategy is less advantageous.

It helps to visualize this, if you consider each individual deposit a separate container.  This is useful, because that's exactly how the government sees it, as individual "tax lots".  Each deposit is essentially a lump sum "set and forget" account.

I did the math on how long it takes you to get past break even in the other Betterment thread, the point where even the gains from new deposits are dwarfed by the higher fees on the old deposits.  It doesn't take long.

I saw that and I'm surprised by how many don't buy your logic. In this case, Betterment might make sense, even considering the fees, if you wanted a small value tilt..of course their strategy is subject to change, like Wealthfront did removing REITs.

Would your logic apply to Wealthfront's direct indexing stock portfolio as well?
« Last Edit: February 09, 2015, 07:49:09 PM by tj »

Dodge

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Re: Betterment for taxable holdings.
« Reply #53 on: February 09, 2015, 08:17:40 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

I feel like this logic is true if you were to lump sum and then set and forget, but if you contribute annually (or monthly) in relatively equal amounts, the TLH should help you as long as you regularly contributing. Obviously once you are in the withdrawal phase, the strategy is less advantageous.

It helps to visualize this, if you consider each individual deposit a separate container.  This is useful, because that's exactly how the government sees it, as individual "tax lots".  Each deposit is essentially a lump sum "set and forget" account.

I did the math on how long it takes you to get past break even in the other Betterment thread, the point where even the gains from new deposits are dwarfed by the higher fees on the old deposits.  It doesn't take long.

I saw that and I'm surprised by how many don't buy your logic. In this case, Betterment might make sense, even considering the fees, if you wanted a small value tilt..of course their strategy is subject to change, like Wealthfront did removing REITs.

Would your logic apply to Wealthfront's direct indexing stock portfolio as well?

If you want a small value tilt, you can buy it on your own with a much simpler portfolio.  The biggest difference verses Betterment, is that you'd have to rebalance the portfolio.  I've written a lot about this, but in short, rebalancing is easy, and you're just fine doing it once a year (if it's even necessary that year).

Your manager risk here is bigger than I think most people recognize.  As you said, Wealthfront removed REITs.  Wealthfront, if I remember correctly, used to put you in actively managed funds, before they switched to indexing.  What do you think Betterment, or Wealthfront...etc, will do if their particular tilt underperforms for 10 years?  If your plan is to stay tilted towards Small Value, because you believe that even if it goes through 10 years of underperformance, it will end up on top over the long run...do you really want your money managed by someone else?

If the US Stock Market index grows 12% a year over the next 10 years, and a small value tilt grows only 8%, do you believe your manager will stay the course?  What if Wealthfront starts running ads showing their portfolio grew an extra $1 million dollars over the last 10 years compared to Betterment, and as a result more people start going with Wealthfront...are you still confident your manager will stay the course?

That's the thing about manager risk.  They can switch their portfolio to whatever did well over the last 10 years, and start running their own ads, showing how their current picks did over the last 10 years.  While I don't recommend a small value tilt, if you want one, I don't recommend paying a manager to get it.

Unfortunately, I'm not familiar enough with Wealthfront's direct indexing portfolio to have an opinion, but it has a steep hill to climb to overcome their extra fees.

Wolf359

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Re: Betterment for taxable holdings.
« Reply #54 on: February 09, 2015, 09:11:11 PM »
I've been reading the arguments about Betterment go around and around without resolution.  There's a basic point that both sides are talking past, perhaps without realizing it.  The pro-Betterment folks see the value in hiring a portfolio manager.  The anti-Betterment people don't.  It's complicated by the fact that Betterment espouses the same general passive indexing philosophy, and even uses the same (Vanguard) investment vehicle to get there.

The fact that you're paying someone something to do something you could do yourself is the basic disagreement.  To some people, that's not worth it. 

I know it's a leap, but if you set aside the DIY option, and evaluate Betterment solely as a portfolio management service, then Betterment is pretty cheap.  The industry average for the service is 1.3% of assets, usually with a half million or more minimum.  In comparison to that, Betterment is very reasonable.

I've seen the comparisons to Vanguard Life Strategy, but that's not apples to apples.  The closest Vanguard service for comparison is the Vanguard Personal Advisor Services.  With a $100,000 minimum, and a charge of .3% of assets, they'll do pretty much the same thing as Betterment, down to the selection of funds and the automatic rebalancing.  It has the added benefits of staying with Vanguard.  If you discontinue, they'll simply leave your funds in place.  Since you worked with a human advisor to set up your fund mix, you'll understand why you're in what they put you in.

If you want or need the handholding, Betterment and other robo-investors are actually a good option.  Schwab, Vanguard, Fidelity, and the other big players have taken notice and are entering the market as well.  For the DIY'ers, these advisory services are not a match.  if a cheap portfolio manager is what you're looking for, then you're not comparing .15% fees (Betterment) to 0% (Vanguard DIY), you're comparing it to  Vanguard Personal Advisor (.3%) or a traditional advisor (1 to 1.3%) or even an actively managed mutual fund.

tj

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Re: Betterment for taxable holdings.
« Reply #55 on: February 09, 2015, 09:17:16 PM »
Quote
Unfortunately, I'm not familiar enough with Wealthfront's direct indexing portfolio to have an opinion, but it has a steep hill to climb to overcome their extra fees.

They have what is called the "Wealthfront 500" for those who invest 500k with them. Instead of putting those people in Total Stock Market, they invest directly in the 500 stocks of the S&P 500 and the portion in the Extended Market ETF. Apparently they tax loss harvest the individual securities...for example, if Coca Cola crashes, they may temporarily put some extra in Dr Pepper Snapple....if they change their strategy, or get acquired, that would be quite a lot of individual stocks to manage. Of cousre I have nowhere near 500k. :)

Wolf359

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Re: Betterment for taxable holdings.
« Reply #56 on: February 09, 2015, 09:24:32 PM »
I have a question for those who are using Betterment's tax loss harvesting service, and also have Vanguard index mutual funds in outside holdings.  How do those tax loss harvests get presented at tax time?  How do you avoid running afoul of wash sale rules?  Does Betterment give you enough  transaction information so you'll know if you're subject to the wash sale rules?

I know you can avoid the wash sale problems if you give Betterment all your funds.  I don't trust their system security enough to do that.  (They don't even use two-factor authentication to secure the accounts.)  That lack isn't a deal killer.  I'll still willing to do business with them.  But not with everything.

Dodge

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Re: Betterment for taxable holdings.
« Reply #57 on: February 09, 2015, 09:30:34 PM »
I've seen the comparisons to Vanguard Life Strategy, but that's not apples to apples.  The closest Vanguard service for comparison is the Vanguard Personal Advisor Services.  With a $100,000 minimum, and a charge of .3% of assets, they'll do pretty much the same thing as Betterment, down to the selection of funds and the automatic rebalancing.

Both Betterment and Vanguard's Automatic funds:

1.  Help you choose your allocation, by filling out a short form to determine a recommended level of risk.

2.  Allow you to ignore the recommendation and choose your own allocation.

3.  Choose the underlying funds for you.

4.  Rebalance for you.

5.  Reinvest dividends for you.

6.  Allow you to automatically add/withdraw to/from your portfolio on a monthly basis (via your checking/savings account at another bank for example).

7.  Do all of this for you, online in your browser, without a human on their end choosing anything for you (not referring to customer service, which both companies have).

How do you consider this "not apples to apples", then claim the "apples to apples" comparison is Betterment vs. Vanguard Personal Advisor Services, when the main (only?) differentiator between that and LifeStrategy is that you're assigned a physical human who helps you choose everything and walks you through it?

tj

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Re: Betterment for taxable holdings.
« Reply #58 on: February 09, 2015, 09:31:29 PM »
I have a question for those who are using Betterment's tax loss harvesting service, and also have Vanguard index mutual funds in outside holdings.  How do those tax loss harvests get presented at tax time?  How do you avoid running afoul of wash sale rules?  Does Betterment give you enough  transaction information so you'll know if you're subject to the wash sale rules?

I know you can avoid the wash sale problems if you give Betterment all your funds.  I don't trust their system security enough to do that.  (They don't even use two-factor authentication to secure the accounts.)  That lack isn't a deal killer.  I'll still willing to do business with them.  But not with everything.

The only 100% safety net w would be to invest in funds that betterment doesn't use. Either use the LifeStrategy or Target Date funds, or invest in S&P 500 rather than Total US, Total International rather than Developed + Emerging, etc.

Dodge

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Re: Betterment for taxable holdings.
« Reply #59 on: February 09, 2015, 09:34:31 PM »
How do you avoid running afoul of wash sale rules?

You'll have to both stop contributing to any "substantially identical" funds across all your accounts, and make sure you turn off any automatic dividend reinvesting for any "substantially identical" funds across all your accounts.

Dodge

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Re: Betterment for taxable holdings.
« Reply #60 on: February 09, 2015, 09:36:56 PM »
I have a question for those who are using Betterment's tax loss harvesting service, and also have Vanguard index mutual funds in outside holdings.  How do those tax loss harvests get presented at tax time?  How do you avoid running afoul of wash sale rules?  Does Betterment give you enough  transaction information so you'll know if you're subject to the wash sale rules?

I know you can avoid the wash sale problems if you give Betterment all your funds.  I don't trust their system security enough to do that.  (They don't even use two-factor authentication to secure the accounts.)  That lack isn't a deal killer.  I'll still willing to do business with them.  But not with everything.

The only 100% safety net w would be to invest in funds that betterment doesn't use. Either use the LifeStrategy or Target Date funds, or invest in S&P 500 rather than Total US, Total International rather than Developed + Emerging, etc.

Since LifeStrategy and Target Date funds invest your money in Total US and Total International, I'm not sure if that will count as not being "substantially identical".  Something to double check.

tj

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Re: Betterment for taxable holdings.
« Reply #61 on: February 09, 2015, 10:17:02 PM »
I have a question for those who are using Betterment's tax loss harvesting service, and also have Vanguard index mutual funds in outside holdings.  How do those tax loss harvests get presented at tax time?  How do you avoid running afoul of wash sale rules?  Does Betterment give you enough  transaction information so you'll know if you're subject to the wash sale rules?

I know you can avoid the wash sale problems if you give Betterment all your funds.  I don't trust their system security enough to do that.  (They don't even use two-factor authentication to secure the accounts.)  That lack isn't a deal killer.  I'll still willing to do business with them.  But not with everything.

The only 100% safety net w would be to invest in funds that betterment doesn't use. Either use the LifeStrategy or Target Date funds, or invest in S&P 500 rather than Total US, Total International rather than Developed + Emerging, etc.

Since LifeStrategy and Target Date funds invest your money in Total US and Total International, I'm not sure if that will count as not being "substantially identical".  Something to double check.

I don't think Fund of funds apply.

el_beardo

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Re: Betterment for taxable holdings.
« Reply #62 on: February 09, 2015, 11:07:48 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

How do the benefits of tax-loss harvesting stop after a short period of time ?

If you're investing with the expectation that your money will grow, you must also acknowledge that Tax Loss Harvesting on any one particular deposit will eventually not be possible (there will be no losses to harvest).

What about dividend re-investment or additional funds ? Won't my year 2 contributions also be eligible for tax-loss harvesting ?

Yes, your year 2 contributions will be eligible, but that won't help your year 1 contributions.  If you keep making bigger and bigger contributions, you can mask the fact that your earlier contributions have lost more in fees than they've gained in harvesting, but that doesn't change the underlying numbers, and eventually it will catch up to you.

It is inevitable, for the simple reason that the fees are both percentage based (so they get higher as your account grows), and forever (each and every year, for the rest of your life), while the tax loss harvesting benefit on each individual deposit is temporary.

I get what you are saying - TLH ( actual tax savings ) are limited to $3000 per year ( and future roll-overs are limited to X years you are alive). As you dump more $$ into your account the fees also increase and TLH is limited to the recent deposits.

But also consider that tax-loss harvesting also wipes out long-term and short term capital gains - would this be useful when rebalancing ?

If you only rebalance once a year ( in 15 minutes between stocks & bonds ), you don't see this benefit.

But if you are spread out between 11 asset classes ( or individual stocks in WealthFront 500k) couldn't you take advantage for example of commodities going down 5% one month, do some TLH out and rebalancing over to international developed, then sell some long term bonds and buy US mid-cap. Keeping your portfolio balanced and not incurring any taxable events ?

Could a machine algorithm optimize that several times over the course of a year without any transaction costs ?

Dodge

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Re: Betterment for taxable holdings.
« Reply #63 on: February 09, 2015, 11:59:01 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

How do the benefits of tax-loss harvesting stop after a short period of time ?

If you're investing with the expectation that your money will grow, you must also acknowledge that Tax Loss Harvesting on any one particular deposit will eventually not be possible (there will be no losses to harvest).

What about dividend re-investment or additional funds ? Won't my year 2 contributions also be eligible for tax-loss harvesting ?

Yes, your year 2 contributions will be eligible, but that won't help your year 1 contributions.  If you keep making bigger and bigger contributions, you can mask the fact that your earlier contributions have lost more in fees than they've gained in harvesting, but that doesn't change the underlying numbers, and eventually it will catch up to you.

It is inevitable, for the simple reason that the fees are both percentage based (so they get higher as your account grows), and forever (each and every year, for the rest of your life), while the tax loss harvesting benefit on each individual deposit is temporary.

I get what you are saying - TLH ( actual tax savings ) are limited to $3000 per year ( and future roll-overs are limited to X years you are alive). As you dump more $$ into your account the fees also increase and TLH is limited to the recent deposits.

But also consider that tax-loss harvesting also wipes out long-term and short term capital gains - would this be useful when rebalancing ?

If you only rebalance once a year ( in 15 minutes between stocks & bonds ), you don't see this benefit.

But if you are spread out between 11 asset classes ( or individual stocks in WealthFront 500k) couldn't you take advantage for example of commodities going down 5% one month, do some TLH out and rebalancing over to international developed, then sell some long term bonds and buy US mid-cap. Keeping your portfolio balanced and not incurring any taxable events ?

Could a machine algorithm optimize that several times over the course of a year without any transaction costs ?

It's even worse than you're describing:

1.  You won't get the full $3,000 every year.  From what I've seen from researching the stocks in Betterment's portfolio, all tax loss harvesting activity ceases for any particular deposit, after a year or so, and sometimes less.  This is a chart of all of Betterment's stocks:



They all hit their bottom in the 6th month.  A theoretical Betterment portfolio which started 4 years ago, would have had 0 tax loss harvesting after the 6th month.  While the portfolio, and the fee, would have nearly doubled.  It is unlikely this money will ever have the opportunity to tax loss harvest again.  It will end up looking like this growth chart of the S&P500 (red line):



Maybe 2010 was a bad year to start, lets try some others:

2011: 1.5 years



2012: 1 year



2009: 3 months



2004-2007 all hit their bottom at the predictable 2008-2009 bottom, which was easily captured with manual tax loss harvesting.  So between 1-3 years was the maximum tax-loss-harvesting time.

2003: 3 months



2002: 9 months



...etc

As you can see, after the first year or so, tax loss harvesting ceases.  Your portfolio, however, rises significantly, along with the percentage-based fee.

2.  You can't simply say, "Oh look, commodities are down 5% this month, let's tax loss harvest some of that."  You can't tax loss harvest, unless it has fallen lower than your purchase point.  If you bought in at $100, and the fund is up 10% since you bought it ($110), you can't tax loss harvest if it then falls down to $105, or even $100.  It has to fall lower than $100.  If it falls to $95, and you do tax loss harvesting at that point, this lowers your cost basis (the price you got in at) to $95.  Now price has to fall lower than $95 in order to perform further tax loss harvesting.

So it's easy to see, that if you're investing with the expectation that your money will rise, tax loss harvesting has a limited shelf life.

Regarding the rebalancing question, rebalancing simply isn't that big of a deal.  No one should be paying any transaction costs with buying/selling, as you should be in diversified index funds, which don't have transaction costs.  Also, Taxable events when rebalancing, really don't matter if you either:

1.  Contribute new money regularly, allowing you to rebalance with that (you're in the accumulation phase).

2.  Withdraw money regularly, allowing you to rebalance with that (you're in the distribution phase).

or

3.  Have a 401k, or better yet an IRA, where you can rebalance without worrying about taxes.

Wolf359

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Re: Betterment for taxable holdings.
« Reply #64 on: February 10, 2015, 12:02:38 AM »
I've seen the comparisons to Vanguard Life Strategy, but that's not apples to apples.  The closest Vanguard service for comparison is the Vanguard Personal Advisor Services.  With a $100,000 minimum, and a charge of .3% of assets, they'll do pretty much the same thing as Betterment, down to the selection of funds and the automatic rebalancing.

Both Betterment and Vanguard's Automatic funds:

1.  Help you choose your allocation, by filling out a short form to determine a recommended level of risk.

2.  Allow you to ignore the recommendation and choose your own allocation.

3.  Choose the underlying funds for you.

4.  Rebalance for you.

5.  Reinvest dividends for you.

6.  Allow you to automatically add/withdraw to/from your portfolio on a monthly basis (via your checking/savings account at another bank for example).

7.  Do all of this for you, online in your browser, without a human on their end choosing anything for you (not referring to customer service, which both companies have).

How do you consider this "not apples to apples", then claim the "apples to apples" comparison is Betterment vs. Vanguard Personal Advisor Services, when the main (only?) differentiator between that and LifeStrategy is that you're assigned a physical human who helps you choose everything and walks you through it?

I am new to both Vanguard and Betterment.  I concede that I did not fully investigate Vanguard Life Strategy Funds.  After doing more research, I agree that Vanguard Life Strategy is very similar to Betterment, except for the Tax Loss Harvesting (which is of debatable value.)  Most comparisons I'm seeing, however, are between Vanguard DIY and Betterment, not the Target or Life Strategy funds.

Actually, the expense ratio for Life Strategy is high compared to the underlying index. If that's what's being compared to Betterment, then aren't the costs similar?  And if I want to change my stock/bond mix but am locked into one Life Strategy fund, don't I have to sell to get out?  That's painful in a taxable account.

Come to think of it, that's also a question for the Betterment side.  If you adjust your stock/bond mix because you're getting older and your risk tolerance changes (which is supposed to be an advantage of an adjustable account), do they just buy/sell immediately to make the adjustments if you reset it, or do it gradually over time?  i think I like the control of DIY.

Wolf359

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Re: Betterment for taxable holdings.
« Reply #65 on: February 10, 2015, 12:25:36 AM »
Dodge,

I just read your full posts in the Betterment -=> Vanguard: Getting Started for Real thread. 

I see where you're coming from.  Those were extremely helpful posts.


milesdividendmd

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Re: Betterment for taxable holdings.
« Reply #66 on: February 10, 2015, 01:30:30 AM »

I have a question for those who are using Betterment's tax loss harvesting service, and also have Vanguard index mutual funds in outside holdings.  How do those tax loss harvests get presented at tax time?  How do you avoid running afoul of wash sale rules?  Does Betterment give you enough  transaction information so you'll know if you're subject to the wash sale rules?

I know you can avoid the wash sale problems if you give Betterment all your funds.  I don't trust their system security enough to do that.  (They don't even use two-factor authentication to secure the accounts.)  That lack isn't a deal killer.  I'll still willing to do business with them.  But not with everything.

I own Vanguard funds in my tax sheltered  (retirement) space, and use betterment with tax loss harvesting for my taxable brokerage option.

I avoid running afoul of wash sale rules by not owning any of the Vanguard funds included in the betterment portfolio in my non-betterment portfolio. It's not terribly difficult to avoid since betterment publishes the complete list of included  funds in their tax loss harvesting white paper, as an example I own an institutional S&P 500 fund in my retirement accounts in place of the Vanguard total market fund. The only fund that I have really had to avoidthat I otherwise wouldn't have is VWO.

Although some never tire of making the same argument against betterment over and over, I find the exercise boring, so I will not remake arguments made in past threads.

But investing my taxable money in Betterment this past year has been a real win. To date they effortlessly have harvested $1468 on 65K, which will save me over $650 come tax time at my tax bracket.

To date they have charge me less than $80 in fees over the underlying etf fees.

Far better than free works for me, and beyond this I've been amazed by their customer service and the ease of the investing experience.  I'm never tempted to meddle, because I never have to do anything.

Despite the fact that the savings gained from their approach has beaten an identical portfolio from Vanguard without tax loss harvesting by more than 700%, If their fees outstrip their benefits in the future, there's nothing to prevent me from transferring my holdings in-kind to another brokerage free of charge.

Their tax data is importable into TurboTax if that is your plan,but I simply printed out all of their tax forms including an itemized listing of transactions for my accountant.

Wolf359

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Re: Betterment for taxable holdings.
« Reply #67 on: February 10, 2015, 04:32:59 AM »

I have a question for those who are using Betterment's tax loss harvesting service, and also have Vanguard index mutual funds in outside holdings.  How do those tax loss harvests get presented at tax time?  How do you avoid running afoul of wash sale rules?  Does Betterment give you enough  transaction information so you'll know if you're subject to the wash sale rules?

I know you can avoid the wash sale problems if you give Betterment all your funds.  I don't trust their system security enough to do that.  (They don't even use two-factor authentication to secure the accounts.)  That lack isn't a deal killer.  I'll still willing to do business with them.  But not with everything.

I own Vanguard funds in my tax sheltered  (retirement) space, and use betterment with tax loss harvesting for my taxable brokerage option.

I avoid running afoul of wash sale rules by not owning any of the Vanguard funds included in the betterment portfolio in my non-betterment portfolio. It's not terribly difficult to avoid since betterment publishes the complete list of included  funds in their tax loss harvesting white paper, as an example I own an institutional S&P 500 fund in my retirement accounts in place of the Vanguard total market fund. The only fund that I have really had to avoidthat I otherwise wouldn't have is VWO.

Although some never tire of making the same argument against betterment over and over, I find the exercise boring, so I will not remake arguments made in past threads.

But investing my taxable money in Betterment this past year has been a real win. To date they effortlessly have harvested $1468 on 65K, which will save me over $650 come tax time at my tax bracket.

To date they have charge me less than $80 in fees over the underlying etf fees.

Far better than free works for me, and beyond this I've been amazed by their customer service and the ease of the investing experience.  I'm never tempted to meddle, because I never have to do anything.

Despite the fact that the savings gained from their approach has beaten an identical portfolio from Vanguard without tax loss harvesting by more than 700%, If their fees outstrip their benefits in the future, there's nothing to prevent me from transferring my holdings in-kind to another brokerage free of charge.

Their tax data is importable into TurboTax if that is your plan,but I simply printed out all of their tax forms including an itemized listing of transactions for my accountant.

Thank you for your response.  It's helpful.  Since I have existing money in the same funds, it means that if I choose to use Betterment for tax loss harvesting, I'll have to move some things around first.  (Some capital gains may result.) 

Dodge

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Re: Betterment for taxable holdings.
« Reply #68 on: February 10, 2015, 06:46:01 AM »
I've seen the comparisons to Vanguard Life Strategy, but that's not apples to apples.  The closest Vanguard service for comparison is the Vanguard Personal Advisor Services.  With a $100,000 minimum, and a charge of .3% of assets, they'll do pretty much the same thing as Betterment, down to the selection of funds and the automatic rebalancing.

Both Betterment and Vanguard's Automatic funds:

1.  Help you choose your allocation, by filling out a short form to determine a recommended level of risk.

2.  Allow you to ignore the recommendation and choose your own allocation.

3.  Choose the underlying funds for you.

4.  Rebalance for you.

5.  Reinvest dividends for you.

6.  Allow you to automatically add/withdraw to/from your portfolio on a monthly basis (via your checking/savings account at another bank for example).

7.  Do all of this for you, online in your browser, without a human on their end choosing anything for you (not referring to customer service, which both companies have).

How do you consider this "not apples to apples", then claim the "apples to apples" comparison is Betterment vs. Vanguard Personal Advisor Services, when the main (only?) differentiator between that and LifeStrategy is that you're assigned a physical human who helps you choose everything and walks you through it?

I am new to both Vanguard and Betterment.  I concede that I did not fully investigate Vanguard Life Strategy Funds.  After doing more research, I agree that Vanguard Life Strategy is very similar to Betterment, except for the Tax Loss Harvesting (which is of debatable value.)  Most comparisons I'm seeing, however, are between Vanguard DIY and Betterment, not the Target or Life Strategy funds.

Actually, the expense ratio for Life Strategy is high compared to the underlying index. If that's what's being compared to Betterment, then aren't the costs similar?  And if I want to change my stock/bond mix but am locked into one Life Strategy fund, don't I have to sell to get out?  That's painful in a taxable account.

Come to think of it, that's also a question for the Betterment side.  If you adjust your stock/bond mix because you're getting older and your risk tolerance changes (which is supposed to be an advantage of an adjustable account), do they just buy/sell immediately to make the adjustments if you reset it, or do it gradually over time?  i think I like the control of DIY.

The total fee for a LifeStrategy fund is about equal to the fees of the underlying funds in the Betterment account.  Betterment then adds an additional 0.15-0.35% fee on top.

Yes, taxable accounts can't switch allocations very quickly, or efficiently.  It's best to have some money in an IRA or 401k, so you can change your total asset allocation without worrying about taxes.

Dodge

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Re: Betterment for taxable holdings.
« Reply #69 on: February 10, 2015, 06:48:08 AM »

I have a question for those who are using Betterment's tax loss harvesting service, and also have Vanguard index mutual funds in outside holdings.  How do those tax loss harvests get presented at tax time?  How do you avoid running afoul of wash sale rules?  Does Betterment give you enough  transaction information so you'll know if you're subject to the wash sale rules?

I know you can avoid the wash sale problems if you give Betterment all your funds.  I don't trust their system security enough to do that.  (They don't even use two-factor authentication to secure the accounts.)  That lack isn't a deal killer.  I'll still willing to do business with them.  But not with everything.

I own Vanguard funds in my tax sheltered  (retirement) space, and use betterment with tax loss harvesting for my taxable brokerage option.

I avoid running afoul of wash sale rules by not owning any of the Vanguard funds included in the betterment portfolio in my non-betterment portfolio. It's not terribly difficult to avoid since betterment publishes the complete list of included  funds in their tax loss harvesting white paper, as an example I own an institutional S&P 500 fund in my retirement accounts in place of the Vanguard total market fund. The only fund that I have really had to avoidthat I otherwise wouldn't have is VWO.

Although some never tire of making the same argument against betterment over and over, I find the exercise boring, so I will not remake arguments made in past threads.

But investing my taxable money in Betterment this past year has been a real win. To date they effortlessly have harvested $1468 on 65K, which will save me over $650 come tax time at my tax bracket.

To date they have charge me less than $80 in fees over the underlying etf fees.

Far better than free works for me, and beyond this I've been amazed by their customer service and the ease of the investing experience.  I'm never tempted to meddle, because I never have to do anything.

Despite the fact that the savings gained from their approach has beaten an identical portfolio from Vanguard without tax loss harvesting by more than 700%, If their fees outstrip their benefits in the future, there's nothing to prevent me from transferring my holdings in-kind to another brokerage free of charge.

Their tax data is importable into TurboTax if that is your plan,but I simply printed out all of their tax forms including an itemized listing of transactions for my accountant.

Thank you for your response.  It's helpful.  Since I have existing money in the same funds, it means that if I choose to use Betterment for tax loss harvesting, I'll have to move some things around first.  (Some capital gains may result.)

Also be sure to calculate any additional expense ratios incurred from moving things around.  If your 401k goes from a 0.05% expense ratio, to a 0.45 expense ratio, since you now have to avoid the cheaper funds, this should be calculated as part of the additional cost of Tax Loss Harvesting.

Dodge

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Re: Betterment for taxable holdings.
« Reply #70 on: February 10, 2015, 06:58:01 AM »
If their fees outstrip their benefits in the future, there's nothing to prevent me from transferring my holdings in-kind to another brokerage free of charge.

It is inevitable, there is no avoiding it.  One day the fees will outstrip the benefits.

Is this what you would recommend for a newbie looking for an automatic portfolio?  This works out great for someone willing to manually manage Betterment's 10-20 fund portfolio for the rest of their lives, but I don't think it fits the target demographic of people looking for someone to manage their money for them.

milesdividendmd

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Re: Betterment for taxable holdings.
« Reply #71 on: February 10, 2015, 09:13:33 AM »
Its what I have chosen for myself personally.

I have also recommended betterment for both of my parents as well who are not at all interested in investing. I consider the .015 to .025 AUM fee more than fair for them and will not recommend they move their assets in the future.

I'm not generically in the recommendation game as I am not a financial advisor. But in terms of objective evidence there's no question that I have significantly more money compounding in my taxable accounts than I would have had I chosen a slice and dice vanguard portfolio.

tj

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Re: Betterment for taxable holdings.
« Reply #72 on: February 10, 2015, 09:45:51 AM »
I've seen the comparisons to Vanguard Life Strategy, but that's not apples to apples.  The closest Vanguard service for comparison is the Vanguard Personal Advisor Services.  With a $100,000 minimum, and a charge of .3% of assets, they'll do pretty much the same thing as Betterment, down to the selection of funds and the automatic rebalancing.

Both Betterment and Vanguard's Automatic funds:

1.  Help you choose your allocation, by filling out a short form to determine a recommended level of risk.

2.  Allow you to ignore the recommendation and choose your own allocation.

3.  Choose the underlying funds for you.

4.  Rebalance for you.

5.  Reinvest dividends for you.

6.  Allow you to automatically add/withdraw to/from your portfolio on a monthly basis (via your checking/savings account at another bank for example).

7.  Do all of this for you, online in your browser, without a human on their end choosing anything for you (not referring to customer service, which both companies have).

How do you consider this "not apples to apples", then claim the "apples to apples" comparison is Betterment vs. Vanguard Personal Advisor Services, when the main (only?) differentiator between that and LifeStrategy is that you're assigned a physical human who helps you choose everything and walks you through it?

I am new to both Vanguard and Betterment.  I concede that I did not fully investigate Vanguard Life Strategy Funds.  After doing more research, I agree that Vanguard Life Strategy is very similar to Betterment, except for the Tax Loss Harvesting (which is of debatable value.)  Most comparisons I'm seeing, however, are between Vanguard DIY and Betterment, not the Target or Life Strategy funds.

Actually, the expense ratio for Life Strategy is high compared to the underlying index. If that's what's being compared to Betterment, then aren't the costs similar?  And if I want to change my stock/bond mix but am locked into one Life Strategy fund, don't I have to sell to get out?  That's painful in a taxable account.

Come to think of it, that's also a question for the Betterment side.  If you adjust your stock/bond mix because you're getting older and your risk tolerance changes (which is supposed to be an advantage of an adjustable account), do they just buy/sell immediately to make the adjustments if you reset it, or do it gradually over time?  i think I like the control of DIY.

The total fee for a LifeStrategy fund is about equal to the fees of the underlying funds in the Betterment account.  Betterment then adds an additional 0.15-0.35% fee on top.

Yes, taxable accounts can't switch allocations very quickly, or efficiently.  It's best to have some money in an IRA or 401k, so you can change your total asset allocation without worrying about taxes.

LifeStrategy funds are 16 bps or 17bps . Wealthfront and Bettermenett's underlying fund fees are obviously lower because they use ETFs which are equivalent to admiral shares rather than the investor shares that the LifeStrategy funds use. Wealthfront portfolio is generally 10 bps and it would be even lower if they didn't use that 75bps Natural Resources fund. Even so, the natural resources is only 5% of most wealthfront portfolio.

I think MilesDividendMD makes soem god points - but will Betterement still be aroudn in 30 years? Who is going to manage his parents hands-off portfolio if they get acuired? Thats the main reason I would suggest Vanguard. I also would suggest Wealthfront over Betterment because I prefer Wealthfront's allocation of using broad funds over Betterment's slicing and dicing. But, I'm interested in seeing what Schwab offers with its robo-advisor platform, I am more confident about Schwab still being around in 30 years.
« Last Edit: February 10, 2015, 09:47:44 AM by tj »

tj

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Re: Betterment for taxable holdings.
« Reply #73 on: February 10, 2015, 12:56:13 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

I feel like this logic is true if you were to lump sum and then set and forget, but if you contribute annually (or monthly) in relatively equal amounts, the TLH should help you as long as you regularly contributing. Obviously once you are in the withdrawal phase, the strategy is less advantageous.

It helps to visualize this, if you consider each individual deposit a separate container.  This is useful, because that's exactly how the government sees it, as individual "tax lots".  Each deposit is essentially a lump sum "set and forget" account.

I did the math on how long it takes you to get past break even in the other Betterment thread, the point where even the gains from new deposits are dwarfed by the higher fees on the old deposits.  It doesn't take long.

I saw that and I'm surprised by how many don't buy your logic. In this case, Betterment might make sense, even considering the fees, if you wanted a small value tilt..of course their strategy is subject to change, like Wealthfront did removing REITs.

Would your logic apply to Wealthfront's direct indexing stock portfolio as well?

If you want a small value tilt, you can buy it on your own with a much simpler portfolio.  The biggest difference verses Betterment, is that you'd have to rebalance the portfolio.  I've written a lot about this, but in short, rebalancing is easy, and you're just fine doing it once a year (if it's even necessary that year).

Your manager risk here is bigger than I think most people recognize.  As you said, Wealthfront removed REITs.  Wealthfront, if I remember correctly, used to put you in actively managed funds, before they switched to indexing.  What do you think Betterment, or Wealthfront...etc, will do if their particular tilt underperforms for 10 years?  If your plan is to stay tilted towards Small Value, because you believe that even if it goes through 10 years of underperformance, it will end up on top over the long run...do you really want your money managed by someone else?

If the US Stock Market index grows 12% a year over the next 10 years, and a small value tilt grows only 8%, do you believe your manager will stay the course?  What if Wealthfront starts running ads showing their portfolio grew an extra $1 million dollars over the last 10 years compared to Betterment, and as a result more people start going with Wealthfront...are you still confident your manager will stay the course?

That's the thing about manager risk.  They can switch their portfolio to whatever did well over the last 10 years, and start running their own ads, showing how their current picks did over the last 10 years.  While I don't recommend a small value tilt, if you want one, I don't recommend paying a manager to get it.

Unfortunately, I'm not familiar enough with Wealthfront's direct indexing portfolio to have an opinion, but it has a steep hill to climb to overcome their extra fees.

Dodge, Vanguard is not immune to fiddling. They are subject to the same sisues if you opt for a LifeStrategy or Target Retirement option. They increased international exposure in the Target Date & LifeStrategy funds in 2008. They had the LifeStrategy funds invested a significant portion in the now-forgotten "Asset Allocation" fund where they basically market timed asset classes until that fund was dropped in 2010. They also added international bonds in 2013, though I don't expect that to have any effect on return. Bottom line, it comes down to: do you trust Vanguard more than Wealthfront or Betterment or some other adviser to make the correct allocation changes.

Dodge

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Re: Betterment for taxable holdings.
« Reply #74 on: February 10, 2015, 07:00:28 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

I feel like this logic is true if you were to lump sum and then set and forget, but if you contribute annually (or monthly) in relatively equal amounts, the TLH should help you as long as you regularly contributing. Obviously once you are in the withdrawal phase, the strategy is less advantageous.

It helps to visualize this, if you consider each individual deposit a separate container.  This is useful, because that's exactly how the government sees it, as individual "tax lots".  Each deposit is essentially a lump sum "set and forget" account.

I did the math on how long it takes you to get past break even in the other Betterment thread, the point where even the gains from new deposits are dwarfed by the higher fees on the old deposits.  It doesn't take long.

I saw that and I'm surprised by how many don't buy your logic. In this case, Betterment might make sense, even considering the fees, if you wanted a small value tilt..of course their strategy is subject to change, like Wealthfront did removing REITs.

Would your logic apply to Wealthfront's direct indexing stock portfolio as well?

If you want a small value tilt, you can buy it on your own with a much simpler portfolio.  The biggest difference verses Betterment, is that you'd have to rebalance the portfolio.  I've written a lot about this, but in short, rebalancing is easy, and you're just fine doing it once a year (if it's even necessary that year).

Your manager risk here is bigger than I think most people recognize.  As you said, Wealthfront removed REITs.  Wealthfront, if I remember correctly, used to put you in actively managed funds, before they switched to indexing.  What do you think Betterment, or Wealthfront...etc, will do if their particular tilt underperforms for 10 years?  If your plan is to stay tilted towards Small Value, because you believe that even if it goes through 10 years of underperformance, it will end up on top over the long run...do you really want your money managed by someone else?

If the US Stock Market index grows 12% a year over the next 10 years, and a small value tilt grows only 8%, do you believe your manager will stay the course?  What if Wealthfront starts running ads showing their portfolio grew an extra $1 million dollars over the last 10 years compared to Betterment, and as a result more people start going with Wealthfront...are you still confident your manager will stay the course?

That's the thing about manager risk.  They can switch their portfolio to whatever did well over the last 10 years, and start running their own ads, showing how their current picks did over the last 10 years.  While I don't recommend a small value tilt, if you want one, I don't recommend paying a manager to get it.

Unfortunately, I'm not familiar enough with Wealthfront's direct indexing portfolio to have an opinion, but it has a steep hill to climb to overcome their extra fees.

Dodge, Vanguard is not immune to fiddling. They are subject to the same sisues if you opt for a LifeStrategy or Target Retirement option. They increased international exposure in the Target Date & LifeStrategy funds in 2008. They had the LifeStrategy funds invested a significant portion in the now-forgotten "Asset Allocation" fund where they basically market timed asset classes until that fund was dropped in 2010. They also added international bonds in 2013, though I don't expect that to have any effect on return. Bottom line, it comes down to: do you trust Vanguard more than Wealthfront or Betterment or some other adviser to make the correct allocation changes.

Good point.  I'd argue that Vanguard has an advantage here, since they are owned by us, the people who own the funds.  If they make a change, I'm inclined to think it's because they believe it will be better for us, not for an ad campaign.

Along with lower fees, this is another big reason to handle your investments yourself.

tj

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Re: Betterment for taxable holdings.
« Reply #75 on: February 10, 2015, 07:20:14 PM »
They're definitely fantastic marketers. Everyone repeats the line about tax-loss harvesting.

The truth is that the excess after-tax performance of tax-loss harvesting will stop helping you after a short period of time.

And you can do it yourself, too.

I feel like this logic is true if you were to lump sum and then set and forget, but if you contribute annually (or monthly) in relatively equal amounts, the TLH should help you as long as you regularly contributing. Obviously once you are in the withdrawal phase, the strategy is less advantageous.

It helps to visualize this, if you consider each individual deposit a separate container.  This is useful, because that's exactly how the government sees it, as individual "tax lots".  Each deposit is essentially a lump sum "set and forget" account.

I did the math on how long it takes you to get past break even in the other Betterment thread, the point where even the gains from new deposits are dwarfed by the higher fees on the old deposits.  It doesn't take long.

I saw that and I'm surprised by how many don't buy your logic. In this case, Betterment might make sense, even considering the fees, if you wanted a small value tilt..of course their strategy is subject to change, like Wealthfront did removing REITs.

Would your logic apply to Wealthfront's direct indexing stock portfolio as well?

If you want a small value tilt, you can buy it on your own with a much simpler portfolio.  The biggest difference verses Betterment, is that you'd have to rebalance the portfolio.  I've written a lot about this, but in short, rebalancing is easy, and you're just fine doing it once a year (if it's even necessary that year).

Your manager risk here is bigger than I think most people recognize.  As you said, Wealthfront removed REITs.  Wealthfront, if I remember correctly, used to put you in actively managed funds, before they switched to indexing.  What do you think Betterment, or Wealthfront...etc, will do if their particular tilt underperforms for 10 years?  If your plan is to stay tilted towards Small Value, because you believe that even if it goes through 10 years of underperformance, it will end up on top over the long run...do you really want your money managed by someone else?

If the US Stock Market index grows 12% a year over the next 10 years, and a small value tilt grows only 8%, do you believe your manager will stay the course?  What if Wealthfront starts running ads showing their portfolio grew an extra $1 million dollars over the last 10 years compared to Betterment, and as a result more people start going with Wealthfront...are you still confident your manager will stay the course?

That's the thing about manager risk.  They can switch their portfolio to whatever did well over the last 10 years, and start running their own ads, showing how their current picks did over the last 10 years.  While I don't recommend a small value tilt, if you want one, I don't recommend paying a manager to get it.

Unfortunately, I'm not familiar enough with Wealthfront's direct indexing portfolio to have an opinion, but it has a steep hill to climb to overcome their extra fees.

Dodge, Vanguard is not immune to fiddling. They are subject to the same sisues if you opt for a LifeStrategy or Target Retirement option. They increased international exposure in the Target Date & LifeStrategy funds in 2008. They had the LifeStrategy funds invested a significant portion in the now-forgotten "Asset Allocation" fund where they basically market timed asset classes until that fund was dropped in 2010. They also added international bonds in 2013, though I don't expect that to have any effect on return. Bottom line, it comes down to: do you trust Vanguard more than Wealthfront or Betterment or some other adviser to make the correct allocation changes.

Good point.  I'd argue that Vanguard has an advantage here, since they are owned by us, the people who own the funds.  If they make a change, I'm inclined to think it's because they believe it will be better for us, not for an ad campaign.

Along with lower fees, this is another big reason to handle your investments yourself.

We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Dodge

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Re: Betterment for taxable holdings.
« Reply #76 on: February 10, 2015, 08:00:16 PM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

milesdividendmd

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Betterment for taxable holdings.
« Reply #77 on: February 11, 2015, 12:50:12 AM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

Assuming you have taxable, in addition to tax sheltered investments, you are choosing to forgo 1-2% savings of your newly invested taxable monies each year because you won't either

A. put the hours of monitoring into your tax lots on a yearly basis to find TLH opportunities.

Or

B. Unwilling to pay for in a hands off product (for 0.15-0.25% of you taxable monies)

Or

C. Unwilling to transfer your taxable  holdings in kind to another brokerage in 3 or 5 years if the cost benefit analysis of TLH VS AUM fees change.

But if you understand the cost and choose to pay extra right now anyway, it's certainly a valid choice. :)

Wolf359

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Re: Betterment for taxable holdings.
« Reply #78 on: February 11, 2015, 11:19:12 AM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

It might take you only 15 minutes to rebalance once a year.  But from the detailed nature and frequency of your posts on this forum, I would conclude that you think about the topic investments more than the average person (and much more that 5-15 minutes a year).  I'd even dare say that you're obsessive about investing. 

I can't speak to your motivations, but you probably selected your investment approach because you believed it was the best approach, or had the best ratio of risks to returns, or some other logical criteria. It might only take 15 minutes to rebalance, but it took you much more time and effort to get to the point where you concluded that that approach was the best one.

There is a large population that approaches investments as something they have to do (like having a will, or getting their teeth cleaned, or mowing their lawns.)  They may want to just pay someone to get the task taken care of.  That's Betterment's target audience.  They might not be the best or most optimized approach, but it's not a bad one.   There are definitely much worse ways to manage your money.  Or not manage it. 

There is another benefit to Betterment that hasn't been discussed.  When the market is down, my wife will hound me because she's convinced I don't know what I'm doing.  If we pay someone else to do it, she's stays calm and is okay with losses.  (Well, the expert says that this is a market downturn, and it's simply an opportunity to buy more shares while prices are down.) 

So my compromise is that I invest almost everything on my own through Vanguard, but I keep a Betterment account to monitor with their slick interface and soothing marketing messages and even make some money.  And we stay invested and there is peace in the world and rainbows and puppies and all that. :)
« Last Edit: February 11, 2015, 11:24:28 AM by Wolf359 »

tj

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Re: Betterment for taxable holdings.
« Reply #79 on: February 11, 2015, 11:38:06 AM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

It might take you only 15 minutes to rebalance once a year.  But from the detailed nature and frequency of your posts on this forum, I would conclude that you think about the topic investments more than the average person (and much more that 5-15 minutes a year).  I'd even dare say that you're obsessive about investing. 

I can't speak to your motivations, but you probably selected your investment approach because you believed it was the best approach, or had the best ratio of risks to returns, or some other logical criteria. It might only take 15 minutes to rebalance, but it took you much more time and effort to get to the point where you concluded that that approach was the best one.

There is a large population that approaches investments as something they have to do (like having a will, or getting their teeth cleaned, or mowing their lawns.)  They may want to just pay someone to get the task taken care of.  That's Betterment's target audience.  They might not be the best or most optimized approach, but it's not a bad one.   There are definitely much worse ways to manage your money.  Or not manage it. 

There is another benefit to Betterment that hasn't been discussed.  When the market is down, my wife will hound me because she's convinced I don't know what I'm doing.  If we pay someone else to do it, she's stays calm and is okay with losses.  (Well, the expert says that this is a market downturn, and it's simply an opportunity to buy more shares while prices are down.) 

So my compromise is that I invest almost everything on my own through Vanguard, but I keep a Betterment account to monitor with their slick interface and soothing marketing messages and even make some money.  And we stay invested and there is peace in the world and rainbows and puppies and all that. :)

Wolf, Dodge's whole point was that using a Vanguard LifeStrategy or Target Date fund accomplishes the same exact things for less in management fees. You can't get more hands off than a Target Date fund. The reason Betterment would make sense is you took the time to due the research and concluded that a small value tilt would be superior. Without the research, the only  reason someone picks Betterment over Vanguard is because they read about it or talked to somebody about it. They have entirely different marketing strategies. Vanguard pays to run banner ads in forums such as this, Betterment has it's own userbase directly market for them and compensates with them with temporary periods of waived fees.


Wolf359

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Re: Betterment for taxable holdings.
« Reply #80 on: February 11, 2015, 12:48:49 PM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

It might take you only 15 minutes to rebalance once a year.  But from the detailed nature and frequency of your posts on this forum, I would conclude that you think about the topic investments more than the average person (and much more that 5-15 minutes a year).  I'd even dare say that you're obsessive about investing. 

I can't speak to your motivations, but you probably selected your investment approach because you believed it was the best approach, or had the best ratio of risks to returns, or some other logical criteria. It might only take 15 minutes to rebalance, but it took you much more time and effort to get to the point where you concluded that that approach was the best one.

There is a large population that approaches investments as something they have to do (like having a will, or getting their teeth cleaned, or mowing their lawns.)  They may want to just pay someone to get the task taken care of.  That's Betterment's target audience.  They might not be the best or most optimized approach, but it's not a bad one.   There are definitely much worse ways to manage your money.  Or not manage it. 

There is another benefit to Betterment that hasn't been discussed.  When the market is down, my wife will hound me because she's convinced I don't know what I'm doing.  If we pay someone else to do it, she's stays calm and is okay with losses.  (Well, the expert says that this is a market downturn, and it's simply an opportunity to buy more shares while prices are down.) 

So my compromise is that I invest almost everything on my own through Vanguard, but I keep a Betterment account to monitor with their slick interface and soothing marketing messages and even make some money.  And we stay invested and there is peace in the world and rainbows and puppies and all that. :)

Wolf, Dodge's whole point was that using a Vanguard LifeStrategy or Target Date fund accomplishes the same exact things for less in management fees. You can't get more hands off than a Target Date fund. The reason Betterment would make sense is you took the time to due the research and concluded that a small value tilt would be superior. Without the research, the only  reason someone picks Betterment over Vanguard is because they read about it or talked to somebody about it. They have entirely different marketing strategies. Vanguard pays to run banner ads in forums such as this, Betterment has it's own userbase directly market for them and compensates with them with temporary periods of waived fees.

I understood his point to be that if you want automatic management, LifeStrategy or Target Date were available.  He goes on to say that even that isn't worth it -- doing it yourself doesn't take much time or effort.

That goes back to my original point, which is that a lot of the objection to Betterment in this forum is that people who know what they're doing don't see any value in paying for anyone to conduct a simple passive index fund strategy.  Even when LifeStrategy or Target date are cited, it's with the caveat that they're more expensive or less flexible than DIY.

Betterment brings 3 things to the table that LifeStrategy does not:
1) They handle all ETF purchases by specific share identification, and do the accounting for you.
2) This allows Tax Loss Harvesting. 
3) This also allows them to minimize your taxes when you go into the withdrawal phase.

I like Betterment, but I don't think they're the right fit for me in the long run.  They did get me interested in investing again, and got me to get my financial life in order.  I like the concept of using them for TLH, but I'm not convinced it's worth the way it would complicate my investment holdings in the long run.

tj

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Re: Betterment for taxable holdings.
« Reply #81 on: February 11, 2015, 01:41:20 PM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

It might take you only 15 minutes to rebalance once a year.  But from the detailed nature and frequency of your posts on this forum, I would conclude that you think about the topic investments more than the average person (and much more that 5-15 minutes a year).  I'd even dare say that you're obsessive about investing. 

I can't speak to your motivations, but you probably selected your investment approach because you believed it was the best approach, or had the best ratio of risks to returns, or some other logical criteria. It might only take 15 minutes to rebalance, but it took you much more time and effort to get to the point where you concluded that that approach was the best one.

There is a large population that approaches investments as something they have to do (like having a will, or getting their teeth cleaned, or mowing their lawns.)  They may want to just pay someone to get the task taken care of.  That's Betterment's target audience.  They might not be the best or most optimized approach, but it's not a bad one.   There are definitely much worse ways to manage your money.  Or not manage it. 

There is another benefit to Betterment that hasn't been discussed.  When the market is down, my wife will hound me because she's convinced I don't know what I'm doing.  If we pay someone else to do it, she's stays calm and is okay with losses.  (Well, the expert says that this is a market downturn, and it's simply an opportunity to buy more shares while prices are down.) 

So my compromise is that I invest almost everything on my own through Vanguard, but I keep a Betterment account to monitor with their slick interface and soothing marketing messages and even make some money.  And we stay invested and there is peace in the world and rainbows and puppies and all that. :)

Wolf, Dodge's whole point was that using a Vanguard LifeStrategy or Target Date fund accomplishes the same exact things for less in management fees. You can't get more hands off than a Target Date fund. The reason Betterment would make sense is you took the time to due the research and concluded that a small value tilt would be superior. Without the research, the only  reason someone picks Betterment over Vanguard is because they read about it or talked to somebody about it. They have entirely different marketing strategies. Vanguard pays to run banner ads in forums such as this, Betterment has it's own userbase directly market for them and compensates with them with temporary periods of waived fees.

I understood his point to be that if you want automatic management, LifeStrategy or Target Date were available.  He goes on to say that even that isn't worth it -- doing it yourself doesn't take much time or effort.

That goes back to my original point, which is that a lot of the objection to Betterment in this forum is that people who know what they're doing don't see any value in paying for anyone to conduct a simple passive index fund strategy.  Even when LifeStrategy or Target date are cited, it's with the caveat that they're more expensive or less flexible than DIY.

Betterment brings 3 things to the table that LifeStrategy does not:
1) They handle all ETF purchases by specific share identification, and do the accounting for you.
2) This allows Tax Loss Harvesting. 
3) This also allows them to minimize your taxes when you go into the withdrawal phase.

I like Betterment, but I don't think they're the right fit for me in the long run.  They did get me interested in investing again, and got me to get my financial life in order.  I like the concept of using them for TLH, but I'm not convinced it's worth the way it would complicate my investment holdings in the long run.

Regarding #1 and 3, you can accomplish the same thing with a LifeStrategy fund. You can sell specific lots as needed.

The merits of #2 is debatable. The benefit is greater if you are in a high tax bracket now and expect to be in a low tax bracket when you sell the funds (or if you are living in a high income tax state and plan to move to a no or low income tax state.

Dodge did not state that LifeStrategy or Target Date are not worth it, in fact he said that he refers the majority of people directly to those.

milesdividendmd

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Betterment for taxable holdings.
« Reply #82 on: February 12, 2015, 09:36:27 AM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

It might take you only 15 minutes to rebalance once a year.  But from the detailed nature and frequency of your posts on this forum, I would conclude that you think about the topic investments more than the average person (and much more that 5-15 minutes a year).  I'd even dare say that you're obsessive about investing. 

I can't speak to your motivations, but you probably selected your investment approach because you believed it was the best approach, or had the best ratio of risks to returns, or some other logical criteria. It might only take 15 minutes to rebalance, but it took you much more time and effort to get to the point where you concluded that that approach was the best one.

There is a large population that approaches investments as something they have to do (like having a will, or getting their teeth cleaned, or mowing their lawns.)  They may want to just pay someone to get the task taken care of.  That's Betterment's target audience.  They might not be the best or most optimized approach, but it's not a bad one.   There are definitely much worse ways to manage your money.  Or not manage it. 

There is another benefit to Betterment that hasn't been discussed.  When the market is down, my wife will hound me because she's convinced I don't know what I'm doing.  If we pay someone else to do it, she's stays calm and is okay with losses.  (Well, the expert says that this is a market downturn, and it's simply an opportunity to buy more shares while prices are down.) 

So my compromise is that I invest almost everything on my own through Vanguard, but I keep a Betterment account to monitor with their slick interface and soothing marketing messages and even make some money.  And we stay invested and there is peace in the world and rainbows and puppies and all that. :)

Wolf, Dodge's whole point was that using a Vanguard LifeStrategy or Target Date fund accomplishes the same exact things for less in management fees. You can't get more hands off than a Target Date fund. The reason Betterment would make sense is you took the time to due the research and concluded that a small value tilt would be superior. Without the research, the only  reason someone picks Betterment over Vanguard is because they read about it or talked to somebody about it. They have entirely different marketing strategies. Vanguard pays to run banner ads in forums such as this, Betterment has it's own userbase directly market for them and compensates with them with temporary periods of waived fees.

I understood his point to be that if you want automatic management, LifeStrategy or Target Date were available.  He goes on to say that even that isn't worth it -- doing it yourself doesn't take much time or effort.

That goes back to my original point, which is that a lot of the objection to Betterment in this forum is that people who know what they're doing don't see any value in paying for anyone to conduct a simple passive index fund strategy.  Even when LifeStrategy or Target date are cited, it's with the caveat that they're more expensive or less flexible than DIY.

Betterment brings 3 things to the table that LifeStrategy does not:
1) They handle all ETF purchases by specific share identification, and do the accounting for you.
2) This allows Tax Loss Harvesting. 
3) This also allows them to minimize your taxes when you go into the withdrawal phase.

I like Betterment, but I don't think they're the right fit for me in the long run.  They did get me interested in investing again, and got me to get my financial life in order.  I like the concept of using them for TLH, but I'm not convinced it's worth the way it would complicate my investment holdings in the long run.

Regarding #1 and 3, you can accomplish the same thing with a LifeStrategy fund. You can sell specific lots as needed.

The merits of #2 is debatable. The benefit is greater if you are in a high tax bracket now and expect to be in a low tax bracket when you sell the funds (or if you are living in a high income tax state and plan to move to a no or low income tax state.

Dodge did not state that LifeStrategy or Target Date are not worth it, in fact he said that he refers the majority of people directly to those.

You are missing a big point about tax loss harvesting. When you buy a life strategy fund you are buying one fund. So if foreign assets go down by a significant amount but less than the amount that domestic assets go up you will have no tax loss harvesting opportunity despite the ability to specifically identify shares.  fund of funds products like life strategy are completely inappropriate for someone who wishes to pursue tax loss harvesting.

Another advantage of the betterment portfolio has to do with the portfolio itself.

From my perspective Vanguard life strategy funds are Homefield bias funds, with zero exposure to the value or size factors.

Granted, this is largely a matter of taste, but if you are looking for a product that reflects modern portfolio theory, it is undebatable, The Betterment's portfolio is the better choice.

(On the other hand if you want a simple Homefield bias "buy the market" strategy, Vanguard is the better option.)
« Last Edit: February 12, 2015, 01:09:08 PM by milesdividendmd »

Wolf359

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Re: Betterment for taxable holdings.
« Reply #83 on: February 12, 2015, 10:15:39 AM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

It might take you only 15 minutes to rebalance once a year.  But from the detailed nature and frequency of your posts on this forum, I would conclude that you think about the topic investments more than the average person (and much more that 5-15 minutes a year).  I'd even dare say that you're obsessive about investing. 

I can't speak to your motivations, but you probably selected your investment approach because you believed it was the best approach, or had the best ratio of risks to returns, or some other logical criteria. It might only take 15 minutes to rebalance, but it took you much more time and effort to get to the point where you concluded that that approach was the best one.

There is a large population that approaches investments as something they have to do (like having a will, or getting their teeth cleaned, or mowing their lawns.)  They may want to just pay someone to get the task taken care of.  That's Betterment's target audience.  They might not be the best or most optimized approach, but it's not a bad one.   There are definitely much worse ways to manage your money.  Or not manage it. 

There is another benefit to Betterment that hasn't been discussed.  When the market is down, my wife will hound me because she's convinced I don't know what I'm doing.  If we pay someone else to do it, she's stays calm and is okay with losses.  (Well, the expert says that this is a market downturn, and it's simply an opportunity to buy more shares while prices are down.) 

So my compromise is that I invest almost everything on my own through Vanguard, but I keep a Betterment account to monitor with their slick interface and soothing marketing messages and even make some money.  And we stay invested and there is peace in the world and rainbows and puppies and all that. :)

Wolf, Dodge's whole point was that using a Vanguard LifeStrategy or Target Date fund accomplishes the same exact things for less in management fees. You can't get more hands off than a Target Date fund. The reason Betterment would make sense is you took the time to due the research and concluded that a small value tilt would be superior. Without the research, the only  reason someone picks Betterment over Vanguard is because they read about it or talked to somebody about it. They have entirely different marketing strategies. Vanguard pays to run banner ads in forums such as this, Betterment has it's own userbase directly market for them and compensates with them with temporary periods of waived fees.

I understood his point to be that if you want automatic management, LifeStrategy or Target Date were available.  He goes on to say that even that isn't worth it -- doing it yourself doesn't take much time or effort.

That goes back to my original point, which is that a lot of the objection to Betterment in this forum is that people who know what they're doing don't see any value in paying for anyone to conduct a simple passive index fund strategy.  Even when LifeStrategy or Target date are cited, it's with the caveat that they're more expensive or less flexible than DIY.

Betterment brings 3 things to the table that LifeStrategy does not:
1) They handle all ETF purchases by specific share identification, and do the accounting for you.
2) This allows Tax Loss Harvesting. 
3) This also allows them to minimize your taxes when you go into the withdrawal phase.

I like Betterment, but I don't think they're the right fit for me in the long run.  They did get me interested in investing again, and got me to get my financial life in order.  I like the concept of using them for TLH, but I'm not convinced it's worth the way it would complicate my investment holdings in the long run.

Regarding #1 and 3, you can accomplish the same thing with a LifeStrategy fund. You can sell specific lots as needed.

The merits of #2 is debatable. The benefit is greater if you are in a high tax bracket now and expect to be in a low tax bracket when you sell the funds (or if you are living in a high income tax state and plan to move to a no or low income tax state.

Dodge did not state that LifeStrategy or Target Date are not worth it, in fact he said that he refers the majority of people directly to those.

I believe Dodge makes a consistent case that doing the rebalancing on your own is very easy and is a better option than paying someone else to do it for you.  He does recommend LifeStrategy or Target Date as a better option than Betterment to those who insist on paying someone else to rebalance.  I have not seen him state that the Vanguard automatic options are superior to or worth the higher management fees when compared to manual rebalancing.

Obviously, Dodge is reading the threads and can comment if he wishes.

tj

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Re: Betterment for taxable holdings.
« Reply #84 on: February 12, 2015, 10:29:17 AM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

It might take you only 15 minutes to rebalance once a year.  But from the detailed nature and frequency of your posts on this forum, I would conclude that you think about the topic investments more than the average person (and much more that 5-15 minutes a year).  I'd even dare say that you're obsessive about investing. 

I can't speak to your motivations, but you probably selected your investment approach because you believed it was the best approach, or had the best ratio of risks to returns, or some other logical criteria. It might only take 15 minutes to rebalance, but it took you much more time and effort to get to the point where you concluded that that approach was the best one.

There is a large population that approaches investments as something they have to do (like having a will, or getting their teeth cleaned, or mowing their lawns.)  They may want to just pay someone to get the task taken care of.  That's Betterment's target audience.  They might not be the best or most optimized approach, but it's not a bad one.   There are definitely much worse ways to manage your money.  Or not manage it. 

There is another benefit to Betterment that hasn't been discussed.  When the market is down, my wife will hound me because she's convinced I don't know what I'm doing.  If we pay someone else to do it, she's stays calm and is okay with losses.  (Well, the expert says that this is a market downturn, and it's simply an opportunity to buy more shares while prices are down.) 

So my compromise is that I invest almost everything on my own through Vanguard, but I keep a Betterment account to monitor with their slick interface and soothing marketing messages and even make some money.  And we stay invested and there is peace in the world and rainbows and puppies and all that. :)

Wolf, Dodge's whole point was that using a Vanguard LifeStrategy or Target Date fund accomplishes the same exact things for less in management fees. You can't get more hands off than a Target Date fund. The reason Betterment would make sense is you took the time to due the research and concluded that a small value tilt would be superior. Without the research, the only  reason someone picks Betterment over Vanguard is because they read about it or talked to somebody about it. They have entirely different marketing strategies. Vanguard pays to run banner ads in forums such as this, Betterment has it's own userbase directly market for them and compensates with them with temporary periods of waived fees.

I understood his point to be that if you want automatic management, LifeStrategy or Target Date were available.  He goes on to say that even that isn't worth it -- doing it yourself doesn't take much time or effort.

That goes back to my original point, which is that a lot of the objection to Betterment in this forum is that people who know what they're doing don't see any value in paying for anyone to conduct a simple passive index fund strategy.  Even when LifeStrategy or Target date are cited, it's with the caveat that they're more expensive or less flexible than DIY.

Betterment brings 3 things to the table that LifeStrategy does not:
1) They handle all ETF purchases by specific share identification, and do the accounting for you.
2) This allows Tax Loss Harvesting. 
3) This also allows them to minimize your taxes when you go into the withdrawal phase.

I like Betterment, but I don't think they're the right fit for me in the long run.  They did get me interested in investing again, and got me to get my financial life in order.  I like the concept of using them for TLH, but I'm not convinced it's worth the way it would complicate my investment holdings in the long run.

Regarding #1 and 3, you can accomplish the same thing with a LifeStrategy fund. You can sell specific lots as needed.

The merits of #2 is debatable. The benefit is greater if you are in a high tax bracket now and expect to be in a low tax bracket when you sell the funds (or if you are living in a high income tax state and plan to move to a no or low income tax state.

Dodge did not state that LifeStrategy or Target Date are not worth it, in fact he said that he refers the majority of people directly to those.

I believe Dodge makes a consistent case that doing the rebalancing on your own is very easy and is a better option than paying someone else to do it for you.  He does recommend LifeStrategy or Target Date as a better option than Betterment to those who insist on paying someone else to rebalance.  I have not seen him state that the Vanguard automatic options are superior to or worth the higher management fees when compared to manual rebalancing.

Obviously, Dodge is reading the threads and can comment if he wishes.

I did not state that he said that. obviously manual rebalancing is superior, but many people can't be bothered, and for those people, they are recommended LifeStrategy.

Dodge

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Re: Betterment for taxable holdings.
« Reply #85 on: February 14, 2015, 12:25:57 AM »
We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

Assuming you have taxable, in addition to tax sheltered investments, you are choosing to forgo 1-2% savings of your newly invested taxable monies each year because you won't either

A. put the hours of monitoring into your tax lots on a yearly basis to find TLH opportunities.

Or

B. Unwilling to pay for in a hands off product (for 0.15-0.25% of you taxable monies)

Or

C. Unwilling to transfer your taxable  holdings in kind to another brokerage in 3 or 5 years if the cost benefit analysis of TLH VS AUM fees change.

But if you understand the cost and choose to pay extra right now anyway, it's certainly a valid choice. :)

A.  Correct.  When I do my yearly 5 minute rebalance, I'm focused on selling high (following the rebalance calculator).  I could probably do better with this, but I'm honestly just not interested in playing games with my portfolio, in an attempt to eke out a few hundred extra bucks from the the tax person.  \_(ツ)_/

B.  Correct.  The benefit is not guaranteed, but the extra expense ratio is guaranteed.  Also, I find a value tilt to be utter crap, meant to sell people who don't know any better on a more expensive fund that "beats the market".  I wouldn't put my money there if there were no added expense ratio, I'm definitely not paying for that.

C.  Correct.  I won't manage a 10-20 fund portfolio, which includes a crap tilt, for the rest of my life, on the chance that I'll get a few hundred bucks back on my taxes the first year I'm in it.

Maybe when WiseBanyan (like Betterment but with no extra fee), or Schwab's Intelligent Portfolio (also like Betterment but with no extra fee) starts offering Tax Loss Harvesting I'll consider it.  Even then, those companies will likely still put me in 10+ fund portfolios, so even if I put money there for a few years, I'll again either be stuck managing a 10-20 fund portfolio, or paying even more capital gains to get back to my 3 fund portfolio.

I think I'll just keep it simple, and stay the course.

Dodge

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Re: Betterment for taxable holdings.
« Reply #86 on: February 14, 2015, 12:32:54 AM »
I've seen the comparisons to Vanguard Life Strategy, but that's not apples to apples.  The closest Vanguard service for comparison is the Vanguard Personal Advisor Services.  With a $100,000 minimum, and a charge of .3% of assets, they'll do pretty much the same thing as Betterment, down to the selection of funds and the automatic rebalancing.

Both Betterment and Vanguard's Automatic funds:

1.  Help you choose your allocation, by filling out a short form to determine a recommended level of risk.

2.  Allow you to ignore the recommendation and choose your own allocation.

3.  Choose the underlying funds for you.

4.  Rebalance for you.

5.  Reinvest dividends for you.

6.  Allow you to automatically add/withdraw to/from your portfolio on a monthly basis (via your checking/savings account at another bank for example).

7.  Do all of this for you, online in your browser, without a human on their end choosing anything for you (not referring to customer service, which both companies have).

How do you consider this "not apples to apples", then claim the "apples to apples" comparison is Betterment vs. Vanguard Personal Advisor Services, when the main (only?) differentiator between that and LifeStrategy is that you're assigned a physical human who helps you choose everything and walks you through it?

I am new to both Vanguard and Betterment.  I concede that I did not fully investigate Vanguard Life Strategy Funds.  After doing more research, I agree that Vanguard Life Strategy is very similar to Betterment, except for the Tax Loss Harvesting (which is of debatable value.)  Most comparisons I'm seeing, however, are between Vanguard DIY and Betterment, not the Target or Life Strategy funds.

Actually, the expense ratio for Life Strategy is high compared to the underlying index. If that's what's being compared to Betterment, then aren't the costs similar?  And if I want to change my stock/bond mix but am locked into one Life Strategy fund, don't I have to sell to get out?  That's painful in a taxable account.

Come to think of it, that's also a question for the Betterment side.  If you adjust your stock/bond mix because you're getting older and your risk tolerance changes (which is supposed to be an advantage of an adjustable account), do they just buy/sell immediately to make the adjustments if you reset it, or do it gradually over time?  i think I like the control of DIY.

The total fee for a LifeStrategy fund is about equal to the fees of the underlying funds in the Betterment account.  Betterment then adds an additional 0.15-0.35% fee on top.

Yes, taxable accounts can't switch allocations very quickly, or efficiently.  It's best to have some money in an IRA or 401k, so you can change your total asset allocation without worrying about taxes.

LifeStrategy funds are 16 bps or 17bps . Wealthfront and Bettermenett's underlying fund fees are obviously lower because they use ETFs which are equivalent to admiral shares rather than the investor shares that the LifeStrategy funds use. Wealthfront portfolio is generally 10 bps and it would be even lower if they didn't use that 75bps Natural Resources fund. Even so, the natural resources is only 5% of most wealthfront portfolio.

I think MilesDividendMD makes soem god points - but will Betterement still be aroudn in 30 years? Who is going to manage his parents hands-off portfolio if they get acuired? Thats the main reason I would suggest Vanguard. I also would suggest Wealthfront over Betterment because I prefer Wealthfront's allocation of using broad funds over Betterment's slicing and dicing. But, I'm interested in seeing what Schwab offers with its robo-advisor platform, I am more confident about Schwab still being around in 30 years.

Haven't looked up WealthFront, but Betterment quotes an average ER of 0.15%:



https://www.betterment.com/resources/research/etf-portfolio-selection-methodology/#taco

WiseBanyan's portfolio is 0.10% if I remember correctly.

Dodge

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Re: Betterment for taxable holdings.
« Reply #87 on: February 14, 2015, 12:43:50 AM »
Another advantage of the betterment portfolio has to do with the portfolio itself.

From my perspective Vanguard life strategy funds are Homefield bias funds, with zero exposure to the value or size factors.

Granted, this is largely a matter of taste, but if you are looking for a product that reflects modern portfolio theory, it is undebatable, The Betterment's portfolio is the better choice.

(On the other hand if you want a simple Homefield bias "buy the market" strategy, Vanguard is the better option.)

Yea, I understand your position here, but from what I see, the vast majority of people who are choosing or being recommended Betterment/Wealthfront, aren't doing so for the lack of a home field bias, or the value factor.  In all likelihood, they haven't ever heard of these terms.  They are choosing, because it's easy.  Because they take care of everything for you.  Or (most likely) they saw an ad.

For those people, I believe our default recommendation should be Vanguard, because their automatic funds meet the same requirements, for a lower cost.

milesdividendmd

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Re: Betterment for taxable holdings.
« Reply #88 on: February 14, 2015, 11:18:18 PM »

We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

Assuming you have taxable, in addition to tax sheltered investments, you are choosing to forgo 1-2% savings of your newly invested taxable monies each year because you won't either

A. put the hours of monitoring into your tax lots on a yearly basis to find TLH opportunities.

Or

B. Unwilling to pay for in a hands off product (for 0.15-0.25% of you taxable monies)

Or

C. Unwilling to transfer your taxable  holdings in kind to another brokerage in 3 or 5 years if the cost benefit analysis of TLH VS AUM fees change.

But if you understand the cost and choose to pay extra right now anyway, it's certainly a valid choice. :)

A.  Correct.  When I do my yearly 5 minute rebalance, I'm focused on selling high (following the rebalance calculator).  I could probably do better with this, but I'm honestly just not interested in playing games with my portfolio, in an attempt to eke out a few hundred extra bucks from the the tax person.  \_(ツ)_/

B.  Correct.  The benefit is not guaranteed, but the extra expense ratio is guaranteed.  Also, I find a value tilt to be utter crap, meant to sell people who don't know any better on a more expensive fund that "beats the market".  I wouldn't put my money there if there were no added expense ratio, I'm definitely not paying for that.

C.  Correct.  I won't manage a 10-20 fund portfolio, which includes a crap tilt, for the rest of my life, on the chance that I'll get a few hundred bucks back on my taxes the first year I'm in it.

Maybe when WiseBanyan (like Betterment but with no extra fee), or Schwab's Intelligent Portfolio (also like Betterment but with no extra fee) starts offering Tax Loss Harvesting I'll consider it.  Even then, those companies will likely still put me in 10+ fund portfolios, so even if I put money there for a few years, I'll again either be stuck managing a 10-20 fund portfolio, or paying even more capital gains to get back to my 3 fund portfolio.

I think I'll just keep it simple, and stay the course.

A.  Eking out a few extra bucks in tax savings is identical to saving a few extra bucks in expense ratios. All that matters is the money in your pocket at the end of your investment.

B.  Value tilt is "utter crap?"  Nobel laureate Eugene Fama will be very disappointed by your insightful critique!  Who needs modern portfolio theory?  Who needs the three factor model?  We've got Dodge and his gestalt take on how the market works and what's really important.

C.  Again I value $700 back on my taxes more than I value $162  saved in expense ratios. To be precise by my unsophisticated metrics it's about 430% better, but who's counting?

milesdividendmd

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Re: Betterment for taxable holdings.
« Reply #89 on: February 14, 2015, 11:26:05 PM »

Another advantage of the betterment portfolio has to do with the portfolio itself.

From my perspective Vanguard life strategy funds are Homefield bias funds, with zero exposure to the value or size factors.

Granted, this is largely a matter of taste, but if you are looking for a product that reflects modern portfolio theory, it is undebatable, The Betterment's portfolio is the better choice.

(On the other hand if you want a simple Homefield bias "buy the market" strategy, Vanguard is the better option.)

Yea, I understand your position here, but from what I see, the vast majority of people who are choosing or being recommended Betterment/Wealthfront, aren't doing so for the lack of a home field bias, or the value factor.  In all likelihood, they haven't ever heard of these terms.  They are choosing, because it's easy.  Because they take care of everything for you.  Or (most likely) they saw an ad.

For those people, I believe our default recommendation should be Vanguard, because their automatic funds meet the same requirements, for a lower cost.

It's impossible to know what motivates others.

We cannot have a default recommendation because:

1.  Obviously "we" have different values and different biases.

2.  "We" do not (in general)  have a fiduciary relationship with others on this board.

3.  The most that "we" can do for others is to honestly report what financial decisions we as individuals have come to, and our rationale and conflicts of interest.


Dodge

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Re: Betterment for taxable holdings.
« Reply #90 on: February 15, 2015, 10:05:39 PM »

We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

Assuming you have taxable, in addition to tax sheltered investments, you are choosing to forgo 1-2% savings of your newly invested taxable monies each year because you won't either

A. put the hours of monitoring into your tax lots on a yearly basis to find TLH opportunities.

Or

B. Unwilling to pay for in a hands off product (for 0.15-0.25% of you taxable monies)

Or

C. Unwilling to transfer your taxable  holdings in kind to another brokerage in 3 or 5 years if the cost benefit analysis of TLH VS AUM fees change.

But if you understand the cost and choose to pay extra right now anyway, it's certainly a valid choice. :)

A.  Correct.  When I do my yearly 5 minute rebalance, I'm focused on selling high (following the rebalance calculator).  I could probably do better with this, but I'm honestly just not interested in playing games with my portfolio, in an attempt to eke out a few hundred extra bucks from the the tax person.  \_(ツ)_/

B.  Correct.  The benefit is not guaranteed, but the extra expense ratio is guaranteed.  Also, I find a value tilt to be utter crap, meant to sell people who don't know any better on a more expensive fund that "beats the market".  I wouldn't put my money there if there were no added expense ratio, I'm definitely not paying for that.

C.  Correct.  I won't manage a 10-20 fund portfolio, which includes a crap tilt, for the rest of my life, on the chance that I'll get a few hundred bucks back on my taxes the first year I'm in it.

Maybe when WiseBanyan (like Betterment but with no extra fee), or Schwab's Intelligent Portfolio (also like Betterment but with no extra fee) starts offering Tax Loss Harvesting I'll consider it.  Even then, those companies will likely still put me in 10+ fund portfolios, so even if I put money there for a few years, I'll again either be stuck managing a 10-20 fund portfolio, or paying even more capital gains to get back to my 3 fund portfolio.

I think I'll just keep it simple, and stay the course.

A.  Eking out a few extra bucks in tax savings is identical to saving a few extra bucks in expense ratios. All that matters is the money in your pocket at the end of your investment.

B.  Value tilt is "utter crap?"  Nobel laureate Eugene Fama will be very disappointed by your insightful critique!  Who needs modern portfolio theory?  Who needs the three factor model?  We've got Dodge and his gestalt take on how the market works and what's really important.

C.  Again I value $700 back on my taxes more than I value $162  saved in expense ratios. To be precise by my unsophisticated metrics it's about 430% better, but who's counting?

A. Complicating my portfolio by attempting to market-time my sale to capture a loss, only to buy it back in 30 days time, for a few extra hundred dollars is not worth the risk to me.

B. Yes paying extra for a value tilt is utter crap.  Fama himself says it's reasonable to expect the market to adjust:

EFF/KRF (Fama & French): The premise is that until the last couple of decades, individual investors had limited access to diversified portfolios of small stocks and value stocks. As a result, the prices of small and value stocks were lower than they would be if all investors had easy access, and their expected returns were higher. The introduction and growth of mutual funds that invest in small-cap and value stocks would then reduce the expected returns on these securities. Since expected security returns depend on supply and demand, an increase in the average allocation to small and value stocks will reduce the size and value premiums.

Another prominent skeptic regarding the importance of a value tilt is John C. Bogle, as articulated in a 2002 speech and paper, The Telltale Chart.  Bogle looks at the data (section 2. RTM - Value Stocks vs. Growth Stocks), and shows that while the theoretical Fama-French portfolio exhibits a dramatic outperformance, the mutual fund performance of the strategy actually underperformed the market.  "So investors should not ignore the obvious costs of implementing a strategy that rises, pristinely, out of academic studies that cannot be precisely replicated in the real world."  I would prefer not to try to summarize a complicated story, and I don't see any soundbites to cherry-pick that would serve as a short summary. Perhaps it is "This too, shall pass"

Portfolio Constituency Rules and the Value Premium in the Small-Cap Space supports Mr.Bogle's conclusion regarding Value stock performance in actual mutual funds over time, and provides a possible reason.  It seems to imply that when actual mutual-funds (index or otherwise) are implemented, that the most illiquid stocks are often excluded, removing the Value Premium.
 
"...We suggest these results might go a long way in explaining why market-based growth fund returns generally equal those of their value fund counterparts over time..."

I respect your opinion on this milesdividendmd, but don't be disingenuous by pretending I'm the only one who doesn't see rosy future for value stocks.

C.  It is guaranteed that you will either end up paying more in expense ratios than you will ever gain in taxes, or end up stuck with a 10-20 fund portfolio (with an in-my-opinion garbage value tilt) for the rest of your investment horizon.  I'd rather pay the few hundred bucks in taxes today, than face one (or both) of those inevitable ends.
« Last Edit: February 16, 2015, 12:06:07 AM by Dodge »

milesdividendmd

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Re: Betterment for taxable holdings.
« Reply #91 on: February 16, 2015, 12:20:56 AM »


We have no idea how Vanguard's executives are compensated.

I would tend to agree, that being said, I have no interest in performing oil changes, cleaning carpets, or tire rotations. i could probably save a lot of $$ if I learned how to do each of these things, but I choose to outsource that. There's nothing wrong with outsourcing your finances, you just want to use a firm that you feel comfortable with- for me Vanguard is that firm, but Betterment and Wealthfront could be reasonable choices for someone else. For that matter, I'd also say Dodge & Cox could be reasonable choice if one wanted to go the active route.

Personally, it takes me somewhere between 5-15 minutes to rebalance once a year.  Some years it might only be 30 seconds, as I might enter the numbers from Mint into the online rebalancing calculator and determine rebalancing isn't necessary.  I'm not willing to pay someone a yearly percentage fee on my entire net worth to avoid typing numbers into a website for this short amount of time...and something tells me a lot of people would agree if they only knew how easy it was.

But if you understand the situation, and choose to pay anyway, it's certainly a valid choice :)

Assuming you have taxable, in addition to tax sheltered investments, you are choosing to forgo 1-2% savings of your newly invested taxable monies each year because you won't either

A. put the hours of monitoring into your tax lots on a yearly basis to find TLH opportunities.

Or

B. Unwilling to pay for in a hands off product (for 0.15-0.25% of you taxable monies)

Or

C. Unwilling to transfer your taxable  holdings in kind to another brokerage in 3 or 5 years if the cost benefit analysis of TLH VS AUM fees change.

But if you understand the cost and choose to pay extra right now anyway, it's certainly a valid choice. :)

A.  Correct.  When I do my yearly 5 minute rebalance, I'm focused on selling high (following the rebalance calculator).  I could probably do better with this, but I'm honestly just not interested in playing games with my portfolio, in an attempt to eke out a few hundred extra bucks from the the tax person.  \_(ツ)_/

B.  Correct.  The benefit is not guaranteed, but the extra expense ratio is guaranteed.  Also, I find a value tilt to be utter crap, meant to sell people who don't know any better on a more expensive fund that "beats the market".  I wouldn't put my money there if there were no added expense ratio, I'm definitely not paying for that.

C.  Correct.  I won't manage a 10-20 fund portfolio, which includes a crap tilt, for the rest of my life, on the chance that I'll get a few hundred bucks back on my taxes the first year I'm in it.

Maybe when WiseBanyan (like Betterment but with no extra fee), or Schwab's Intelligent Portfolio (also like Betterment but with no extra fee) starts offering Tax Loss Harvesting I'll consider it.  Even then, those companies will likely still put me in 10+ fund portfolios, so even if I put money there for a few years, I'll again either be stuck managing a 10-20 fund portfolio, or paying even more capital gains to get back to my 3 fund portfolio.

I think I'll just keep it simple, and stay the course.

A.  Eking out a few extra bucks in tax savings is identical to saving a few extra bucks in expense ratios. All that matters is the money in your pocket at the end of your investment.

B.  Value tilt is "utter crap?"  Nobel laureate Eugene Fama will be very disappointed by your insightful critique!  Who needs modern portfolio theory?  Who needs the three factor model?  We've got Dodge and his gestalt take on how the market works and what's really important.

C.  Again I value $700 back on my taxes more than I value $162  saved in expense ratios. To be precise by my unsophisticated metrics it's about 430% better, but who's counting?

A. Complicating my portfolio by attempting to market-time my sale to capture a loss, only to buy it back in 30 days time, for a few extra hundred dollars is not worth the risk to me.

B. Yes paying extra for a value tilt is utter crap.  Fama himself says it's reasonable to expect the market to adjust:

EFF/KRF (Fama & French): The premise is that until the last couple of decades, individual investors had limited access to diversified portfolios of small stocks and value stocks. As a result, the prices of small and value stocks were lower than they would be if all investors had easy access, and their expected returns were higher. The introduction and growth of mutual funds that invest in small-cap and value stocks would then reduce the expected returns on these securities. Since expected security returns depend on supply and demand, an increase in the average allocation to small and value stocks will reduce the size and value premiums.

Another prominent skeptic regarding the importance of a value tilt is John C. Bogle, as articulated in a 2002 speech and paper, The Telltale Chart.  Bogle looks at the data (section 2. RTM - Value Stocks vs. Growth Stocks), and shows that while the theoretical Fama-French portfolio exhibits a dramatic outperformance, the mutual fund performance of the strategy actually underperformed the market.  "So investors should not ignore the obvious costs of implementing a strategy that rises, pristinely, out of academic studies that cannot be precisely replicated in the real world."  I would prefer not to try to summarize a complicated story, and I don't see any soundbites to cherry-pick that would serve as a short summary. Perhaps it is "This too, shall pass"

Portfolio Constituency Rules and the Value Premium in the Small-Cap Space supports Mr.Bogle's conclusion regarding Value stock performance in actual mutual funds over time, and provides a possible reason.  It seems to imply that when actual mutual-funds (index or otherwise) are implemented, that the most illiquid stocks are often excluded, removing the Value Premium.
 
"...We suggest these results might go a long way in explaining why market-based growth fund returns generally equal those of their value fund counterparts over time..."

I respect your opinion on this milesdividendmd, but don't be disingenuous by pretending I'm the only one who doesn't see rosy future for value stocks.

C.  It is guaranteed that you will either end up paying more in expense ratios than you will ever gain in taxes, or end up stuck with a 10-20 fund portfolio (with an in-my-opinion garbage value tilt) for the rest of your investment horizon.  I'd rather pay the few hundred bucks in taxes today, than face one (or both) of those inevitable ends.

A.  That's not how TLH is done by betterment and TLH is no more "market timing" than rebalancing is.

B. Using bogle to support your non tilt pro vanguard bias is a bit circular no?  Vanguards value offerings are weak sauce for a reason. (Though I will point out that vanguard "charges more" for its value funds as well.)

C.  Nothing is guaranteed. That is axiomatic.

What is empirically undeniable is that the approach that you condone was more expensive than Betterment's last year. (Which was a historically non volatile year when TLH should provide less benefit.)

Warren buffet has done pretty well with a "crap tilt" (in your opinion), but who's counting?

Your opinion is biased (as is mine). Reality is reality and cares not for either of our opinions.

With investing, In the end there is but one scoreboard, and that is who has more money in their pocket.