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Learning, Sharing, and Teaching => Investor Alley => Topic started by: lovesasa on April 02, 2017, 12:54:41 AM

Title: Who Should I Open my Roth IRA with?
Post by: lovesasa on April 02, 2017, 12:54:41 AM
I posted a similar question a while back but didn't get much response, so I thought I would rephrase.

I am looking at opening a Roth IRA. I haven't had one previously because I was working abroad and ineligible. Or rather, I opened one with Northwestern Mutual, then found out I was ineligible, then had to take all my money out before the tax deadline. It was a mess, I've learned a lot since then, and I don't want to go back to NWM. Now I'm back in the US, starting a new job soon, and interested in opening a Roth again.

I currently have a WiseBanyan taxable account (where I put the money I couldn't put in a Roth) and I've been pretty happy with them so far. My investments are diversified into Schwab and Vanguard Index Fund ETFs (I think they started with Vanguard and then switched most of my new purchases to Schwab when they started offering their lower fee funds). I'm pretty happy with their diversification strategy as it's basically what I had picked on my own to do, but without me having to manually rebalance everything and with the added inclusion of REITs, which I've learned to like.

So... Is there any major reason NOT to open my new Roth IRA with WiseBanyan? Am I risking anything putting all my investments (other than my 401k and ESOP) with a "start up" robo-advisor? Should I open an account with Schwab or Vanguard instead, even though I'm basically just investing with them through WiseBanyan?

I've noticed in past WiseBanyan threads that people are concerned about their start up status and the fact that they don't have much money under management yet. Practically, what does that mean for me? My money is technically in the ETFs, not WiseBanyan, so what happens if they fold?
Title: Re: Who Should I Open my Roth IRA with?
Post by: lovesasa on April 02, 2017, 09:58:21 AM
If they fold, most likely your funds will be safe.  Perhaps there will be a period of time that you won't have access to your money.  Also they could be acquired, so your assets will shift over to a new provider.

I think I'm ok with that. I'm very happy with the service currently provided by WiseBanyan, and if they get acquired I can re-evaluate at that point. I'm using them only for long-term investments, so a month or two without access wouldn't ruin me.

If I do become unhappy at a later time (i.e. if they get acquired), how much of a pain would it be to pull out my money later? I guess in the case of a Roth, could I "roll over" the funds to a different Roth IRA?

I think the real risks involved in a tiny startup like this is internal fraud or hacking.  I imagine they only have a handful of employees.  Is it possible one employee could steal investors money?  How secure is the site?  what would happen if the site got hacked?

Very good questions, thank you! I will look into that. How common is that sort of thing? I use a lot of online services and have for years (started using both Mint and CreditKarma when they first came out and people voiced similar concerns). Are these issues bigger for an investment company, since they have actual access to funds? I have also used ING Direct, now CapitalOne360, with no problems for many years. I remember people being freaked out about online-only banks at that point, as well.

Personally I don't see the value this robo advisor is offering and would just go with vanguard and invest in an index.

For me the value has been the broad diversification of ETFs without having to do everything manually, and the automatic rebalancing. I like that all of my tax forms are in one place, even though I own several different ETFs.