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The SEC and Wealthfront

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  • Avatar Peds 
    Participant
    Status: Physician
    Posts: 3988
    Joined: 01/08/2016
    Earnest refinancing bonus

    wasnt there a thread with someone with a 90 page long 1099?

    better make sure you look at everything for a wash sale….cause Wealthfront didnt…

    https://www.sec.gov/news/press-release/2018-300?inf_contact_key=d21407a633db7c9f342f566128528732680f8914173f9191b1c0223e68310bb1

    #206180 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7794
    Joined: 01/09/2016

    Honestly, I think there is little to nothing to be gotten in exchange for the frenzied trading from these sites. But all those transactions seem to make people feel better and alleviate that nagging need for personal responsibility.

    Or, maybe not.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #206183 Reply
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3353
    Joined: 01/14/2017

    “Over a period of more than three years during which it made this disclosure, wash sales occurred in at least 31 percent of accounts enrolled in Wealthfront’s tax loss harvesting strategy.“

    Robofail

    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3988
    Joined: 01/08/2016
    Or, maybe not.

    Click to expand…

    dont just stand there, do something!

    #206187 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3988
    Joined: 01/08/2016

    Robofail

    Click to expand…

    #robofail

    #206189 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2621
    Joined: 09/18/2018

    “Without admitting or denying the SEC’s findings, Wealthfront consented to the entry of the SEC’s order censuring it, requiring it to cease and desist from further violations, and imposing a $250,000 penalty.”

    Wealthfront made out like a bandit and the IRS didn’t catch one! That’s a win-win-win-win! SEC, IRS, Acct holder.

    From a financial standpoint, TLH for the volume of small loses is like clipping coupons. No one gets rich off of coupons. Activity trap.

    #206192 Reply
    Avatar DCdoc 
    Participant
    Status: Physician
    Posts: 481
    Joined: 06/14/2016

    That was me. A 90 page 1099. And I didn’t realize the complexity it would add to my taxes until March so I have at least 1 more similarly complex tax return. The TLH wasn’t even that big on a percentage level. So it was (literally) hundreds of transactions with TLH amounts under $5

    #206284 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2621
    Joined: 09/18/2018

    @dcdoc,
    A lot of data entry if I recall. All for $5 loss. That definitely Hall of Fame material.
    Just don’t believe that day trading maximizes daily profits, add them up and it’s the absolute best you can do! Sounds good, except it’s not true. Closing doesn’t equal the opening. Rethink their allocations. You can do just as well or not. Good luck. How many hours did you spend?

    #206292 Reply
    Avatar CFEonline 
    Participant
    Status: Physician
    Posts: 112
    Joined: 09/05/2018

    If simply looking for a high yield savings account, any reason not to take advantage of this? Would it screw up taxable investing tax loss harvesting?

    https://www.businessinsider.com/wealthfront-high-yield-savings-return-growth-calculation-2019-7

    #230506 Reply
    Avatar mistywong 
    Participant
    Status: Student
    Posts: 1
    Joined: 07/16/2019

    Oh my goodness! I’m a user with Wealthfront and I had no idea this even happened! Not happy with my money staying in this account anymore… Does anyone know of other replacements for Wealthfront?

    #231400 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7794
    Joined: 01/09/2016

    Oh my goodness! I’m a user with Wealthfront and I had no idea this even happened! Not happy with my money staying in this account anymore… Does anyone know of other replacements for Wealthfront?

    Click to expand…

    Yes, it’s really not that complicated. A well-diversified equity fund portfolio, based upon a carefully-considered financial plan, rebalanced annually. Unfortunately, most people don’t want to put in the time, effort and, yes, cost, of doing so. Hence, the shortcuts. Even TLH, as good as it feels for HIPs, is far better fodder for blog posts and forum threads than for true long-term financial impact. Just “doing something” that other smart people do is a good thing, right?

    A portfolio is not a plan.

    And…welcome to the forum!

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #231463 Reply
    Avatar CFEonline 
    Participant
    Status: Physician
    Posts: 112
    Joined: 09/05/2018

    Does the wealthfront high yield savings account engage in this tax loss harvesting activity as well? Not sure what they do with the money after distributing it to their partner banks

    #231494 Reply
    Avatar Physician Finance Basics 
    Participant
    Status: Physician
    Posts: 34
    Joined: 06/02/2019

    If simply looking for a high yield savings account, any reason not to take advantage of this? Would it screw up taxable investing tax loss harvesting?

    https://www.businessinsider.com/wealthfront-high-yield-savings-return-growth-calculation-2019-7

    Click to expand…

    No reason. Not connected with the investing account. Keep in mind though the interest rate may fall if fed keeps cutting rates.

    Blogging and videocasting about the basics of personal finance at http://physicianfinancebasics.com

    #231499 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2621
    Joined: 09/18/2018

    I have been chewing on TLH trying to figure out how much value is really added from a FA marketing perspective. I hear the words but tend to translate:
    “I will lose a lot but don’t worry, I do it enough that I had to automate the sales for tax purposes. Sound good to you?”
    Somehow I come back to, why don’t you just buy the winners?”
    I guess it let’s a client look at the holdings and see nothing but gains!
    Not much value in how great you are at losses in the long term. Thanks anyway.
    Not much of a selling point for FA services.

    #231506 Reply

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