Wealthfront = Burton Malkiel, CIO + Andy Rachleff, CEO: a Silicon Valley approach to efficient asset management

Today I came across an interview with Burton Malkiel, author of the seminal  A Random Walk Down Wall Street [sorry, no Kindle edition]. I recommend the short Olly Ludwig interview at Index Universe Malkiel: Cheap Money Advice For The Wired

Why is this exciting? Based upon just an afternoon of exploration of Wealthfront.com, this one-year-old startup looks to be offering just the sort of very-low-cost investment management that everyone needs. Qualification: everyone at this stage means US-centric investors as their asset array is all US-dollar denominated. I’ll speculate that John Bogle would approve of the Wealthfront strategy: no fees for accounts <= $25,000 and only 0.25% above $25k. I’m confident that John approves of Wealthfront’s current ETF choices, which based on my testing, are heavily Vanguard-managed.

I have made a quick pass through the Wealthfront interactive client-profiling exercise, including risk-tolerance, 5-year-liquidity requirements, and investment objectives. Very well thought out. It is clear they have thought hard about how to get at the most critical client parameters while keeping the whole process accessible by the majority.

It is not yet clear to me how Wealthfront plans to manage the risk/reward of the fixed income part of the asset allocation. 

I’ve seen enough to know that we will investigate Wealthfront with some vigor. Check them out – let me know what you think, including what you find lacking. Keep in mind that you may find they offer a good fit for a portion of your financial assets, not necessarily the “whole enchilada”. E.g., your projected expenses are in a currency other than USD. Of course YMMV, “your mileage may vary”.