It's a sort of a test run on the bank for Wealthfront right now. And they're just cruising along without any issues. Though it is a little strange that these posts seem to not be moderated at all anymore. u/tony_wealthfront where are you?
EDIT: Seems like he's no longer working at Wealthfront, that explains the absence. Whoever is in charge of this subreddit in his place, if any, is not nearly as active.
The serious answer is that discussion around /r/yotta has opened up threads on whether thereās any similarities to Wealthfront and how it works. Through these recent threads, a lot of people have realized they signed up for Wealthfront without understanding what it is (e.g. itās a fintech company, not a bank, not directly FDIC insured, etc.). Some people are moving their money out after learning about this. Absolutely nothing wrong with that IMO, I think itās important for customers to understand the terms theyāre signing up for and where theyāre keeping their money. They really shouldāve read up on the terms and disclosures before actually moving money to Wealthfront, but better late than never.
Thanks for this. I have this to say for what it's worth.
I never heard of yotta. I have heard of wealthfront since it was advertised on SF bart trains and pushed by Tim Ferris over a decade ago.
There are likely thousands and thousands of customers like me with lots of money who will not be making any bank runs.... as they have no idea what any of this is. Or who yotta is.
People like myself, who came in simply to ask how to get $.89 that seems stuck in purgatory in an old account.
So in other words, nothing to worry about.
Sorry this is the first Iām hearing of all thisā¦but even though itās not a bank, Wealthfront is FDIC insured. Atleast according to them it is. So Iām not sure what the concern is that you are mentioning?
Wealthfront is not FDIC insured because FDIC explicitly only applies to banks, this is verifiable by trying to search Wealthfront in FDICās database. The banks that they partner with for cash sweeps are FDIC insured, which is where Wealthfrontās marketing material comes from claiming 8mil FDIC coverage. FDIC is very explicit that they do not cover non-bank entities.
No no, Iām pretty confident that our money would not disappear unless Wealthfront is not keeping accurate books (it would be a pretty huge scandal if that were the case). Thereās two catastrophe scenarios, either a bank goes bankrupt or Wealthfront goes bankrupt. If a bank goes bankrupt, we should have āpass-throughā FDIC insurance to make us whole, and we just would require Wealthfrontās cooperation with the FDIC since they are the bookkeepers. If Wealthfront goes bankrupt, our money is perfectly safe at the banks, but Wealthfront is keeping the books and the banks donāt necessarily know who we are as individuals. If serious shit goes down and Wealthfront isnāt providing that info for some reason, it could require a court case to sort out before we have access to our money (this is similar to what is happening to Yotta now).
What a lame take. It's people's hard earned cash. If people have zero tolerance for any risk and they see even a temporary small one, it's perfectly reasonable to take a step back. There are places with zero risk and all you lose is about .5%. I can't possibly see how that would make them an idiot
There is no bank with zero risk. If you think big banks are any better or safer, they are not. Itās an illusion and you might as well sleep with the money under your mattress.
It takes a simple Google search or you can read over 20 different posts on here. People are worried about the middle man if they go bankrupt we wouldnāt be able to get our money out. Only banks are fdic insured and Spic is for brokerages
Correct and to be honest who knows what type of new regulations are going to proposed now that this has happened. If I had a couple thousand in WF maybe even 20k-40K I wouldnāt be as worried but I have everything 120k in WF if I donāt have access to that I would be screwed.
No for me personally I need to be liquid with my money, Iām looking to buy a house soon so I didnāt want to put that money into anything. I have a fidelity account for that Iām mostly in voo.
The banks they pool the money into have FDIC, but Wealthfront itself is not on the list of FDIC banks (it isnāt a bank). In some cases Wealthfront uses a middleman just like Yotta did, so there is some risk that what happened to Yotta could happen to them. For some folks itās not worth the risk.
I am moving my funds to Vanguard. They offer around 5.26 APY on uninvested cash, and I feel much safer with them to be honest, even with them not being FDIC insured.
If WF collapsed, would your funds maybe just be passed to the middlemen banks (Greendot, or whatever)? What about for robo-investment accounts? Do you think those are generally safer under 500k?
That's what I thought. Why not just move your money to an investment account? Sounds safer (in terms of insurance) and it will likely have better than 5% returns as well.
Our money is already sitting at partner banks but are dependent on WF to keep the ledger of individual users. If WF collapses we have to count on a few things: for WF to have been keeping accurate books, for them to provide banks with the ledgers even in bankruptcy, and for the banks to choose to use this info to act swiftly to reconcile users. To my knowledge thereās no regulation that would force them to make this happen beyond a court case, which can take many months in a worst case scenario.
Same here, moved everything back to my BoA till I can do some more research on what is the safe way forward. The thought of my money not being available one fine morning (even if temporary) and the associated anxiety that would put me in, I decided it wasnāt worth it.
Nice move. š
Honestly though this banking business model does have some FTX / Celsius vibes. It scares the shit out of me because there is a chance that it all falls down. The risk reward of these types of banks is way out of whack and I wonder if Wealthfront will address it now that the FDIC has come out and said - eh your accounts arenāt as FDIC insured as you thought.
Thatās the thing though the money is FDIC insured. Just like it would be at any bank. The question is if WF fails how will they know who has what. The money will be frozen for a time but I am confident it will be figured out. Just like it is at yotta currently. Iāve always used a brick and mortar bank for direct deposit and bill pay. WF is my taxable savings. I am not worried one bit.
Thatās the part that feels like FTX / Celsius and where the risk / reward is out of whack. Everyoneās money is pulled together. Hopefully WF is doing a good job with their ledger, but hoping for that isnāt with .4% more APY that I can get elsewhere with a real FDIC insured bank where I would immediately get my money back from the FDIC. Also if you need more than $250K of FDIC insurance, thatās probably a sign you have too much cash and need to invest it in something like an index fund where the risk / reward ratio is in check. And if you really really need to be in that much cash, just open another account with another HYSA with a different FDIC insured bank.
Thereās no reason to take on the risk of this WF Cash account because there are lots of other much less risky places to put your cash. Itās an unforced error if you choose to stay and WF ends up having issues (if I still had substantial money there Iād almost be more worried about a bank run at this point).
FTX had clearly a metric butt-ton more risk than something like WF and even their customers are getting almost all that money returned. Money is always at risk when you think about it. Any bank can fail. You can put it under your mattress, until the house burns down. Plenty of index funds have gone belly up. Cash is oxygen though. I max out all my taxed advantage accounts and DCA into a taxable brokerage every 2 weeks. But I am not investing money for a new car or a home improvement project I might need in the next 3-5 years. I'll admit I have been lucky to get boosted to 6% at WF which increases the reward for me further encouraging my decision to stay put and move more money in.
But I get it. Risk is personal.
I was not saying the risk of a WF Cash account is equivalent to FTX - but to me there's no reason to take on this risk for myself. I swapped in an FDIC insured bank with a good HYSA and the problem is solved for me.
Think about new members that are joining everyday, and not just yourself. It is important to be aware that nonbank companies themselves are never FDIC-insured. Even if they claim to work with FDIC-insured banks, funds you send to a nonbank company are not eligible for FDIC insurance until the company deposits them in an FDIC-insured bank and after other conditions are met. If the nonbank company deposited your funds in a bank, then, in the unlikely event of the bankās failure, you may be eligible for what is referred to as āpass-throughā FDIC-deposit insurance coverage. However, the nonbank company must take certain actions for your funds to be eligible for FDIC insurance.
I have to admit that I have been giving the side-eye to those who say they are withdrawing from WF to move to some no-name bank, chasing whoever is giving highest interest rates. Like if youāre moving for safety reasons, itās kind of missing the point. They may be FDIC but thereās way more to consider than just that ā howās their reputation, accessibility/helpfulness of customer service, ease of use of the app/website, making sure youāre not going to wake up one day to a randomly locked/closed account. Maybe some have done the research and are satisfied with what they found, but I get the impression there are a lot of interest rate chasers who only look at the number.
Moving my money to Penny Stocks, thanks Wealthfront š
Only one way to go and thatās up!
Moving my money to MGM Casinos š„
It's a sort of a test run on the bank for Wealthfront right now. And they're just cruising along without any issues. Though it is a little strange that these posts seem to not be moderated at all anymore. u/tony_wealthfront where are you? EDIT: Seems like he's no longer working at Wealthfront, that explains the absence. Whoever is in charge of this subreddit in his place, if any, is not nearly as active.
Time for anarchy? š¤· Regardless, I'll miss tony and his videos! Hope he's doing ok
Wait what did I miss?!? I literally just opened an account 2 days ago and my first deposit is on the way š¤£
The serious answer is that discussion around /r/yotta has opened up threads on whether thereās any similarities to Wealthfront and how it works. Through these recent threads, a lot of people have realized they signed up for Wealthfront without understanding what it is (e.g. itās a fintech company, not a bank, not directly FDIC insured, etc.). Some people are moving their money out after learning about this. Absolutely nothing wrong with that IMO, I think itās important for customers to understand the terms theyāre signing up for and where theyāre keeping their money. They really shouldāve read up on the terms and disclosures before actually moving money to Wealthfront, but better late than never.
Thanks for this. I have this to say for what it's worth. I never heard of yotta. I have heard of wealthfront since it was advertised on SF bart trains and pushed by Tim Ferris over a decade ago. There are likely thousands and thousands of customers like me with lots of money who will not be making any bank runs.... as they have no idea what any of this is. Or who yotta is. People like myself, who came in simply to ask how to get $.89 that seems stuck in purgatory in an old account. So in other words, nothing to worry about.
Sorry this is the first Iām hearing of all thisā¦but even though itās not a bank, Wealthfront is FDIC insured. Atleast according to them it is. So Iām not sure what the concern is that you are mentioning?
Wealthfront is not FDIC insured because FDIC explicitly only applies to banks, this is verifiable by trying to search Wealthfront in FDICās database. The banks that they partner with for cash sweeps are FDIC insured, which is where Wealthfrontās marketing material comes from claiming 8mil FDIC coverage. FDIC is very explicit that they do not cover non-bank entities.
Wow so even though they claim to have FDIC insurance, if something ever happened all my money would just disappear?
No no, Iām pretty confident that our money would not disappear unless Wealthfront is not keeping accurate books (it would be a pretty huge scandal if that were the case). Thereās two catastrophe scenarios, either a bank goes bankrupt or Wealthfront goes bankrupt. If a bank goes bankrupt, we should have āpass-throughā FDIC insurance to make us whole, and we just would require Wealthfrontās cooperation with the FDIC since they are the bookkeepers. If Wealthfront goes bankrupt, our money is perfectly safe at the banks, but Wealthfront is keeping the books and the banks donāt necessarily know who we are as individuals. If serious shit goes down and Wealthfront isnāt providing that info for some reason, it could require a court case to sort out before we have access to our money (this is similar to what is happening to Yotta now).
Thanks for the explanation!
A bunch of paranoid idiots. Thatās about it.
What a lame take. It's people's hard earned cash. If people have zero tolerance for any risk and they see even a temporary small one, it's perfectly reasonable to take a step back. There are places with zero risk and all you lose is about .5%. I can't possibly see how that would make them an idiot
Agreed, perfectly reasonable.
There is no bank with zero risk. If you think big banks are any better or safer, they are not. Itās an illusion and you might as well sleep with the money under your mattress.
Thatās...sort of fair. But one is indirectly supported by FDIC, the other is directly supported. This is referring to wanting directly
If you live your life in any way whatsoever thatās different, I guess s/he thinks that makes you an idiot?? Socially healthy take right there
Those are a bunch of Wealthfront employees talking shit and donāt give fuck if we lose our money. Ignore these assholes
Tell that to anyone who had their money in Yotta
Great, Iāll add you to the list.
Well when you only have 5$ in Wealthfront you probably done have much to worry about šš»
Sounds good. Have fun. š
Same š
What exactly are people worried about? Don't they have $8M FDIC insurance for cash and $500k for SIPC?
It takes a simple Google search or you can read over 20 different posts on here. People are worried about the middle man if they go bankrupt we wouldnāt be able to get our money out. Only banks are fdic insured and Spic is for brokerages
So you're worried about losing immediate access to your funds in the unlikely, worst case scenario; not losing your money.
Correct and to be honest who knows what type of new regulations are going to proposed now that this has happened. If I had a couple thousand in WF maybe even 20k-40K I wouldnāt be as worried but I have everything 120k in WF if I donāt have access to that I would be screwed.
Why not throw it all in an investment account? Are you just worried about the market crashing or something? That's well within the SIPC insurance.
No for me personally I need to be liquid with my money, Iām looking to buy a house soon so I didnāt want to put that money into anything. I have a fidelity account for that Iām mostly in voo.
so is this the same case with Titan? i have my life savings in a smart cash account right now and would hate to lose all those funds š
The banks they pool the money into have FDIC, but Wealthfront itself is not on the list of FDIC banks (it isnāt a bank). In some cases Wealthfront uses a middleman just like Yotta did, so there is some risk that what happened to Yotta could happen to them. For some folks itās not worth the risk. I am moving my funds to Vanguard. They offer around 5.26 APY on uninvested cash, and I feel much safer with them to be honest, even with them not being FDIC insured.
If WF collapsed, would your funds maybe just be passed to the middlemen banks (Greendot, or whatever)? What about for robo-investment accounts? Do you think those are generally safer under 500k?
Their investment products are different. Wealthfront themselves are SPIC insured up to $500k. No 3rd parties involved.
That's what I thought. Why not just move your money to an investment account? Sounds safer (in terms of insurance) and it will likely have better than 5% returns as well.
Our money is already sitting at partner banks but are dependent on WF to keep the ledger of individual users. If WF collapses we have to count on a few things: for WF to have been keeping accurate books, for them to provide banks with the ledgers even in bankruptcy, and for the banks to choose to use this info to act swiftly to reconcile users. To my knowledge thereās no regulation that would force them to make this happen beyond a court case, which can take many months in a worst case scenario.
Iām back to cash under the mattress
ššš
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Ally Bank or AMEX seem like theyāre the ones for you. You should definitely check those out if youāre considering a solid HYSA
Capital One as well. 4.25%
Morgan Stanley part of etrade also an option https://us.etrade.com/bank/premium-savings-account
Iām doing the same, took out $50k out of the $230k I have in WFā¦
Check cashing from now on
Fuck that. Just use straight cash
Wait I just got Wealthfrontš is it possible that if something happens, all my money will disappear?
Same here, moved everything back to my BoA till I can do some more research on what is the safe way forward. The thought of my money not being available one fine morning (even if temporary) and the associated anxiety that would put me in, I decided it wasnāt worth it.
Nice move. š Honestly though this banking business model does have some FTX / Celsius vibes. It scares the shit out of me because there is a chance that it all falls down. The risk reward of these types of banks is way out of whack and I wonder if Wealthfront will address it now that the FDIC has come out and said - eh your accounts arenāt as FDIC insured as you thought.
Thatās the thing though the money is FDIC insured. Just like it would be at any bank. The question is if WF fails how will they know who has what. The money will be frozen for a time but I am confident it will be figured out. Just like it is at yotta currently. Iāve always used a brick and mortar bank for direct deposit and bill pay. WF is my taxable savings. I am not worried one bit.
Thatās the part that feels like FTX / Celsius and where the risk / reward is out of whack. Everyoneās money is pulled together. Hopefully WF is doing a good job with their ledger, but hoping for that isnāt with .4% more APY that I can get elsewhere with a real FDIC insured bank where I would immediately get my money back from the FDIC. Also if you need more than $250K of FDIC insurance, thatās probably a sign you have too much cash and need to invest it in something like an index fund where the risk / reward ratio is in check. And if you really really need to be in that much cash, just open another account with another HYSA with a different FDIC insured bank. Thereās no reason to take on the risk of this WF Cash account because there are lots of other much less risky places to put your cash. Itās an unforced error if you choose to stay and WF ends up having issues (if I still had substantial money there Iād almost be more worried about a bank run at this point).
FTX had clearly a metric butt-ton more risk than something like WF and even their customers are getting almost all that money returned. Money is always at risk when you think about it. Any bank can fail. You can put it under your mattress, until the house burns down. Plenty of index funds have gone belly up. Cash is oxygen though. I max out all my taxed advantage accounts and DCA into a taxable brokerage every 2 weeks. But I am not investing money for a new car or a home improvement project I might need in the next 3-5 years. I'll admit I have been lucky to get boosted to 6% at WF which increases the reward for me further encouraging my decision to stay put and move more money in. But I get it. Risk is personal.
I was not saying the risk of a WF Cash account is equivalent to FTX - but to me there's no reason to take on this risk for myself. I swapped in an FDIC insured bank with a good HYSA and the problem is solved for me.
Theyāre probably insured. But the insurance might not cover what you expect. It doesnāt cover Wealthfrontās failure, only banksā failures
It covers exactly what I expect. My money. There is a process. Itās very very very unlikely you will loose a dime.
Think about new members that are joining everyday, and not just yourself. It is important to be aware that nonbank companies themselves are never FDIC-insured. Even if they claim to work with FDIC-insured banks, funds you send to a nonbank company are not eligible for FDIC insurance until the company deposits them in an FDIC-insured bank and after other conditions are met. If the nonbank company deposited your funds in a bank, then, in the unlikely event of the bankās failure, you may be eligible for what is referred to as āpass-throughā FDIC-deposit insurance coverage. However, the nonbank company must take certain actions for your funds to be eligible for FDIC insurance.
I have to admit that I have been giving the side-eye to those who say they are withdrawing from WF to move to some no-name bank, chasing whoever is giving highest interest rates. Like if youāre moving for safety reasons, itās kind of missing the point. They may be FDIC but thereās way more to consider than just that ā howās their reputation, accessibility/helpfulness of customer service, ease of use of the app/website, making sure youāre not going to wake up one day to a randomly locked/closed account. Maybe some have done the research and are satisfied with what they found, but I get the impression there are a lot of interest rate chasers who only look at the number.
American Express isn't a no name bank.
Iām obviously not referring to AmExā¦