Burton Malkiel Joins Wealthfront As CIO

Dr. Burton Malkiel, Wealthfront CIOWe’re honored to announce that famed economist Burton Malkiel, who helped launch the low-cost investing revolution with A Random Walk Down Wall Street, has joined Wealthfront as our Chief Investment Officer.

Dr. Malkiel is one of the most important public voices in investment management and a leading light in the index investing movement. He’s an emeritus Princeton University economics professor, a former board member of Vanguard Group, and a former member of the President’s Council of Economic Advisors.

As Chief Investment Officer, Burt will help Wealthfront continue to improve our investment services, including the choice of asset classes, the way we allocate among different classes, the choice of securities and the methods by which we evaluate risk and apply those evaluations to client portfolios. He’ll also meet with select groups of Wealthfront clients and offer investing insights to clients and the public.

“A successful investor is generally a well-rounded individual who puts a natural curiosity and an intellectual interest to work to earn more money.” – Burton Malkiel

We were thrilled when, after advising us on a number of ways to improve our service, he agreed to join Wealthfront.

“I love Weathfront’s mission and vision,” Burt says. “Software-based advice is the only way in which the little guy can get professional financial advice without paying an arm and a leg for it.”

Value of professional financial advice

Burt has been a proponent of software that helps investors minimize their taxes though a strategy called tax-loss harvesting (TLH). “I do not mean to suggest that you attempt to cheat the government,” he wrote in A Random Walk Down Wall Street, first published in 1973. “But I do mean to suggest that you take advantage of every opportunity to make your savings tax-deductible and to let your savings and investments grow tax-free.”

In the book, Burt was referring to year-end tax-loss harvesting. One of the things that most excited him about working with Wealthfront was the opportunity through software to do continuous tax-loss harvesting. Our research shows continuous tax-loss harvesting could double the benefit, adding at least 1% a year to an investor’s returns.

Unbiased advice

Burt also is a long-standing critic of brokers who offer advice to clients while they accept commissions and kickbacks from mutual fund companies. Wealthfront has been dedicated since its founding to providing its clients with low cost, unbiased financial advice. We never accept payments from the providers of investment products.

“One thing you can be sure of in investing is that the lower the fee, the more stays with investors,” Burt says. “Wealthfront is providing this service not only at low cost, but for free to people with the smallest portfolios.”

As you can see in this video clip, Burt has been advocating for diversified and periodically rebalanced low-cost portfolios for years.

“I’ve been working in investor education all my life, delivering these messages,” he says. “In Wealthfront, I’ve found people who believe as I do, and can make a high-quality service possible for everyone.”

We can’t think of anyone better to help us deliver on our mission to democratize sophisticated financial advice.

To receive regular insights from Burt Malkiel and Wealthfront, please send an email to betsy@wealthfront.com.

Disclosure

This blog is not intended as tax advice, and Wealthfront does not represent in any manner that the tax consequences described herein will be obtained or that Wealthfront’s tax-loss harvesting strategy, or any of its products and/or services, will result in any particular tax consequence.

We simulated the potential after-tax benefit of our tax-loss harvesting service using historical results and found that it added an average of at least 1.03% annually, net of commissions. We used several assumptions to create one possible approximation, but did not rely on actual client trading history, and our results should not be relied upon for predicting future performance. The results are hypothetical only. These results are based on a study Wealthfront conducted for the years between January 2000 and December 2011, assuming a Wealthfront account with an initial deposit of $100,000, additional quarterly deposits of $10,000, and periodic rebalancing. Dividends and interest were not considered. Commissions were assumed to be $2 per security trade plus $0.0025 per share traded.

For more about our tax-loss harvesting service, and a complete disclosure, see our white paper.

 

 

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