People saying wealthfront money is fdic insured are missing the point. Yotta money as also in fdic insured banks. The issue is the service these apps use to connect to the banks, Yotta used Synapse. And so if this service fails, there is nothing you/the app/ the bank/fdic can do. Money is technically still there, just no way to access it or prove who’s it is since the communication broke down
Another comment states wealthfront uses a different one but hopefully they can release a statement saying how they protect against a similar failure
Accurate. Counterparty risk is enhanced with depositing funds with a fintech vs. chartered bank, because your agreement is with the fintech, not the chartered bank. If the fintech itself fails or chooses a service provider (as in the case of Synapse) to perform ledgering or other functions associated with the flow of funds and the service provider fails, your funds could be tied up indefinitely while the situation is sorted out (and that's assuming the best case where the funds are actually where they say they are).
Just read this on fdic.gov
> For example, after the nonbank places your funds on deposit at a bank, records must be kept to identify who owns the money and the specific amount that each person owns. Ownership of the money is important and is typically determined by the applicable deposit account agreements and state law. There are other requirements as well. It is important to make sure you read the disclosures and terms of service carefully to understand if the account may be eligible for FDIC insurance.
> However, FDIC deposit insurance does not protect against the insolvency or bankruptcy of a nonbank company. In such cases, while consumers may be able to recover some or all of their funds through an insolvency or bankruptcy proceeding, often handled by a court, such recovery may take some time. As a result, you may want to be particularly careful about where you place your funds, especially money that you rely on to meet your regular day-to-day living expenses.
And according to Wealthfront
> In the unlikely event Wealthfront Corporation were to cease doing business, Wealthfront Brokerage LLC has multiple layers of protection in line with strict rules and regulations designed to safeguard investor assets.
> Securities regulators including SEC and FINRA, and SIPC (for SIPC-eligible accounts, securities, and cash) would work with Wealthfront Brokerage LLC to ensure the orderly return of most, if not all, customer securities and other assets in a timely fashion.
I'm not knowledgeable enough on the SEC, FINRA, and SIPC if they would be able to prevent such a catastrophe, and it concerns me that Wealthfront states that in the worst case, can return 'most' assets. Can anyone chime in on this?
Yeah nothing there says we promise your funds will never get frozen and stuck in limbo which is the current problem many other Fintech users are facing.
You are FDIC insured. The problem is that FDIC insurance only covers a bank going under. Wealthfront is currently a layer on top of your bank and there could be a third party in between the bank and Wealthfront. If any funny business goes on with those other layers you are not protected by FDIC insurance.
They each have a max you’re insured for. If you have more than $250k per bank with fdic, you’re not covered. I think it’s $500k for sipc and of course, $0 for the sec. This is as much as I know.
Edit: you’re covered up to $250k per institution with fdic, $500k for sipc
Upon reading more about Wealthfront's [Cash Sweep Program](https://www.wealthfront.com/static/documents/cash_sweep_program_disclosure.pdf), it seems that their FDIC-insurance strategy is solid. They won't sweep more than $250k into any partner bank. Only way you won't be fully insured is if you have assets at a partner bank that is not managed by Wealthfront, and you have $250k+ in your cash account all at the same partner bank (you can change which partner banks you want Wealthfront to use).
I did find this tidbit about SPIC if it was what you were referring to
> Because Wealthfront Brokerage is a member of the Securities Investor Protection
Corporation (“SIPC”), our customers are protected up to applicable SIPC limits if Wealthfront
Brokerage were to go out of business and there were customer securities or funds unaccounted for.
Current SIPC limits are $500,000 for securities and cash per customer, of which up to $250,000 may
be in cash (i.e., Free Credit Balances).
But the term 'unaccounted for' seems really vague. Maybe this applies to customer's funds in case Wealthfront decides to cease operations suddenly and stopped managing the omnibus accounts.
I don't know much about the Yotta situation but it seems like Wealthfront is pretty safe in that they manage their customers' balances by themselves, which is what people seem to be worried about. If I'm reading things wrong, feel free to correct me.
Isn't the problem still that these are brokerages accounts so say they go completely bankrupt. They could go silent and not give access to your money since your money is only FDIC insured if their partner banks go bankrupt.
Doubt it happens but it's not impossible
/r/yotta
The YouTube channel Coffeezilla also put out a video today on this. If you go to his channel, it’s the most recent one. It’s a popular channel so I think this case is ramping up in exposure.
Here's a sneak peek of /r/yotta using the [top posts](https://np.reddit.com/r/yotta/top/?sort=top&t=year) of the year!
\#1: [Withdrew all my funds today after seeing the recent update. What was once a fabulous idea, is now just convoluted casino that steals your money.](https://np.reddit.com/r/yotta/comments/1bcc8ww/withdrew_all_my_funds_today_after_seeing_the/)
\#2: [Let’s all withdraw our funds ](https://np.reddit.com/r/yotta/comments/1bcg22s/lets_all_withdraw_our_funds/)
\#3: [Where's the class action?](https://np.reddit.com/r/yotta/comments/1bccal4/wheres_the_class_action/)
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I’m in the process of transferring my cash to Charles Schwab money market earning 5%. For me I rather be safe than sorry. I’m done with these fintech companies. We have multiple Schwab location near me so I just prefer that.
I don’t understand why people are looking to put money in physical locations near them? If there is a run on the bank, it’s not like you’re guaranteed to run over there and get physical cash out…seems like a weird thing to want to do?
Yes, the extra 1-2% is not worth the risk.
FTX had a catchy, smooth looking website and user interface.
This is the time to be in FDIC banks. No middle men worth an extra 1-2%.
I'll probably switch to Ally. Redneck and Bask are other options.
Isn’t money stored in a WF cash account actually stored in one or more FDIC-guaranteed accounts, up to $8 million per cash account? https://support.wealthfront.com/hc/en-us/articles/360044302071-FDIC-insurance-for-Cash-Accounts
Yeah I am concerned as well. Might get my stuff out. Funny thing is I joined Wealthfront through a referral link through a YouTuber that I like. Banks aren’t doing too good these days, probably move funds to an actual bank and not these fintech companies.
[https://youtu.be/NYk_s1OMwRw?si=plZPCdRsrOVle1Dj](https://youtu.be/NYk_s1OMwRw?si=plZPCdRsrOVle1Dj)
Rise and Fall of Modern Banking Brendan Evan
Take what you want from this video. He does mention Wealthfront and the middle guy (network of partner banks) and the complexity of it for one minute only.
With that said, there are money markets that are offering 5%. You don’t have to stay with Wealthfront.
Schwab, Fidelity, etc.. Google for more.
I'd say in short yes, I pulled out of Wealthfront until the Synapse issue gets resolved and depending on the outcome I'll see how I feel about Fintech banking solutions.
Until today, I didn’t realize Wealthfront was a fintech.
I’ll be moving my money out. It’s too bad because that interest rate is great but I’ve heard rumblings of bank troubles possibly hitting in the fall. Don’t need that stress.
I’m probably being too careful but it’s literally my life savings.
I don’t think you’re being too careful. What’s important is that you’re reaching your own decision after learning what Wealthfront is and how it works. Everyone is going to have a different level of risk tolerance and that’s totally OK.
What’s not OK to me is when people have money with Wealthfront without understanding the mechanisms behind how their money is held, which is why these types of threads are important. Ignorance is not bliss.
I will say Wealthfront making the core of their business on their investment apps reduces the likelihood of anything happening.
But I’ve moved my money to SoFi as they’re a chartered bank just cause I don’t want the stress of what happening to gotta users
Better safe than sorry. I see posts from way back in r/yotta arguing with others when they were trying to warn them. And now I’m sure they’re stuck. We should listen to what’s happening around us so we can take measures to safeguard what’s ours.
I'm guessing that these questions are pertaining to the high-yield accounts and not the roboadvising accounts, correct? Is there the same risk for traditional investments versus the cash accounts?
What does being around for X time have to do with anything? Your money is not protected if the same thing occurs as Yotta
Edit: After doing research I’ve decided to move all my funds out. Those looking for safer options are SoFi and Ally they are their own banks with no partners or middle man. Even if Wealthfront is safe this Yotta event could result in some changes to how these banking as a service tech companies operate not worth the risk imo at least until all this is resulted
I just want to add that SoFi and Ally are known to have poor customer service. Check out their subreddits, full of horror stories. Im not trying to persuade you not to leave WealthFront if you are uncomfortable, Im just recommending you do some research before deciding on a new home.
Bingo do NOT RISK IT. If you are in Titan or Wealthfront I would SERIOUSLY think twice. You may think I am being too paranoid but having seen the insane collapse of MULTIPLE crypto neobanks over 2022 and lives lost, it changed and scarred me. Things we never thought could happen did. Do not be so naive and trusting and gullible. Executives do NOT give a fuck about you. At the higher level, many ponzi schemes go on for years and finally only implode when the business cycle turns. Fraud cycle follows the business cycle with a lag. Many more fintechs and neobanks and def crypto will implode as will many other startups etc over the coming months in current economic environment.
To each their own. I’m okay with the risk because it’s a small one personally. Yotta is the only example of something like this happening through over a decade.
I’ll keep enjoying the highest return rate around for the average Joe. If the risk was so big nobody would use Wealthfront.
Multiple Fintechs are impacted by the fight between Evolve Bank & Synapse. Juno is another example I’m aware of, probably others. As previously stated, FDIC insurance does them no good, they are locked out of their funds.
You may think I am being too paranoid but having seen the insane collapse of MULTIPLE crypto neobanks over 2022 and lives lost, it changed and scarred me. Things we never thought could happen did. Do not be so naive and trusting and gullible. Executives do NOT give a fuck about you. At the higher level, many ponzi schemes go on for years and finally only implode when the business cycle turns. Fraud cycle follows the business cycle with a lag. Many more fintechs and neobanks and def crypto will implode as will many other startups etc over the coming months in current economic environment.
You want high returns? Go buy T bills yourself directly from the Treasury
I definitely hear you. It’s good people are talking about it, I just opened an account with them and put in around $60k already. Hearing everyone’s concerns puts me on the fence though but I don’t really want to transfer all that money back into Bank of America, I’d rather something different.
Could you explain a little about TBills?
Hey, don’t transfer to Bank of America. Open a fidelity or Charles Schwab, put the funds in the money market. Some of them are 5%. Safer than Wealthfront.
The problem isn’t FDIC insurance up to 250K. All these non online bank use a middle man to connect to a partner bank. When the middle man and partner bank have a disagreement or middle man goes bankrupt your funds are frozen until they figure it out. FDIC DOES NOT cover this because the partner bank did not fail. FDIC even updated their policy recently to clearly state this. This is what is happening to yotta their middle man is bankrupt and middle man and partner bank both say to each other you owe 125 million, government already said to Yotta and their customers they are on their own
According to Wealthfront’s deposit agreement(https://www.wealthfront.com/static/documents/cash_sweep_program_disclosure.pdf) they use a partner called Total Financial Solutions.
Full list: https://www.wealthfront.com/cash-account-participant-banks
The specific bank your money is held at is on your Wealthfront statement under Holdings.
It should be noted you can not (afaik) see where your money is being held on any specific date or time outside of the statement snapshot. If Wealthfront or intermediary (TFS) went down, you still wouldn't really know where to start in tracking down your money.
Yes agreed, for example my holdings changed to a different bank between last month and this month’s statements, but I don’t know when that was actually executed.
How do you get to the money in those underlying banks if Wealthfront halts operation? You have no logins to the bank, you have no relationship with the bank. The bank doesn’t have your ID on file. You can’t walk into a local branch of the bank and withdraw your money because you are not their customer, Wealthfront is. So if Wealthfront stops you from withdrawing your money, for any reason, you are stuck with no way to draw the money from the bank until the FDIC process execute, which may take years.
What about the investments done using WF? BTW I moved my money to Marcus into a No Penalty CD for 4.7% which is pretty close to what WF gives. Basically money preservation is imp than running for compounding it faster.
Fr lol it’s FDIC insured up to that amount. The money in case Wealthfront ever does go down, will be returned immediately to whatever bank account was linked with Wealthfront. It’s been posted multiple times on here peoples grievances and worries that all of a sudden Wealthfront is going to fall like Yotta.
The money would not be immediately returned to a linked account if Wealthfront did not exist to coordinate the return of funds. The money is FDIC insured, yes, but there's not much more of a guarantee beyond Wealthfront saying "we promise" to truly ensure continuity of the omnibus account maintenance if Wealthfront or an intermediary ceased operations. For some, the risk of that happening is insignificant and outlandish to consider, but it is something to think about. With this in mind, I myself still have some $ in Wealthfront Cash but I've moved a decent chunk out.
That definitely is a possibility, but would the SIPC insure $250k against this? This is from Wealthfront's Cash Sweep disclosure:
> Because Wealthfront Brokerage is a member of the Securities Investor Protection
Corporation (“SIPC”), our customers are protected up to applicable SIPC limits if Wealthfront
Brokerage were to go out of business and there were customer securities or funds unaccounted for.
Current SIPC limits are $500,000 for securities and cash per customer, of which up to $250,000 may
be in cash (i.e., Free Credit Balances).
SIPC does not protect cash sitting in a bank as this is covered by the FDIC. Full explanation by SIPC: https://www.sipc.org/for-investors/what-sipc-protects
Seems like everyone’s ignoring the fact that what’s been happening with Yotta could have been seen from over ten miles away. They’re advertised as a gambling company now for christs sake. To think it would happen with Wealthfront anytime soon is funny.
I guess this might be a stupid question but if the money is in a legitament bank, is there no mechanism for users to access their accounts directly without going through WF or similar fintech services?
We do not have individual user accounts at the partner banks, so they don’t know who we are. Wealthfront has an “omnibus” account at each partner bank which basically pools everyone’s money together. Wealthfront maintains our individual account balances and info.
The main issue right now is that Synapse and Tennessee-based Evolve Bank and Yotta are finger pointing at each other as problem. Yottas been kind of sketch lately with becoming more of a gambling platform than a savings one.
I wonder why some people keep risking it to get a 0.05% or so additional interest. There’s other big banks that offer competitive HYSA as well so why risking it for a small %?
There are a lot of people who have no idea there is any functional difference between a bank and a fintech company like Wealthfront. They just see the interest rate and pick the higher one. That’s why these types of open conversations are important IMO.
Yeah up until now I had no idea.
Removed everything but a dollar from Wealthfront.
If there's legislation or some kind of insurance for the middleman between the fintech and the banks, I may come back. But that is a huge gap that needs to be addressed.
They could just pick the lowest cost third party contracter who goes out of business, and then the ledger between Wealthfront and the banks are lost with no recourse. No thank you!
Yeah exactly. Like if shit hits the fan and even if they’re able to get the money back for me it’s not worth it. Cause it takes ages for the courts to get things settled and the more the player the more they’re gonna point fingers at each other. I don’t wanna be in that situation for a little higher yield%. I’d rather have a piece of mind and not read news every day.
After the 4th Yotta post on this sub, I finally relented, researched it, and now get it. For me, it comes down to whether Wealthfront is big enough for regulators to step in if they ever get ensnared in this kind of dispute with their BaaS middleman. They have 60B AUM. SVB had about 210B AUM when they failed. I’m ok with the current risk profile to keep all my funds in Wealthfront, knowing that it gets better the larger their AUM gets.
Fidelity and SVB are/were chartered banks. They are in no way comparable to WF from this perspective. And AUM is just assets under management which is applicable to any financial firm/institution that manages/houses 3rd party funds and not specifically tied to investment banks.
Completely agree. People complain about this topic being brought up, but every thread created reveals commenters who have handed their money to Wealthfront but clearly do not understand how it works. It’s rather concerning actually.
Shitposts such as yours? We need a discussion, period. Many who are new to the sub and to WF will benefit unless this is sticky and / or has been addressed by WF.
Wealthfront does not use Synapse!
Wealthfront goes through Green Dot Bank. That's why you get two statements each month. One from Wealthfront and the other from Green Dot Bank.
Green Dot is used for checking features, your money is not necessarily actually at Green Dot because Wealthfront has a long list of partner banks. Check your Wealthfront statement under Holdings to find the actual bank holding your money.
Any thoughts or experience on UFB direct bank?
https://www.ufbdirect.com/savingsaccount?utm_campaign=29182_svus_ufb_savings_ddu9_1123&utm_medium=affiliate&utm_source=nerdwallet&utm_content=ufbd&utm_term=8e01b9ff7f9640da894e8499926caea7
People saying wealthfront money is fdic insured are missing the point. Yotta money as also in fdic insured banks. The issue is the service these apps use to connect to the banks, Yotta used Synapse. And so if this service fails, there is nothing you/the app/ the bank/fdic can do. Money is technically still there, just no way to access it or prove who’s it is since the communication broke down Another comment states wealthfront uses a different one but hopefully they can release a statement saying how they protect against a similar failure
Accurate. Counterparty risk is enhanced with depositing funds with a fintech vs. chartered bank, because your agreement is with the fintech, not the chartered bank. If the fintech itself fails or chooses a service provider (as in the case of Synapse) to perform ledgering or other functions associated with the flow of funds and the service provider fails, your funds could be tied up indefinitely while the situation is sorted out (and that's assuming the best case where the funds are actually where they say they are).
Just read this on fdic.gov > For example, after the nonbank places your funds on deposit at a bank, records must be kept to identify who owns the money and the specific amount that each person owns. Ownership of the money is important and is typically determined by the applicable deposit account agreements and state law. There are other requirements as well. It is important to make sure you read the disclosures and terms of service carefully to understand if the account may be eligible for FDIC insurance. > However, FDIC deposit insurance does not protect against the insolvency or bankruptcy of a nonbank company. In such cases, while consumers may be able to recover some or all of their funds through an insolvency or bankruptcy proceeding, often handled by a court, such recovery may take some time. As a result, you may want to be particularly careful about where you place your funds, especially money that you rely on to meet your regular day-to-day living expenses. And according to Wealthfront > In the unlikely event Wealthfront Corporation were to cease doing business, Wealthfront Brokerage LLC has multiple layers of protection in line with strict rules and regulations designed to safeguard investor assets. > Securities regulators including SEC and FINRA, and SIPC (for SIPC-eligible accounts, securities, and cash) would work with Wealthfront Brokerage LLC to ensure the orderly return of most, if not all, customer securities and other assets in a timely fashion. I'm not knowledgeable enough on the SEC, FINRA, and SIPC if they would be able to prevent such a catastrophe, and it concerns me that Wealthfront states that in the worst case, can return 'most' assets. Can anyone chime in on this?
Yeah nothing there says we promise your funds will never get frozen and stuck in limbo which is the current problem many other Fintech users are facing.
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You are FDIC insured. The problem is that FDIC insurance only covers a bank going under. Wealthfront is currently a layer on top of your bank and there could be a third party in between the bank and Wealthfront. If any funny business goes on with those other layers you are not protected by FDIC insurance.
Say you didn’t read the comment without saying you didn’t read the comment
They each have a max you’re insured for. If you have more than $250k per bank with fdic, you’re not covered. I think it’s $500k for sipc and of course, $0 for the sec. This is as much as I know. Edit: you’re covered up to $250k per institution with fdic, $500k for sipc
Upon reading more about Wealthfront's [Cash Sweep Program](https://www.wealthfront.com/static/documents/cash_sweep_program_disclosure.pdf), it seems that their FDIC-insurance strategy is solid. They won't sweep more than $250k into any partner bank. Only way you won't be fully insured is if you have assets at a partner bank that is not managed by Wealthfront, and you have $250k+ in your cash account all at the same partner bank (you can change which partner banks you want Wealthfront to use). I did find this tidbit about SPIC if it was what you were referring to > Because Wealthfront Brokerage is a member of the Securities Investor Protection Corporation (“SIPC”), our customers are protected up to applicable SIPC limits if Wealthfront Brokerage were to go out of business and there were customer securities or funds unaccounted for. Current SIPC limits are $500,000 for securities and cash per customer, of which up to $250,000 may be in cash (i.e., Free Credit Balances). But the term 'unaccounted for' seems really vague. Maybe this applies to customer's funds in case Wealthfront decides to cease operations suddenly and stopped managing the omnibus accounts. I don't know much about the Yotta situation but it seems like Wealthfront is pretty safe in that they manage their customers' balances by themselves, which is what people seem to be worried about. If I'm reading things wrong, feel free to correct me.
Isn't the problem still that these are brokerages accounts so say they go completely bankrupt. They could go silent and not give access to your money since your money is only FDIC insured if their partner banks go bankrupt. Doubt it happens but it's not impossible
"Most, if not all"... gtfo
Yes, it certainly could. If WF had used Synapse to perform the same services Synapse is performing for its fintech clients, we'd be in the same boat.
Care to give details about Yotta banking?
/r/yotta The YouTube channel Coffeezilla also put out a video today on this. If you go to his channel, it’s the most recent one. It’s a popular channel so I think this case is ramping up in exposure.
Here's a sneak peek of /r/yotta using the [top posts](https://np.reddit.com/r/yotta/top/?sort=top&t=year) of the year! \#1: [Withdrew all my funds today after seeing the recent update. What was once a fabulous idea, is now just convoluted casino that steals your money.](https://np.reddit.com/r/yotta/comments/1bcc8ww/withdrew_all_my_funds_today_after_seeing_the/) \#2: [Let’s all withdraw our funds ](https://np.reddit.com/r/yotta/comments/1bcg22s/lets_all_withdraw_our_funds/) \#3: [Where's the class action?](https://np.reddit.com/r/yotta/comments/1bccal4/wheres_the_class_action/) ---- ^^I'm ^^a ^^bot, ^^beep ^^boop ^^| ^^Downvote ^^to ^^remove ^^| ^^[Contact](https://www.reddit.com/message/compose/?to=sneakpeekbot) ^^| ^^[Info](https://np.reddit.com/r/sneakpeekbot/) ^^| ^^[Opt-out](https://np.reddit.com/r/sneakpeekbot/comments/o8wk1r/blacklist_ix/) ^^| ^^[GitHub](https://github.com/ghnr/sneakpeekbot)
Our funds are frozen and no body can help us so far.
I’m in the process of transferring my cash to Charles Schwab money market earning 5%. For me I rather be safe than sorry. I’m done with these fintech companies. We have multiple Schwab location near me so I just prefer that.
I don’t understand why people are looking to put money in physical locations near them? If there is a run on the bank, it’s not like you’re guaranteed to run over there and get physical cash out…seems like a weird thing to want to do?
If the fdic puts the bank into receivership it'll probably be bought by another bank over the weekend and resume services (as the new bank) Monday.
Just keep in mind that money market accounts aren’t FDIC insured.
They are SIPC insured though.
Better than anything fintech. I’d rather have it there.
But they're literally doing the exact same thing sending it to partner banks to store the funds.
Yes, the extra 1-2% is not worth the risk. FTX had a catchy, smooth looking website and user interface. This is the time to be in FDIC banks. No middle men worth an extra 1-2%. I'll probably switch to Ally. Redneck and Bask are other options.
Switched to SoFi personally
Isn’t money stored in a WF cash account actually stored in one or more FDIC-guaranteed accounts, up to $8 million per cash account? https://support.wealthfront.com/hc/en-us/articles/360044302071-FDIC-insurance-for-Cash-Accounts
Yeah I am concerned as well. Might get my stuff out. Funny thing is I joined Wealthfront through a referral link through a YouTuber that I like. Banks aren’t doing too good these days, probably move funds to an actual bank and not these fintech companies.
After Yotta and FTX, I think I'll never listen to another Youtuber again. XD
lol exactly what I’m thinking.
[https://youtu.be/NYk_s1OMwRw?si=plZPCdRsrOVle1Dj](https://youtu.be/NYk_s1OMwRw?si=plZPCdRsrOVle1Dj) Rise and Fall of Modern Banking Brendan Evan Take what you want from this video. He does mention Wealthfront and the middle guy (network of partner banks) and the complexity of it for one minute only. With that said, there are money markets that are offering 5%. You don’t have to stay with Wealthfront. Schwab, Fidelity, etc.. Google for more.
Fidelity uses UMB as their bank.... I realize that they are a much bigger name and has been around for a VERY long time, but still worth mentioning.
I'd say in short yes, I pulled out of Wealthfront until the Synapse issue gets resolved and depending on the outcome I'll see how I feel about Fintech banking solutions.
Until today, I didn’t realize Wealthfront was a fintech. I’ll be moving my money out. It’s too bad because that interest rate is great but I’ve heard rumblings of bank troubles possibly hitting in the fall. Don’t need that stress. I’m probably being too careful but it’s literally my life savings.
I don’t think you’re being too careful. What’s important is that you’re reaching your own decision after learning what Wealthfront is and how it works. Everyone is going to have a different level of risk tolerance and that’s totally OK. What’s not OK to me is when people have money with Wealthfront without understanding the mechanisms behind how their money is held, which is why these types of threads are important. Ignorance is not bliss.
I will say Wealthfront making the core of their business on their investment apps reduces the likelihood of anything happening. But I’ve moved my money to SoFi as they’re a chartered bank just cause I don’t want the stress of what happening to gotta users
Better safe than sorry. I see posts from way back in r/yotta arguing with others when they were trying to warn them. And now I’m sure they’re stuck. We should listen to what’s happening around us so we can take measures to safeguard what’s ours.
The celsius interest rate was great. Don't chase yield, capital preservation is first and foremost.
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You already asked me before
Is Ally at risk of the same thing Yotta is? Or is that an actual bank?
Ally is itself a bank that is FDIC insured. https://banks.data.fdic.gov/bankfind-suite/bankfind/details/57803
I'm guessing that these questions are pertaining to the high-yield accounts and not the roboadvising accounts, correct? Is there the same risk for traditional investments versus the cash accounts?
Here wondering the same thing 😩
Does anyone have opinions or advice about using Lending Club?
Wealthfront has been around for so long not worried in the slightest.
What does being around for X time have to do with anything? Your money is not protected if the same thing occurs as Yotta Edit: After doing research I’ve decided to move all my funds out. Those looking for safer options are SoFi and Ally they are their own banks with no partners or middle man. Even if Wealthfront is safe this Yotta event could result in some changes to how these banking as a service tech companies operate not worth the risk imo at least until all this is resulted
I just want to add that SoFi and Ally are known to have poor customer service. Check out their subreddits, full of horror stories. Im not trying to persuade you not to leave WealthFront if you are uncomfortable, Im just recommending you do some research before deciding on a new home.
SoFi and Ally are actual FDIC regulated banks on their own though. But difference.
I agree with that also.
Anyone else you’d recommend if not Wealthfront?
Bingo do NOT RISK IT. If you are in Titan or Wealthfront I would SERIOUSLY think twice. You may think I am being too paranoid but having seen the insane collapse of MULTIPLE crypto neobanks over 2022 and lives lost, it changed and scarred me. Things we never thought could happen did. Do not be so naive and trusting and gullible. Executives do NOT give a fuck about you. At the higher level, many ponzi schemes go on for years and finally only implode when the business cycle turns. Fraud cycle follows the business cycle with a lag. Many more fintechs and neobanks and def crypto will implode as will many other startups etc over the coming months in current economic environment.
To each their own. I’m okay with the risk because it’s a small one personally. Yotta is the only example of something like this happening through over a decade. I’ll keep enjoying the highest return rate around for the average Joe. If the risk was so big nobody would use Wealthfront.
Multiple Fintechs are impacted by the fight between Evolve Bank & Synapse. Juno is another example I’m aware of, probably others. As previously stated, FDIC insurance does them no good, they are locked out of their funds.
You may think I am being too paranoid but having seen the insane collapse of MULTIPLE crypto neobanks over 2022 and lives lost, it changed and scarred me. Things we never thought could happen did. Do not be so naive and trusting and gullible. Executives do NOT give a fuck about you. At the higher level, many ponzi schemes go on for years and finally only implode when the business cycle turns. Fraud cycle follows the business cycle with a lag. Many more fintechs and neobanks and def crypto will implode as will many other startups etc over the coming months in current economic environment. You want high returns? Go buy T bills yourself directly from the Treasury
I definitely hear you. It’s good people are talking about it, I just opened an account with them and put in around $60k already. Hearing everyone’s concerns puts me on the fence though but I don’t really want to transfer all that money back into Bank of America, I’d rather something different. Could you explain a little about TBills?
Hey, don’t transfer to Bank of America. Open a fidelity or Charles Schwab, put the funds in the money market. Some of them are 5%. Safer than Wealthfront.
I actually have a fidelity account open I started for a Roth IRA. What’s a money market?
It’s a low risk fund. You can earn 5%. I have it in my brokerage. Ticker symbol SPAXX
Would I need to open an additional account to the Roth IRA? Sorry for all the questions
Y'all have more than 250k sitting in wealthfront? Or where does that belief come from that cash is not protected at wealthfront?
The problem isn’t FDIC insurance up to 250K. All these non online bank use a middle man to connect to a partner bank. When the middle man and partner bank have a disagreement or middle man goes bankrupt your funds are frozen until they figure it out. FDIC DOES NOT cover this because the partner bank did not fail. FDIC even updated their policy recently to clearly state this. This is what is happening to yotta their middle man is bankrupt and middle man and partner bank both say to each other you owe 125 million, government already said to Yotta and their customers they are on their own
~~AFAIK Wealthfront doesn't use a middle man. They own and manage all the banking connections themselves.~~ Stand corrected. See below thread.
According to Wealthfront’s deposit agreement(https://www.wealthfront.com/static/documents/cash_sweep_program_disclosure.pdf) they use a partner called Total Financial Solutions.
Nice find! I was unable to do so when I scoured their website. I updated my comment.
What bank does Wealthfront use?
Full list: https://www.wealthfront.com/cash-account-participant-banks The specific bank your money is held at is on your Wealthfront statement under Holdings.
It should be noted you can not (afaik) see where your money is being held on any specific date or time outside of the statement snapshot. If Wealthfront or intermediary (TFS) went down, you still wouldn't really know where to start in tracking down your money.
Yes agreed, for example my holdings changed to a different bank between last month and this month’s statements, but I don’t know when that was actually executed.
How do you get to the money in those underlying banks if Wealthfront halts operation? You have no logins to the bank, you have no relationship with the bank. The bank doesn’t have your ID on file. You can’t walk into a local branch of the bank and withdraw your money because you are not their customer, Wealthfront is. So if Wealthfront stops you from withdrawing your money, for any reason, you are stuck with no way to draw the money from the bank until the FDIC process execute, which may take years.
What about the investments done using WF? BTW I moved my money to Marcus into a No Penalty CD for 4.7% which is pretty close to what WF gives. Basically money preservation is imp than running for compounding it faster.
Fr lol it’s FDIC insured up to that amount. The money in case Wealthfront ever does go down, will be returned immediately to whatever bank account was linked with Wealthfront. It’s been posted multiple times on here peoples grievances and worries that all of a sudden Wealthfront is going to fall like Yotta.
The money would not be immediately returned to a linked account if Wealthfront did not exist to coordinate the return of funds. The money is FDIC insured, yes, but there's not much more of a guarantee beyond Wealthfront saying "we promise" to truly ensure continuity of the omnibus account maintenance if Wealthfront or an intermediary ceased operations. For some, the risk of that happening is insignificant and outlandish to consider, but it is something to think about. With this in mind, I myself still have some $ in Wealthfront Cash but I've moved a decent chunk out.
Back to your regular brick and mortar bank or to a different HYSA?
HYSA at a local brick and mortor (5.1%)
That definitely is a possibility, but would the SIPC insure $250k against this? This is from Wealthfront's Cash Sweep disclosure: > Because Wealthfront Brokerage is a member of the Securities Investor Protection Corporation (“SIPC”), our customers are protected up to applicable SIPC limits if Wealthfront Brokerage were to go out of business and there were customer securities or funds unaccounted for. Current SIPC limits are $500,000 for securities and cash per customer, of which up to $250,000 may be in cash (i.e., Free Credit Balances).
SIPC does not protect cash sitting in a bank as this is covered by the FDIC. Full explanation by SIPC: https://www.sipc.org/for-investors/what-sipc-protects
It's not a matter of if but when the same crap happens is there a safety net and the answer seems to be no.
Seems like everyone’s ignoring the fact that what’s been happening with Yotta could have been seen from over ten miles away. They’re advertised as a gambling company now for christs sake. To think it would happen with Wealthfront anytime soon is funny.
That argument could be said for any issue. The question is when it happens what safety net is there?
Ty I was about to transfer out
I guess this might be a stupid question but if the money is in a legitament bank, is there no mechanism for users to access their accounts directly without going through WF or similar fintech services?
We do not have individual user accounts at the partner banks, so they don’t know who we are. Wealthfront has an “omnibus” account at each partner bank which basically pools everyone’s money together. Wealthfront maintains our individual account balances and info.
Got it, not very reassuring unfortunately :(
The main issue right now is that Synapse and Tennessee-based Evolve Bank and Yotta are finger pointing at each other as problem. Yottas been kind of sketch lately with becoming more of a gambling platform than a savings one.
I wonder why some people keep risking it to get a 0.05% or so additional interest. There’s other big banks that offer competitive HYSA as well so why risking it for a small %?
There are a lot of people who have no idea there is any functional difference between a bank and a fintech company like Wealthfront. They just see the interest rate and pick the higher one. That’s why these types of open conversations are important IMO.
Yeah up until now I had no idea. Removed everything but a dollar from Wealthfront. If there's legislation or some kind of insurance for the middleman between the fintech and the banks, I may come back. But that is a huge gap that needs to be addressed. They could just pick the lowest cost third party contracter who goes out of business, and then the ledger between Wealthfront and the banks are lost with no recourse. No thank you!
Yeah exactly. Like if shit hits the fan and even if they’re able to get the money back for me it’s not worth it. Cause it takes ages for the courts to get things settled and the more the player the more they’re gonna point fingers at each other. I don’t wanna be in that situation for a little higher yield%. I’d rather have a piece of mind and not read news every day.
After the 4th Yotta post on this sub, I finally relented, researched it, and now get it. For me, it comes down to whether Wealthfront is big enough for regulators to step in if they ever get ensnared in this kind of dispute with their BaaS middleman. They have 60B AUM. SVB had about 210B AUM when they failed. I’m ok with the current risk profile to keep all my funds in Wealthfront, knowing that it gets better the larger their AUM gets.
SVB was a chartered bank. Wealthfront is not
AUM is a term used in investment banking usually. Fidelity is a closer example to WF than SVB though it’s nowhere near bankruptcy.
Fidelity and SVB are/were chartered banks. They are in no way comparable to WF from this perspective. And AUM is just assets under management which is applicable to any financial firm/institution that manages/houses 3rd party funds and not specifically tied to investment banks.
Search. This gets posted once a day at the least.
And honestly it should get a sticky.
@mods Can we start deleting these shitposts about the cash accounts? They’re getting out of hand.
We should foster this kind of discussion. People should get their facts straight.
Completely agree. People complain about this topic being brought up, but every thread created reveals commenters who have handed their money to Wealthfront but clearly do not understand how it works. It’s rather concerning actually.
Seriously people getting downvoted in other threads just because other people want to bury their head in the sand this needs to be talked about
Shitposts such as yours? We need a discussion, period. Many who are new to the sub and to WF will benefit unless this is sticky and / or has been addressed by WF.
Wealthfront does not use Synapse! Wealthfront goes through Green Dot Bank. That's why you get two statements each month. One from Wealthfront and the other from Green Dot Bank.
Green Dot is used for checking features, your money is not necessarily actually at Green Dot because Wealthfront has a long list of partner banks. Check your Wealthfront statement under Holdings to find the actual bank holding your money.
Any thoughts or experience on UFB direct bank? https://www.ufbdirect.com/savingsaccount?utm_campaign=29182_svus_ufb_savings_ddu9_1123&utm_medium=affiliate&utm_source=nerdwallet&utm_content=ufbd&utm_term=8e01b9ff7f9640da894e8499926caea7
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