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Beware The Bold Claims Of Tax-Loss Harvesting

FYI: The exchange-traded fund industry has claimed credit for democratizing strategies once available only to the rich, such as trading oil futures or using leverage to amplify returns. The latest target: your tax bill.


  • "Wealthfront, for example, harvests losses by switching between the Vanguard ETF and the Schwab U.S. Broad Market ETF."
    Wealthfront, for example, was fined $250,000 by the SEC for allegedly making "false statements about a tax-loss harvesting strategy it offered to clients."
    The company had told clients using the service that it would monitor all clients’ accounts for transactions that might trigger a sale of securities that would diminish the benefits of the tax-loss strategy but it failed to do so, the SEC alleged.

    For a period of over three years these sales occurred in at least 31 percent of accounts enrolled in the company’s tax-loss harvesting strategy, the SEC alleged.

    [The SEC also claimed that Wealthfront paid bloggers for client referrals w/o disclosure, and that it posted performance figures that included less than 4% of their clients' accounts - the better performing ones, of course.]
    Definitely beware the bold claims when they're paid testimonials and rigged numbers.
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