ETF.com: Is there an account minimum? Is it for anybody?
Faber: We set it at $100,000. Eventually, once we get our sea legs, I would expect the minimum to go down very low.
ETF.com: Is any of this going to be marketed as an option for retirement investing? Who is your target client for this robo service?
Faber: The initial rollout was mainly designed for our audience—Cambria clients or those who have followed Cambria for some time—because we've had enough requests for this. And we're not going to do any marketing. But it's open to anyone.
It's a perfectly fine setup for someone who’s in retirement and someone who’s taxable. The tax harvesting is a wonderful benefit for people.
It's a great way to have a holistic solution. People are tired of having what our buddy Josh Brown calls “mutual fund salad,” where they end up buying a fund, and then another, they go on adding, and the next thing they know they don't know what they own, and it's just a mess.
ETF.com: What's been the most challenging thing about starting a robo?
Faber: The biggest challenge to date was waiting for the technology to catch up. There are a lot of 1.0 versions of the solution right now that for a lot of advisors is suboptimal. Many don’t really offer anything other than plain-vanilla one-size-fits all solutions. So the biggest challenge—and I've been writing about this since Wealthfront came to be—waiting and biding our time.
But the cool thing is that within a year or two, everyone's going to have it. And almost every advisor will utilize this technology the same way they utilize email. It's just another piece of the advisor pie. But it's a wonderful benefit to the end investor, because costs are lower, it's a better user interface. It benefits everyone all around.
The initial advisor reaction, in a lot of cases, was a little bit of fear, but if anything, it's going to help free up their time to go do their value-added activities and not worry about asset allocation and rebalancing.
ETF.com: Do you have other ETFs in the works?
Faber: We filed for another eight ETFs. It’s more of the same for us—launching funds that either don't exist or we think we can do a lot better or cheaper. We have a lot of liquid alt-style funds cued up where the status quo in the space is still pretty expensive, so we'd like to offer some that are cheaper and we think better.
Contact Cinthia Murphy at [email protected].