This post kind of misses the main point of services like Wealthfront. You're paying 0.25% in exchange for automatic rebalancing, asset class diversification, and tax optimization. If the combination of those factors is going to increase your yearly return by 0.25% or more (say, from 6.8% to 7.2%), it's worth it. If they won't, it's not.

It's silly to focus entirely on the fee aspect: the point of using Wealthfront is not because it's lower-cost, it's because you expect it to be better-performing from a total-return perspective. They may oversell themselves, and that's a valid criticism, but the OP fails to really analyze the raison d'etre of Wealthfront as a service. Comparing it to a single Vanguard ETF is not a proper comparison.

The Vanguard target retirement fund for 2035, for example, includes four underlying ETFs (US stock, international stock, US bonds, international bonds), whereas Wealthfront portfolios typically have more like six or seven asset classes (differentiating between developed and emerging international markets, and adding in natural resources and real estate). Left to my own devices, I don't have the time or inclination to do the research necessary to do that sort of additional asset diversification myself, determining the ideal allocation and then avoiding too much drift while not incurring too much tax. I also don't have the time to deal with tax loss harvesting, which might not matter for retirement accounts, but does make a difference for taxable accounts: you're likely incurring some taxation issues when it comes to portfolio rebalances, for example, since that necessarily involves asset sales. If you have $100k in wealthfront, you're paying $250/year in fees. If tax loss harvesting can only harvest $1k in losses during the year that offset (or at least avoid) $1k in capital gains, that still pays for the wealthfront fees by itself (if you assume 15% federal and 10% CA state tax on long-term capital gains). So, sure, the fees you pay wealthfront compound over time, but so does the money you pay in taxes. (You do eventually pay the taxes on that gain, of course, but the money you save now compounds over time, so you still come out significantly ahead).

So the question is: does additional asset class diversification plus tax optimization yield at least a 0.25% increase in your total return (net of taxes and fees) in an average year? I believe it does in my case, hence why I have my money with them. It's not because I'm some idiot taken in by slick marketing who can't do math and doesn't know about Vanguard ETFs: Wealthfront's core market is really people who can do math and understand what they're getting for their 0.25%.

Similarly, you can quibble over asset-based fees over fixed fees, but that also misses the point: as long as they make me more money than I pay them, I come out ahead. If I come out ahead, why would I be complaining? If I don't come out ahead, then there's still no point in complaining: just don't use the service. Capitalism at its finest.

Again, it's sad that the OP and most of the comments in this thread don't even attempt to tackle the real value proposition here. Just saying "Stick it in a Vanguard ETF and you'll pay less in fees" is not at all addressing whether or not the core value proposition is valid.