Comment by Thorrez
1 year ago
How about Wealthfront Cash accounts? Wealthfront provides me a statement that shows how my deposited money is distributed among its FDIC insured partner banks, and each transfer they do to and from one of those partner banks. Wealthfront does use a middleman, somewhat similar to how Yotta used Synology as a middleman. But Wealthfront's middleman is FDIC insured: Green Dot Bank.
Wealthfront is a broker iirc, so you have some private insurance to protect you in the event of Wealthfront becoming insolvent.
The difference between them and some bullshit thing like Yotta is you are the customer of record for the account. The bullshit aspect of Wealthfront is they front real services with automated investment services. Yotta was pooling customer funds at some other bullshit fintech who was then putting those funds (or not) into one big account.
Personally, handling cash is an old business and I’m really conservative about who handles mine. Innovation is risk, especially when the money behind it is focused on eliminating accountability. Yotta should have been illegal. Keep accounting boring.
Wealthfront has multiple offerings. Wealthfront investment accounts are for stocks. Wealthfront Cash accounts are for cash. I was talking about Wealthfront Cash accounts, which don't have automated investment services, and I don't think involve a broker.
Some are better than others at bookkeeping, however FDIC only insures against risks of the bank they regulate. They don’t regulate the risks at the fintech co and they don’t insure it .
There is always residual risk between the bank and you with the fintech company. That’s what got Yotta in trouble ,they basically outsourced the heavy lifting of managing ledgers to synapse which you as customer have no control over.
For most people that risk is not worth losing their already modest savings over , that is why banks are regulated and FDIC exists after all.