Betterment wants to be your new, higher-yield savings account (TC Disrupt)

So it's passive investing with a pretty interface and a 0.9% fee. No thanks.

Users would be better off just deciding how much they want to risk in stocks vs bonds, and moving it into Vanguard. The major difference is that Vanguard doesn't try to fool you into thinking that a mutual fund is really a savings account.

Anyway, good luck to 'em, but I hope consumers are smart enough not to be interested. Then again, I doubt anyone has ever gone broke betting against the intelligence of the average American consumer, particularly when it comes to finance and investing.

I read the article and immediately wanted to find out the actual holdings they allocate in their stock-based and bond-based portfolios. However, I couldn't find any information on the actual holdings, which is information that I consider to be pretty important. Do they just buy broad market index based ETFs? Would I be exposed to domestic, international, and emerging markets?

The experience is "dumbed down" to make it dead simple, but I feel that it's missing certain power-user features that would help convince people more in touch with their finances to make the switch to their solution. 0.9% is also a pretty high expense ratio. I'm guessing it's to offset redemption trades, fees, and what not. In comparison, passively managed Vanguard-style mutual funds/ETFs that also invest in broad indexes have expense ratios that are an order of magnitude lower.

A savings account that charges a management fee, can't advertise a return rate, takes twice as long to move money through, has more complicated tax implications, and isn't insured against market movements.

But it has a slider. Sign me up.

"Ultra-safe" bonds? "Ultra-safe"? Seriously? They have their own rating system now? Treasuries are "AAA", but they're holding "AAAA", aka "Ultra-safe" bonds.

And I love the .9 percent they charge for allocating your money in unmentionable ETFs. Let's see...SPY charges .1 percent, so if you manually have 50/50 savings/stocks, your expense ratio is a whopping .05 percent. Definitely preying on the ignorant--

The fee is too high, the investment choices too few (I don't want to be exposed to Treasuries right now, thanks), and it's still separate from my checking account. Fix those things and I'm there.

In principle, I am a huge fan of mutual fund banking:

http://www.cato.org/pubs/journal/cj10n1/cj10n1-12.pdf