Advisers find value in new investor-focused websites

Sep 10, 2007 @ 12:01 am

By Davis D. Janowski

Several new online services aimed at individual investors are attracting the attention of advisers because of the potential they provide for marketing and collaboration.

Covestor.com, for instance, a site operated by Covestor LLC of London and New York, permits an investor to measure their performance against that of any selected mutual fund and then post the combined track record for other Covestor subscribers to see.

Advisers who use the service can post educational material on the site in addition to posting performance.

“One of the main reasons I’ve joined up with them is the hope for the future — the possibilities in the collaboration piece they are in the process of building,” said Sean Hannon, whose Epic Advisors LLC in Westfield, N.J., manages $5 million in assets.

In addition to sharing his investment performance, he posts his bio, investment strategy and mission statement on Covestor.

Perry Blacher, a co-founder of the site, said the forthcoming collaboration tools will be a great draw for advisers.

“Basically, the idea is that with the flip of a switch, an investor can share everything they need with an adviser.”

Using the Covestor platform, advisers and prospective or current clients will be able to look at each other’s data and view other websites.

Covestor, which partners with Redwood City, Calif.-based Yodlee Inc. to access investor brokerage account data, is free to users. It has been in a public beta test phase for three months and plans to charge for premium services sometime in the future.

Ned Bennett, a co-founder of optionsXpress Inc. of Chicago, an online discount brokerage specializing in options trading, said he sees Covestor.com and similar companies complementing what his firm and traditional brokerages are doing.

“In our opinion, it’s not a threat. As a matter of fact, for the professional broker — especially the independent — it’s a great way for them to get their track record out,” Mr. Bennett said.

Social finance

Timothy J. Kelley, a managing associate with John Hancock Financial Network of Wellesley Hills, Mass., is a big fan of Geezeo, which bills itself as a “personal social finance application.”

Peter Glyman, a co-founder of Framingham, Mass.-based Geezeo, describes his site — which competes directly with buxfer.com of Sunnyvale, Calif., and wesabe.com of San Francisco — as an online version of Quicken, a product of Intuit Inc. in Mountain View, Calif.

“Geezeo is all about ease of use and reliability,” he said. “With it, our clients, many of them young professionals, can effectively manage their spending habits by accessing their accounts anytime, anywhere, even on their cell phones.”

Mr. Glyman said that clients who have greater access to their spending patterns and account balances are more likely to successfully follow their financial plans. His firm links electronically to more than 6,000 financial institutions to provide data on a user’s loans, credit cards and bank accounts. Mr. Glyman is quick to point out that data are not held by Geezeo but are stored on a secure account-aggregation engine owned by CashEdge, a New York-based provider of financial applications.

He added that the site soon will provide brokerage account data.

“When we’ve rolled that feature out, you’ll be able to see your positions, trades and current market value of those trades,” Mr. Glyman said.

David Schehr, research director of Gartner Inc., an information technology research and advisory firm in Stamford, Conn., expects many of the new online services to have staying power.

“These sites and companies were not started by Web 1.0 dot-com amateurs and techies,” he told attendees at a recent Gartner conference in New York. “These guys cut their teeth at traditional brokerages.”

Mr. Bennett of optionsXpress voiced an even more upbeat view.

“I’ve been in the online brokerage business since 1994. I’m the first guy around here to say so when things don’t work. Things like this are the future,” Mr. Bennett said.

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