FutureAdvisor, another advice site for the mass market

On the heels of Veritat being bought by LPL (actually the NestWise LLC subsidiary…

On the heels of Veritat being bought by LPL (actually the NestWise LLC subsidiary of LPL) I wanted to go back and write about a site I have neglected since its launch back in March.
There never seems to be enough time.
I am talking about FutureAdvisor.com.
FutureAdvisor officially launched in March and its mission is to help the 99% get the most out of their investment portfolios.
Its founders are chartered financial analysts and mathematicians, fairly atypical startup types and rather than Silicon Valley, the firm is based in Microsoft’s home turf up in Seattle.
Once you go through the signup/registration process (whereby you provide information on the investments you already have) the application delivers personalized recommendations on asset allocation, how to reduce fees, analysis of your 401K, improve your tax efficiency and select better investments, and you can sign up for rebalancing alerts.
The premium offering remains in a private beta according to the website but offers automatic portfolio rebalancing (I will follow up on the status of this).
Angel investors, Y Combinator, Sequoia Capital and some well-known startup talent (a C-suiter from Square for example) have all backed the startup.
I spoke to cofounder Bo Lu a few months ago.
In there initial prepared statement he did not mince words: “We envision a world where old school financial advisers are obsolete, except for the very wealthy. The convergence of technology, index funds and investment instruments are making this possible now. We want to empower the 99% everyday investors with information they need to manage their own investments online.”
That said, I am not writing about them to posit that there is yet another tech-centered threat to human advisers.
No, it is yet another example of technology being used to reach the mass market and worthy of notice and possible emulation by advisers.
“We don’t take custody of assets, your money stays where it is, what we do via the web application is give you step by step analysis and recommendations,” said Mr. Lu.
Back in April when I spoke to him Mr. Lu said that the service supported 100 of the largest 401K plans in the country (again I’ll follow up and find out where they stand currently).
“When you come to the service and you have say, a Microsoft 401K the application knows what is in there and it knows what the 14 specific options within the fund options are,” he said.
When I asked for differentiators between themselves and Personal Capital as an example, Mr. Lu emphasized that FutureAdvisor takes no fees for assets under management — they charge a flat annual fee.
At launch, the Gold Plan was $49 per year and included 24/7 portfolio monitoring, coupled with rebalancing alerts and an annual scheduled video call with an adviser. The Platinum Plan was $195 per year for unlimited video calls with an adviser one face-to-face meeting per year.
I am reminded of a conversation I had with David Fetter, chief executive of Fetter Logic Inc. and Quadron Data Solutions.
He is a veteran technologist I have spoken to several times and I interviewed him for the story I wrote about LPL having bought Veritat (it was cut for reasons of space).
“In the mid-90s when Paine Webber first released performance reporting, you could only get it on an account if it had $1 million in net worth in that account, the size of the relationship did not matter,” he said.
“Today you pretty much expect a rate of return on a $10,000 mutual fund position,” he said, adding that also in the past data aggregation was only the purview of the largest accounts and relationships but is now expected down to the mass affluent audience.