A new website is creating a Facebook-type social networking site to help investors check up on their financial advisers.
Greenwich, Conn.-based Exchange Networks LLC launched its website on Nov. 1, based on the idea that those with $5 million to $50 million to invest should control of their assets. The site's founder, Wayne Cooper, said that such investors typically don't have anyone looking comprehensively at their family's investments and estates, so they must do it themselves.
The site, wealthmanagementexchange.com, doesn't propose that investors ditch their advisers, however. But articles on the site seek to arm this segment of the wealthy with the knowledge to evaluate their investment performance and know enough to make changes when needed, Mr. Cooper said.
The website incorporates discussion groups on topics such as trusts and estate plans and alternative investments, and soon it will host a list of recommended advisers that will allow investors to rate financial professionals.
Like Palo Alto, Calif.-based Facebook Inc., the site provides a forum for networking, in this case for individual investors to talk to each other and to investment professionals, Mr. Cooper said. It provides more anonymity, however, because many wealthy individuals don't want to be later contacted by advisers or others, he said.
The site was conceived after Mr. Cooper sold his information publishing company in 2000 "for more than I ever dreamed possible," he said. Mr. Cooper invested some of his new capital with a "world-class firm," and within a year that firm had lost 35% of his investment, he said.
"Getting burned from a major, respected player made me think this was needed," said Mr. Cooper, 46, chairman of Exchange Networks. He declined to provide the name of the firm, which he now thinks had him too heavily invested in technology.
Mr. Cooper's company has recruited 34 professionals to its board of experts to provide articles for the website, including Ron Birnbaum, a financial consultant who specializes in real estate; Robert Shiller, an economics professor at Yale University in New Haven, Conn., and author of "Irrational Exuberance" (Princeton University Press, 2005); and Sam Stovall, chief investment strategist at New York-based Standard & Poor's. The site's experts aren't paid by Exchange Networks.
Members register with the free site and receive periodic newsletters on investment topics. In the next six months to a year, Exchange Networks will begin sponsoring events and conferences to generate revenue.
The site also will have advertising sponsorships in the future, Mr. Cooper said. "At the end of the day, we think individuals should be active in their own
financial planning," he said. They may have one or multiple advisers, but the investors need to be monitoring performance and comparing it with indexes or other benchmarks, he said.
Investors should compare fees with returns and hold advisers accountable, Mr. Cooper said.
Advisers should join in the discussion groups and set up a free profile on the site once that list is functioning in about 60 days, he said.
Professionals interested in becoming experts on the exchange should contact site editor David Beck.
The challenge will be to familiarize investors with the site, said Mark Balasa, one of the site's experts and an adviser with Chicago-based Balasa Dinverno & Foltz LLC, which manages about $1.5 billion in client assets.
"The community who participates will make it valuable," he said. If the site can get investors sharing their successes and failures — combined with a bit of guidance — that will be useful to investors.
Having investors rate advisers is both a valuable idea and a dangerous one, Mr. Balasa said. It could be similar to San Jose, Calif.-based eBay Inc.'s site, where there are preferred sellers, he said.
"Of course, this is more serious than buying china on eBay—this is someone's life," Mr. Balasa said. "I don't know if this will carry over."
