PersonalRIA is a service that helps you monitor your portfolio and connect you with reliable investment advisors who can better manage your investments.
The startup presented today during the Finance and Statistics session of TechCrunch50. You can watch the video of its presentation here.
After signing up for PersonalRIA, users can start looking for investment advisors. The site gives the users information about why they buy or sold each stock, full disclosure about the advisor, and specific information about their trading moves.
Once the user finds an investment advisor worth working with, they can add the advisor that best matches their strategy. The advisor is added to the portfolio page where you can see what the advisor is doing.
PersonalRIA really shines when it allows you to add your own brokerage account to the service and let it become monitored by the advisor you choose. Once complete, it will scale your portfolio to the advisor’s portfolio regardless of the funds in your account and manage your account based onthe advisor’s suggestions.
In order ot make money, PersonalRIA collects 0.5% for managing services and trading costs.
Expert Panelists
Mark Cuban:
I hate the idea but it still can work. I only hate the idea because I have no confidence or trust in investment managers. But how will you protect against fraud and see an investment advisor run up a stock and game the system?
Answer: What we do is we have a threshold and the advisors must be managed with SEC and do a due diligence process with all of them. Automated and non-automated processes will be present.
Roelof:
Very interesting idea and I think it’s good for one reason: it’s always good to take advantage of man’s sins and not their virtues. My primary question is how to get cost-effective customer acquisition.
Answer: Customer acquisition at the beginning will cost and we’ll need to spend money to get customers. But brokerage firms will want to add us to their platforms as well because we can increase trading. We’re already talking with one of them.
Kevin Rose:
“How do you tailor this to an investor based on their ages? Am I basically buying into this one advisor or can I have a custom-based system?”
Answer: You can have personalized advice and from that point onwards, you can search for advisors that hve the same asset allocation you want. You can have it managed for you based on that.
Don Dodge:
“This is a very competitive space and more mutual funds that publicly traded stocks. The competition is enormous and customer acquisition is going to be very difficult. A 0.5 percent fee is small and you’ll have enormous marketing costs. Easily understandable, but difficult to implement.”
I agree with Mark Cuban. I believe educating oneself to become financial literate. Investment returns can be easily wiped out by taxes and management fees too.
Not only I agree with Mark Cuban, but it sounds like these guys don’t understand Investing 101. Asset allocation is based on an investor’s risk tolerance, age, etc.
Also 0.5% sounds small but it is a lot of money, especially on top of other fees to the advisor and the brokerage.
This is very similar to xearn.com. At xearn.com you can view portfolios from investment advisors or individual investors. Interestingly, portfolios managed by individual investors are doing as well if not better than portfolios managed by investment advisors.
Rather than interesting, I think it’s obvious there would be, “portfolios managed by individual investors doing as well if not better than portfolios managed by investment advisors [sic]” .
These are the “individual investors” spending lots more time understanding what to do…aka “day traders”. It is their job, but that job really sucks because it is boring and doesn’t change anything in the world. I’d rather let someone else (someone spending full time) play the role of hedging my bets against entrepreneurship.
All the companies focused on this will, perhaps, allow many unknown, non-large-investment firm- backed investors to gain a name and possibly earn some extra cash.
This disrupts the large investment houses in the long term.
{never thought about this market much]
I think this is a great business, apparently Marty (above) doesn’t get it. If one wants to manage their own money and know what they are doing, fine. Nobody in my family cares to do this, just to keep up with the reasoning behind anything done with our money. We all have some portion of our portfolios in which we make specific investment choices (once per quarter), but ~85% is completely managed.
My broker is from Smith Barney, and my whole family let’s our broker/manager handle everything. We pay about 8% (annual ave.) including brokerage fees with very low 10 figures under management.
These guys need to keep chugging, they’ll get the funding to acquire customers.
A few different approaches to acquiring and retaining customers come to mind, and they all relate to partnerships/ bizdev.
Am I totally missing something? Isnt the whole reason why small amounts like $10,000 arent professionally managed is because of the transaction costs as a percentage of assets? His example showed the purchase of at least 10-15 different stocks. Even at $8 a trade, thats 0.8%-1.2% of assets just in the initial purchase. Combine that with potentially hundreds of trades a year, there wont be anything left to ‘follow’.
They want to be like MarketGuru.com but their strategy is off.. by deciding who gets to be a leader, they are interfering with the natural selection of talent. This isn’t web 2.0 – just another on-line brokerage service with a twist.
On Market Guru anyone can become a Guru – that’s true internet power..
I agree with Sean about MarketGuru.com being a better platform for investors. First of all it’s completely free.
Second, you don’t hand anyone control over your portfolio, you manage it yourself.
Third, talent shines through. You can see the portfolios of all members on the site and find the talents who are right for you. No one can falsely claim to be an ace, their portfolio performance will do the talking for them.
I’m surprised to see so many MarketGuru fans on this blog.
How many users do they have?
Sean? Kohalza? any idea?