FutureAdvisor launches comprehensive investment advice website

The startup offers software-driven investment advice across multiple accounts

FutureAdvisor launched Tuesday a financial services website that displays, analyzes and offers advice about a user's entire investment portfolio.

The website, which was previously in private beta, works like Mint.com for investments, compiling information about multiple accounts in one place and offering analysis of the user's overall financial picture. But while Mint.com's financial advice comes in the form of paid advertising, FutureAdvisor's investing advice is its own work product.

The company, which consists of both software engineers and finance experts, relies on algorithms to deliver relevant parts of investing best practices advice to diverse users. According to cofounders Jon Xu and Bo Lu, financial advisers share a set of "well-known best practices" when it comes to structuring an investment portfolio, which includes, for example, balancing stocks and bonds.

Lu said the algorithm that powers the advice is "definitely complex -- that's one of the reasons that no one's built it."

FutureAdvisor will compete with services from existing providers including Betterment, WealthFront and Personal Capital.

The co-founders hope their service will do for financial advising what Expedia and Hotwire did for the travel industry: "Disintermediate the human in the middle who in a very non-transparent way is taking a cut," Lu said. Investors pay fees whenever they invest through mutual funds or IRAs, but the fees are often only clarified in the fine print. Moreover, as recent financial scandals have revealed, advisers often operate under pressure to sell particular products.

But can a computer offer good financial advice, when each person's financial picture is so different? "In theory, yes," said Gartner analyst Ray Valdes. In practice, it remains to be seen whether [FutureAdvisor's] particular artificial implementation is worth handing over the wheel of the financial vehicle to a software adviser. The proof is in the pudding."

The security of their financial information may give would-be users pause. FutureAdvisor, which was supported by Y Combinator, uses Yodlee as an authentication system. Yodlee, which originally powered Mint.com's access to user accounts, has offered its platform to select Y Combinator-backed startups. FutureAdvisor only reads user data, it cannot move money, and all data is encrypted using 256-bit encryption.

Nevertheless, security will remain an issue for FutureAdvisor. Valdes said, "The bad guys have been getting smarter and more sophisticated over the last five years and the question is, are the good guys keeping pace? For me personally it's a question mark. But the success of Mint shows that there are plenty of consumers that are comfortable entrusting some of their financial future to a piece of software."

FutureAdvisor operates on the popular freemium model. Use of the site is free, but the company's revenue will ironically come from premium users who pay for personal advice, via video conference, from staff advisers. FutureAdvisor maintains that these advisors are better because their fees are transparent and they don't receive any incentives to push particular products.

With Tuesday's launch, the company also announced that it can now guide investors in their use of 100 major IRA plans.

Cameron Scott covers search, web services and privacy for The IDG News Service. Follow Cameron on Twitter at CScott_IDG.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Cameron Scott

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?