We’ve been excited about the movement toward automated, fiduciary investment advice, sometimes called robo-advice, since we saw what WealthFront.com had to offer more than five years ago. I remember looking over Joyce’s shoulder as I walked her through their site, with her jaw dropping to desktop. Now, the likes of Vanguard and Charles Schwab are taking the lead from those first-to-market robos, including Betterment and Wealthfront.
All of our offerings—including Essentials, which is free—will include Retirement planning, real-time net worth tracking, budgeting, cash flow analysis, investment allocation analysis, an estate planning checklist, a private document vault, and real-time links to investment, bank, and credit accounts. We’ll also be able to assign and complete planning tasks right within the application. You can consider it similar to Mint.com, only better: complete with interactive planning features from your friends at Sommers Financial Management.
I just completed a review of how each of our Model Portfolios performed in 2016, the first full year in which we’ve used them with a majority of our clients. As some background, we use Riskalyze to determine our client’s tolerance for volatility, balanced against their desire for high returns. Once clients are assigned a Risk Number between 1 and 100, we can then match each client to one of our Model Portfolios with a similar Risk Number.
During a recent conversation about how to invest her portfolio, while looking at our model portfolio offerings, a client remarked about our Closed-End Fund (CEF) Arbitrage model: “Well this one appears to have the best potential for higher returns, without taking on any more risk than the ‘Conservative’ model. Why wouldn’t everyone choose CEF-Arb?”
… to test how much they spin the truth. Over the past year, I’ve had a very aggressive investor ask me to help him find the “investing silver bullet,” that will make a lot of money with little risk. In fact, I’ve had many clients ask for this over the years – just none as headstrong as this one. He is convinced that there is a way to make a lot of money – likely trading options – without risk of losing principal. He was so convinced that early in the year, he gave me $500 to subscribe to a weekly options advisory that sends 2-3 daily emails with trade recommendations. The website boasted of 546% gains in a month.
A few weeks back, I attended a due diligence forum in Denver, Colorado with 361 Capital, an alternative asset manager fairly new to the mutual fund space. They currently manage five funds across three strategies: long/short, counter-trend managed futures, and “macro opportunity”. In looking over the offerings, the macro opportunity fund has been a dismal failure since launching two years ago, and was not even mentioned at the forum. That’s okay – I wasn’t planning any diligence on it given its performance history.