An increasingly-crowded space is the online investment portfolio manager, which promises to help you invest better while costing a fraction of what conventional financial advisors would charge. Here is an incomplete list, including several services that I’ve tried and reviewed:
- MarketRiders Review
- Betterment Review ($25 bonus on $250 deposit)
- Jemstep Review
- Personal Capital Review ($10 free to try, no money required)
I support the overall vision and enjoy seeing all the new developents, and I think that many of them show promise. Selfishly, I figured that I’d put up my personal wish list of features as a DIY low-cost investor. Many of the services listed above do one or more of these things, but so far none have done enough to replace my current method of using a manually-updated Google Docs spreadsheet.
Import my existing portfolio automatically. Similar to Mint, I should simply provide my login details and have all my portfolio holdings and activity imported and synchronized automatically on a daily basis. Security is a concern here, and it would be really nice if brokers created a “read-only” access protocal, similar to what Capital One 360 has set up for its savings account. SigFig (formerly WikInvest) does this aggregation part reasonably well for many popular brokers.
Track asset allocation across entire portfolio. Many folks have investments spread across various places – 401k, IRA, SEP-IRA, taxable account, etc. I want to know my overall asset allocation across everything. Stocks vs. Bonds, US vs. International, Large-cap vs. Small-cap, Growth vs. Value, please break it down as fine or as broadly as I’d like. This may take some learning by the software in the case of some niche investments like stable value funds or individual bonds. I’ve seen Personal Capital learn asset classes quickly, so it’s definitely possible.
Customized rebalancing alerts. I want to be able to set my own target asset allocation as well as tolerance bands, and have the software send me an alert when I need to rebalance. They could even tell me “buy $X,XXX of Large-Cap US stocks” or “sell $X,XXX of Corporate Bonds”. This is a critical feature of my Google Docs spreadsheet, as it tells me where to invest new cash inflows. MarketRiders provides rebalancing alerts for a fee, but they don’t import data automatically.
Detailed performance stats vs. benchmarks. Even though I’m mostly a passive investor, my actual performance will still depend on the timing of my investments. I’d like to know my “personal rate of return”, which some brokers like Fidelity and Vanguard are pretty good at showing me. But again, I want to see numbers across my entire portfolio. How does my return compare with various benchmarks?
Reasonable cost. Some services are ad-supported or charge based on asset size, but I would be willing to pay around a flat $100 a year or $10 a month for such a product. That’s not much, but I think all of the above can be done with software and thus should scale easily. 10,000 people paying $100 a year is still $1,000,000 a year. Perhaps a company like Morningstar could offer access as part of their premium service, or it could be licensed to an E-Trade or TD Ameritrade.
What features are you looking for that haven’t been met?