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!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
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

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?