Financial advisers closely guard their clients. Now a web-based upstart hopes to nudge its way into the relationship.
Wikinvest.com of San Francisco has so far signed up more than 100,000 users who have entered brokerage data into the company's system, giving them access to Wikinvest's tools for tracking performance and sharing stock commentary with other members.
In July, Wikinvest hopes to launch a product that will take the relationship a step further. SigFig will not only help investors analyze their portfolios but aims to help save them money by switching to a new mutual fund, online brokerage or even financial adviser. "It's a second set of eyes on your portfolio," said Wikinvest co-founder Parker Conrad.
For advisers that could be a mixed blessing. If the system proves popular, it could speed investors' move toward lower-cost investments, shepherding clients to financial advisers that have embraced these strategies and away from those that haven't. For its part, Wikinvest aims to earn referral fees from advisers that benefit from its recommendations.
Wikinvest represents one of several attempts to use new technology to scrutinize brokers and investment advisers. Last month BrightScope Inc. of San Diego launched a product designed to help investors search through advisers' resumes and disciplinary records. Regulators like the Securities and Exchange Commission have made efforts too, such as this year's new requirement that investment advisers post fee schedules on the SEC's website.
Wikinvest, founded in 2007, is free to individual investors. Signing up involves users handing over their brokerage password. Once they do, the site imports their account data, allowing them to see their holdings on the Wikinvest home page and use the company's analytical tools to measure things like their portfolio's total return.
While that's basically the same service provided by well-known sites like Yahoo.com, Wikinvest says its big advantage is automation. Traditionally, investors have had to log on to these sites manually, updating portfolio trackers each time they trade, a chore few people are likely to keep up with.
SigFig won't just track investments, but uses the same automatic access to investors' accounts to offer financial advice. For instance, when investors own a high-priced mutual fund, it might recommend a lower-cost version with a similar stock or bond portfolio. It is also designed to use buy-and-sell histories to estimate yearend capital gains tax bills.
In addition, SigFig will track amounts brokerage firms deduct from clients' accounts as fees and commissions. This means if investors are paying top dollar for stock trades, it might be able to offer a cheaper option, such as a discount brokerage. If SigFig suspects investors are paying too much in annual fees for services like a mutual fund "wrap" program, it may recommend investors switch advisers altogether.
While SigFig will be free for investors, that's not the case for financial advisers that benefit from its referrals: SigFig hopes to collect referral fees equal to one-fifth the annual fees that advisers receive from clients they win through it.
SigFig has about 20 registered investment advisers signed up as partners and hopes to have around 30 when it launches in July. Wikinvest says it will recommend advisers to clients based on factors including location, performance data provided by advisers and fees.
