Q2 2015 Research Report Money s Edge has just released the results of their Q2 rankings process. Below are the results, which were generated from proprietary scoring systems. In producing lender scores, Money s Edge tends to take the perspective of the borrower, favoring firms which will underwrite loans for lower credit scores, offer fast delivery of funds, higher loan limits and the best customer service. The original, raw data input for these rankings was gathered by Money s Edge researchers online and by phone interviews with the firms. Top 10 Online Personal Loan Providers Rank Name APR Range 1 8.47-29.9% 2 5.99-29.99% 3 4.25-9.25% 4 6.68-35.97% Min Credit Score Min Time to Rcv Funds User Friendliness Customer Service Max. Loan Amt. Max. Loan Term 600 2 days $35,000 5 100 600 1 day $35,000 5 96 650 2 days $30,000 3 87 640 2 days $35,000 5 87 Score 5 5.5-9.24% not published 3 days $100,000 7 85 6 5.7-?% 640 1 day $25,000 3 80 7 6.63-36% 8 6.44-29.27% 9 6-39.95% 10 6.48-29.99% 660 1 day $35,000 5 76 700 1 day $35,000 5 76 660 1 day $25,000 3 70 640 3 days $35,000 5 68
Top 10 Online Real Estate Loan Providers Rank Name User Friendly Customer Service Max. Loan Term Max. LTV Int. Rates Max Loan Amount Time Get Funds Loan Type(s) 1 10 yrs 90% $50,000,000 7 days non-owner occupied residential, commercial 2 3 yrs 80-85% 7-10% $25,000,000 7 days non-owner occupied residential, commercial 3 1 yr 80% 10-14% $5,000,000 5 days non-owner occupied residential, commercial 4 5 yrs 80% $20,000,000 8 days non-owner occupied residential, commercial 5 1 yr 90% 7-11% $1,000,000 10 days bridge loan, rental loan, consumer mortgage 6 5 yrs 85-90% 8% min. $5,000,000 14 days single, family, 7 $5,000,000 15 days commercial, institutional owner occupied residential 8 30 yrs 90% $100,000,000 25 days commercial and construction Score 94 91 81 77 74 72 71 70 9 30 yrs 80% 5.25-9.25% $2,000,000 21 days owner occupied residential 65 10 7 yrs $100,000,000 45 days commercial 53
Top 10 Online Commercial Loan Providers Rank Name Min. APR Max Loan Amt Time to Rcv Funds Credit Required User Friendliness Customer Service 1 5.9% $300,000 2 days 620 5 yrs 95 Max. Loan Term Score 2 7.99% $500,000 3 days 600 4 yrs 93 3 12% $5,000,000 4 days receivables based revolving 91 4 6% $1,000,000 9 days 650 startup, 9 yrs 91 500 established 5 6.5% $50,000 1 day 640 3 yrs 90 6 6% $500,000 9 days 660 2 yrs 89 7 10% $250,000 1 day 500 2 yrs 88 8 6% $350,000 7 days 600 10 yrs 85 9 15% $500,000 3 days revenue based 2 yrs 84 10 13% $500,000 3 days 600 3 yrs 84
Top 10 Online Investment Advisors In producing advisor scores, Money s Edge tends to take the perspective of the borrower, favoring firms with low account minimums, lowest fees for accounts of less than $10,000 balance, lowest rebalancing costs and the provision of aggregator services. The raw data input for these rankings was gathered by Money s Edge researchers online and by phone interviews with the firms. Note that this is a hot area of fintech development and that competition is tight. There is a heated race for assets and the firms are quickly developing new functionality, integrations, and partnerships to differentiate themselves. The nuances mentioned in our additional notes are worth reviewing in order to become better acquainted with this marketplace. Rank Name Fees Account Minimum 1 free for <$10,000;.25 % annually after that Aggregator? * Phone Support 7 Days/ Week Assets Held In $2,000 yes no Fidelity, Schwab, or TD Ameritrade 2014 Portfolio Returns ** Rebalancing Costs 5.2-5.3% none, except when liquidating certain holdings during account setup Tax Loss Harvesting Score yes- daily 97 2.15%-.35% annually; $3/month if no auto deposit & account < $10k 3 free for<$10,000;.25% annually above that $0 no- but developing the capability this year yes Betterment Securities $5,000 no No Apex Clearing Corporation 7.55% for a 70% stock portfolio average 4-6% return per year over the long term none, just ETF expense ratios none, just ETF expense ratios; some accounts can even avoid those with their Direct Indexing option yes- daily 94 yes- daily 84
4 free $0 no no- no phone number on website Foliofn Investments, Inc. average 7.8% over past 10 yrs none, just ETF expense ratios yes- for a fee 83 5 annual fee of $149.95- $191.40; free for the first month $1,000 yes yes anywhere if directed, TD Ameritrade if discretionary 6 0.89% $100,000 yes yes Pershing Advisor Solutions, a Bank of New York Mellon Company 7.3-.75% $0 no no-but have 7 day text, chat, and platform support FOLIOfn Investments, Inc. 6.11-8.35% depends on where you hold assetsthey seek to minimize expenses 2-7.1% depending on portfolio choice 7.4% in 2014 better than other roboadvisors according to their roboadvisor index none; not even ETF expense ratios for US stock portion of portfolio which is in individual - stocks no 81 yes 81 none yes 80 8 free college planning,.5% annual fee on retirement planning $10,000 yes no TD Ameritrade or Fidelity 8.5%- 12.2% (retirement investing at lower end, younger clients at higher end) transaction fees are incurred. Ameritrade: $9.99 - $24.00 per trade; Fidelity: $7.95- $50 per trade yes 80
9 0 $5,000 no yes Schwab not published 10 $12.50 per month; 30 day free trial $0 no no-can t get through to customer service even during business hours your own accounts- MarketRiders doesn t move assets not published none, just ETF expense ratios trading fees; depends on where assets are held yes- for accounts $50,000 or more no, unless requested 77 63 *aggregators allow users to pull all of their investment accounts into the platform and will take those holdings into consideration when making investment recommendations; this allows for more holistic, effective investment advice for individuals who have more than one account **self-quoted, may not be comparable due to difference in taxability, risk level, etc. Additional notes re: Online Investment Advisors 1) SigFig CEO & Co-founder Mike Sha earned MS in Computer Science from Harvard, co-founded Wikivest, and launched Amazon Visa and Amazon Prime. SigFig tracks $370 bn in assets and has has $59.5 mn AUM. They have about 500,000 users currently and expect to reach 100 mn by powering partnerships in the near term. SigFig offers 20 different portfolios- answer questions based on risk and goal preferences and they will recommend one of them. The portfolios hold ETFs that invest in US and foreign stocks, bonds and real estate. SigFig can execute trades in Fidelity, Schwab or Ameritrade- so they often just keep your money where it is. If you contribute cash, they open account for you in TD Ameritrade. Users can make appointments with a personal investment advisor as needed. They have a well-developed mobile app for iphone and android. The platform allows all of a user s investments to be synced in one place, including 401(k)s.
2) Betterment Betterment claims to be the largest automated investing service in terms of number of clients (100,000) and they currently have nearly $2.5 bn in assets under management (AUM). They were the first automated investment advisor, launched in 2010. Betterment defines four primary types of investing goals: Retirement, Safety Net, Build Wealth, and Major Purchase. Each goal type is translated into a different stock allocation glide path and money is allocated between stocks and bonds accordingly. They are passive- not attempting to beat the market but to diversify assets and match market returns at the desired risk level. They are one of 2 firms which offers fractional shares, so can perfectly allocate small accounts. Rumored to have a tilt toward value stocks. Have a lot to offer for retirees who invest automatic distributions. Betterment s asset evaluation algorithm is run quarterly and evaluates just under 1,700 different stock and bond ETFs to select low-cost, highly liquid, index-tracking ETFs. They don t believe real estate or commodity products offer sufficient benefits to investors. The investment committee reviews algorithm results to see if changes in investment recommendation are warranted. Betterment offers several well-developed, user-friendly features such as round-the-clock phone support, excellent mobile apps, integration with Mint.com, tax impact preview, financial planning advice and SmartDeposit- a feature which will automatically invest any excess balance in your checking account. 3) Wealthfront Also claims to be the largest automated investment service, with > $2 bn AUM. They utilize Apex Clearing Corporation as a custodian because Apex does not engage in activities like proprietary trading which could put clients at risk. Apex is solidly profitable and maintains regulatory capital that is four times the requirements. Users take a questionnaire which determines their risk score and portfolio allocation. Wealthfront includes commodities in their asset allocation advice. However, they do not take into account your outside holdings when making recommendations. Portfolios cannot be customized at all. To attract a niche of Silicon Valley tech employees, they offer a Single-Stock Diversification service. For accounts with a balance > $100,000 they offer a Tax-Optimized Direct Indexing feature which will replicate the US stock market in your account using individual stocks directly rather than an ETF. This allows far more opportunity for tax loss harvesting, and eliminates ETF expense ratio costs. They also offer Daily tax loss harvesting, as opposed to traditional advisors which harvest only annually. This creates more tax alpha. These 2 features combined could add as much as 2.03% annually to your returns.
4) WiseBanyan Founded in 2013 by Herbert Moore, who has a strong background in asset management and trading at both the institutional and private level. Services launched in March 2014. Currently $22 mn AUM. Their basic service is free but they offer optional services a la carte for additional fees, such as professional tax preparation services and tax loss harvesting. WiseBanyan asks users questions about risk and goal preferences to generate a risk score from 1-10. Then they assign a portfolio which would maximize return at given level of risk. They use a slight qualitative overlay to their robo-advisor allocation recommendations. For example, they tilt away from longer duration bonds because of the currently low interest rate environment- currently take macroeconomic view that interest rates may pick up and bond prices fall. Approximately 9 ETFs are held by any single investor. They include Vanguard REITs in their recommendations. They are one of 2 firms which offers fractional shares, so can perfectly allocate small accounts. Clients are skewed toward young, first-time investors. Actual minimum deposit they can take is $10. 5) Financial Guard Launched in late 2013. Financial Guard normally advises on investments but assets aren t moved- you have to execute investment advice yourself. However, they have offered to sign on as a discretionary manager when a user s account is open longer than 1.5 years, in which case they can make transactions for you, given that the account is held at TDAmerittrade, Fidelity, or Scottrade. Soon they plan to offer investment implementation via Ameritrade for all clients upon signup. Their alogorithm technology examines and ranks over 28,000 mutual funds and ETFs each month, including real estate, commodity, and natural resource funds- a much broader range than most robo-advisors who cover only ETFs. An investment committee of CFAs and PH.Ds selects the best in each asset class utilizing the algorithm s output. They will accommodate user preferences for passive or active investing by recommending funds accordingly. Unlike other robo-advisors, they can advise on 401ks since they don t require moving assets and they advise on mutual funds as well as ETFs. Like SigFig, they aggregate a user s investments into their dashboard to provide holistic recommendations, and take into consideration assets in all aggregated accounts when issuing advice on the investment portfolio. Customer support is accessible by phone during business hours.
6) Personal Capital Personal Capital has a free, robust best-in-class software to aggregate a user s banking and investment accounts. The software is geared toward financial planning and offers a free retirement planning tool as well as some investment insight. Personal Capital claims to offer a level of advisory service at the $100,000 account minimum which was previously available only to those with millions to invest. Their service is a hybrid between robo advisor and personal advisor. They set up an initial phone meeting to discuss your goals and preferences. Then their investment team evaluates your situation and an advisor holds a virtual meeting with you to discuss recommendations, all of which are fully customizable. You get a dedicated financial advisor team who knows your financial situation holistically and makes appropriate recommendations which include ETFs and individual stocks. They often sample US stocks to build your own index, which allows for more tax loss harvesting opportunities. Clients with more than $250,000 invested can use their investment account as a line of collateral at Bank of NY. Additional private client services are available for accounts with > $1 mn. 7) Hedgeable $33 mn AUM. Offer over 100 different ways to receive an allocation customized to your profile with optional access to alternatives such as real estate and commodities. They use modern portfolio theory like others but add some hedging elements so are considered dynamic portfolio managers- somewhere between a passive and active strategy. Hedgeable applies a TPPI (Time-varying Proportion Portfolio Insurance) investment approach which allows risk levels to vary with time. In this approach, the risky asset is rebalanced to a lower allocation weight as it loses value- as opposed to classic MPT which rebalances the asset back to the same portfolio weight. The resulting TPPI convex payoff structure theoretically performs better in bear markets and bull markets than the classic MPT approach. (see their white paper for details). It effectively mirrors the risk management and convex payoff of a protective put option strategy, without requiring the use of derivatives. Hedgeable does not take forward-looking positions on assets, but does move in and out of asset classes based on risk observed in price levels. 8) FutureAdvisor This firm is backed by the venture capital team behind PayPal and Google. Leaders include Ken Frier- CIO of Atlas Capital Advisors, former CIO Stanford endowment- and Salil Mehta- former director of Analytics for US Dept Treasury and author of statistics and mathematics books.
Currently has $650 mn AUM in their premium service and has provided free guidance on over $40 bn. A user cannot individualize the investment approach or override advisory except for a small portion of the portfolio. You could do-it-yourself by signing up for a free account, looking at the advice, and placing trades yourself. The investment advice is free but when you pay for an account they will make the actual investments for you. 9) Schwab Intelligent Portfolios (SIP) They break assets down into 20 different classes, including real estate and commodities. They also factor investor loss aversion into portfolio allocation recommendations. Their system analyzes 1,657 ETFs and narrows them down into 54 which are recommended. SIP charges no fees but makes money as Schwab affiliates earn revenue from underlying assets in these accounts (such as cash holdings) and may receive payments from trading firms/exchanges. Just launched in March of 2015 yet already have $3 bn in AUM. 10) MarketRiders Investors are fitted with one of 9 basic portfolio allocations. The service requires self-executed trades- they send you rebalancing instructions by email, you manually execute them via an online broker then input trade information into your MarketRiders account. Real estate and commodities are included in their portfolios. Rebalancing is set by default to occur when when asset drift is 15% or greater. They are beginning to offer a new service built on the MarketRiders investment platform called Rebalance IRA in which they will manage your account for you for a low fee.