Second Opinions on Investment Performance By Sue Bergin

There was a day when you could sense when someone was looking over your shoulder. Technology, however, has made those days a thing of the past.

With the increasing number and sophistication of personal financial management software sites and mobile applications, it is getting easier for your clients to get second opinions on the investment advice you provide.

Technology-driven portfolio analysis boasts the ability to provide independent and objective investment evaluation, which is appealing to investors on a few levels. From a client’s perspective, they can get a second opinion on your recommendations at no charge, with no obligation, and relatively little effort. Once data is entered, they have a convenient place to go for aggregated and up-to-date information and continual guidance.

The functionality and sophistication of these personal financial management sites and mobile applications is evolving at warp speed. Take SigFig for an example. SigFig aggregates all investment holdings then makes recommendations based on current holdings. It compares the holdings in a user’s portfolio against other investments in the same category and share class. It then provides suggestions of other, less expensive investments that perform better than the user’s current holdings. It even goes a step further. After reviewing the user’s trading patterns, it evaluates the brokerage fees paid. Even individual advisors are evaluated based on the fees assessed and performance obtained. This functionality has led to all kinds of provocative “Find out if your financial advisor is overcharging you” headlines!

Another media darling is Jemstep, which scored a “Use Jemstep to See if Your Broker is Wasting Your Money” headline. Jemstep’s ranking engine analyzes 80 attributes of more than 20,000 mutual funds and ETFs.
Jemstep helps clients identify their financial goals, provides a ranked list of the “best investment options” for that client, and tracks aggregated investment performance.

These services and dozens of others are gaining in popularity. They are free or come at a modest fee, and they have seized the attention of both venture capitalists and the media. Your tech savvy clients are likely to be aware of them, and very well may be relying on them for a second opinion of your performance.

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