FutureAdvisor Launches Investment Tool for "The 99 Percent"

Seattle-based FutureAdvisor is launching in public beta today to be “Mint.com for investing,” and is announcing an undisclosed amount of funding from Sequoia Capital and several angel investors including Yelp founder Jeremy Stoppelman and Square COO Keith Rabois. The tool pulls together a user’s accounts and gives personalized and actionable advice on how to improve their portfolio. They’re launching in the U.S. with support for 100 of the largest 401(k) plans in the country.

FutureAdvisor co-founder Bo Lu started the company after trying to find financial advisors for a friend, and discovering that advisors often charge one percent of net assets per year, and often require a minimum amount of investments. “Future Advisor is based on a single vision, which is that high quality personalized advice should be available to be everyone,” Lu said in an interview. “[We] realized that most good advisors wanted half a million dollars or more minimum or they kept trying to sell us life insurance and annuities which we knew we wouldn’t need. So, we built FutureAdvisor.com which is a free web application that gives personalized advice to individual investors on how they can save mutual fund fees that many people don’t know they’re paying, be more tax efficient, and better diversify for their situation and age.”

The tool gives investors a snapshot of their investments (after they automatically or manually upload their investment portfolio), and outlines their total assets, level of diversification, portfolio fees and tax efficiences. Users get recommendations on what they should be doing differently, and can either build new low-fee portfolios or improve existing portfolios. There is also a personal profile that allows users to specify when they want to retire, what they want their retirement income to be, and other goals so FutureAdvisor can monitor whether they’re on track. Users can also ask financial advisors questions online.

The online personal finance space is crowded, with established players like Mint.com and Personal Capital vying for mindshare and users. Lu said they differ from Mint.com because unlike Mint, they don’t offer financial products to users and take a cut, and they’re focused specifically on investment advice. “Unlike many other financial products out there, no one else pays us for our customers and I want to make that very clear,” Lu said. “We don’t take money, we don’t take legalized kickbacks; we don’t receive commissions for pushing any financial products.” The site makes money by offering a premium subscription which allows users to schedule regular calls with financial advisors (who are on staff at FutureAdvisor). But Lu says the “vast majority of clients do fine with just the free web service that gives personalized recommendations.”

That model is similar to Personal Capital, which launched an iPad app last week. FutureAdvisor doesn’t offer any mobile apps – they say have mobile accessibility is something that private beta users haven’t asked for yet. While FutureAdvisor charges an annual fee to premium users ($49 or $195 premium plans are available), Personal Capital charges a percentage based on the total value of assets being managed (starting at .95 percent for the first $250,000).

Lu and co-founder Jon Xu, who both previously worked on the Windows Phone team at Microsoft, say the funding will be used for “delivering on the vision of making high quality advice available for everyone.” Lu says FutureAdvisor’s target market is “the 99 per cent – everyone that isn’t rich enough today that advisors are beating down their door.” “It’s for folks who are just starting out, folks who have $50,000 that they’ve tucked away in the last couple years where it’s hard to get unbiased advice without someone trying to sell you annuities or something,” Lu said. The company itself is an entity-registered advisor, and they have advisors on staff who are CSAs and who have been in the industry.

While FutureAdvisor and Personal Capital both focus on providing investment advice rather than everyday finance tracking like Mint.com and other personal finance applications, they compete not only with existing apps, but with financial advisors who do in-person meetings. Personal Capital tried to bridge that gap with its iPad app, which offers live FaceTime-enabled video chat and instant messaging with real financial advisors to paid customer, and Lu admits their biggest competition isn’t other online services, it’s financial advisors. “The people who actually give high quality financial advice with a preview of all your accounts, so actually, human advisors,” he said.

With additional reporting by Cheronne Thurab.

Erin Bury

Erin Bury

Erin has covered startups and technology for over three years in publications including Sprouter Weekly, The Globe and Mail, Business Insider, Mashable, and VentureBeat. She also writes a regular startup column for the Financial Post, and is a technology expert on CTV News Channel. Before BetaKit Erin worked as Director of Content & Communications at Sprouter from its launch in 2009 until its acquisition by Postmedia Network Inc. She was recently named one of Marketing Magazine's 30 Under 30 in 2012.

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