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The Start-Up That Thinks Quality Investment Advice Shouldn’t Just Be For Rich People

The majority of the financial services industry pays little attention to young people.

For example, unless you’re sitting on a seven-figure trust fund, the best financial advisors probably won’t return your calls. (And you should be wary of those who do, especially if they’re hawking life insurance policies to you when you’re 24, single, and childless). And if you do find a trusted financial advisor, you may not be able to afford regular planning sessions.

But just because you don’t have millions in the bank (at least not yet) doesn’t mean you don’t deserve investment advice you can trust.

Enter Bo Lu and his company FutureAdvisor.

Bo and his team realize that not every investor is best served by exclusive—and expensive—financial advisors. That’s why they’ve launched FutureAdvisor, a new Web application that provides automated portfolio analysis and diversification recommendations. Essentially, it’s a virtual investment advisor.

Today, I bring you the FutureAdvisor story for two reasons. For one, I think FutureAdvisor is a promising product—especially if you agree with my simple, low-cost investing philosophy. But this post is as much about entrepreneurship as it is investing, and a good start-up story should inspire anybody, whether you’re trying to make it on your own, too, or just earn a few extra bucks to get on top of your finances.

*To clarify something that came up in the comments, I am NOT part of FutureAdvisor’s affiliate program nor do I have any sort of financial relationship with them…Bo approached me through a fellow blogger and I liked his ideas and company, hence the post.

Here’s Bo:

Seeing The Need

Long before FutureAdvisor, my cofounder Jon and I were rookie software engineers at Microsoft. Like many of our peers, we were geeks in our early 20s who never before had much money (nor cared much for it), and suddenly started earning almost six figures.

As you might expect, some predictable things happened: friends bought BMWs, posh waterfront apartments downtown, and all the plasma TVs and video games you could imagine.

But something else happened, too: some of us started asking each other: “I want to start saving some of this cash to maybe buy a house, and even retire early someday…but how? Where do we start?” And eventually, some of my friends started complaining to me that it wasn’t easy to figure out how to start or manage 401(k)s.

Becoming Reluctant Advisors To Our Friends

Some of our friends went to find financial advisors, but found two problems.

One, many advisors have asset-minimums, meaning that you needed usually $250,000 or more in assets before they would take you as a client. We in our early twenties didn’t have anywhere near that much.

Second, the few advisors who would consider working with us wanted to charge 1% of our total portfolio value, which was a ton of money, and would quickly become thousands of dollars a year as we got older.

Meanwhile, I had been investing since I opened an IRA with money from my first summer job at the age of 16. I had read up on the research behind index investing, and why low-fee, broadly diversified mutual funds and ETFs are the absolute best way to invest.

My friend Simon, who is a CFA and had worked for Putnam Investments and the Bank of England, ran his investments the same way. We helped our friends over numerous dinners, teaching the underlying tenants of passive investing and proper asset allocation. Slowly, one-by-one, we helped our friends clean up their 401(k)s and create broader portfolios.

It took forever, but along the way we quickly realized that while everyone’s financial situation was different, much of the underlying tenants of our investing advice were broadly applicable.

The Idea

We realized that the underlying math to pick the best funds for a particular purpose (such as finding the lowest-cost way to broadly index domestic blue-chip stocks), and the algorithms to tailor a portfolio to an individual’s financial situation (such as a 27-year old who wants to retire early at 55), was something that computers were well-poised to handle.

I talked this over with my good friend Jon, an experienced investor himself and a graduate of MIT’s Computer Science program, and we decided to build ourselves a prototype to see if our hunch proved out. We applied to the start-up incubator Y Combinator, a California boot camp for new companies run by experienced entrepreneurs.

We consider ourselves exceptionally fortunate to have spent the summer working with some of the best start-up advisors and fellow founders in the world. Soon afterwards, we built a team of engineers and finance professionals and began our journey in the historic Pioneer Square district of Seattle.

FutureAdvisor’s Mission and Methodology

FutureAdvisor is a registered investment advisor now serving thousands of clients with unbiased, personalized investment advice delivered via the web application FutureAdvisor.com.

We implement well-known best practices of personal investing and apply it via algorithms to address the unique financial situations of each of our clients. We believe that you shouldn’t pay mutual fund managers thousands of dollars in fees to pick stocks for you, because research shows that stock picking doesn’t work for the long-term. We believe in asset allocations that match your time horizon and risk tolerance, implemented in low-cost, passively-managed mutual funds and ETFs.

(Here’s a screen shot:)

Throughout the application, whenever we give advice, that advice is backed by research and clearly-written explanations.

We believe FutureAdvisor is especially needed now, as companies completely move from pensions (defined benefit plans) that guaranteed employees a certain amount per month in retirement, to 401(k) and similar plans (defined contribution plans) under which your financial future is in your own hands.

We also think that professional quality investment advice should be personalized, research-driven, and available to clients anytime…even in your pajamas. Most importantly, we believe that advisory services should be accessible regardless of how much money you have now or will have invested someday.

This is our story; we hope join us on our mission to democratize unbiased and high-quality financial advice and make it affordable to all.

Learn More: Give FutureAdvisor a free test drive for 14 days.

*Note on the free trial. The FutureAdvisor site currently requires a credit card to enroll in the free trial, but Bo has offered to waive that requirement for Money Under 30 readers if you email him at bo@futureadvisor.com.


Published or updated on July 13, 2011

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  1. Slinky says:

    Sounds interesting, but I get pretty paranoid whenever something uses Yodlee. The thing that annoys me is that mint and futureadvisor go on about not storing my credentials, but doesn’t Yodlee? I’ve never seen anything that says so one way or another, but it certainly seems that way. I don’t care how secure it is, I’m never knowingly going to store all my financial credentials on one single server that I have no control over.

  2. Fred says:

    This sounds awesome. I have a 401k via my employer and my own personal TD Ameritrade trading account. I believe my 401k is held at hewitt.com. I normally acces it via intranet so im not sure. Does this service have access to these companies/sites? Or will I have to manually enter all financial data?

    • Bo Lu says:

      Hi Fred – we are in the process of supporting more and more financial institutions, though unfortunately both TD Ameritrade and Hewitt are on the “still working on it” list. I can send you a quick email when they’re supported, if you’d like.

      In the meantime, we do have a feature that allows you to manually enter your data if you’d like.

      Thanks, -Bo

  3. AP says:

    There are a lot of complaints on here but I think this sounds like a product that we as a community had specifically asked for in an earlier post. Investment advice should not be limited to sitting down at a desk with an “advisor” who doesn’t have the time of day for you and your $5,000. My only complaint is that $180/year is still pretty high and I wouldn’t recommend it to anyone still working on debt. I will check it out when I have some time.

    • Bo Lu says:

      Thanks for the words of encouragement. The feedback on pricing is great, and it helps us gauge where do invest or time and resources.

      The community has definitely been clear in its feedback that while a product like this may be useful the pricing is still higher than some would like. We’ll continue to work on this.

      Thanks again. -Bo

  4. MD Sam says:

    So is this part of the site’s $120/referral affiliate program? Nothing wrong with that and the site looks lovely imo… but if you are aiming for “honest” financial advice David, it’d be good to clearly state what is a paid referral and what is an article on your blog.

    • Hi MD Sam: No I am not a part of the affiliate program. Although I do work with affiliates on occasion and try to make that clear when it’s the case, this is not one of them. I ran this post because Bo approached me through a fellow blogger and I thought the company is a cool idea readers would enjoy knowing about.

  5. Ryan says:

    Looks like you need to enter credit card information even to do the trial. Might want change what you said on the hyperlink.

    • Bo Lu says:

      Ryan – this is Bo Lu, CEO of FutureAdvisor, I wanted to respond that this isn’t David’s fault. This is a change we made a couple of days ago and I’m not sure we communicated it as well as we should have.

      That said, we will honor the promise. Send me your email address (and this is open to anyone reading this article) and we’ll give you a 14-day trial without a credit card being needed.

  6. Rob says:

    Yeah… I’m not convinced their (for pay) tools will save me any real fees. Sounds just like an extra middle man telling me to invest in a diversified set of ETFs. Maybe they just failed to hook me in their “about us”, but I’ll pass.

    On a related note, I’m dropping this blog from my google reader. Its really just turned into a marketing platform for start up financial sites. Though, in retrospect, I turned 30 last year so maybe this move is 8 months over due…

    • David Weliver says:

      Sorry to see you go, Rob. There have been a few posts on new products lately during the quieter summer months, but only three of the last 30 have been dedicated to start-ups/companies. Also, I turned 30 last year, too…and although I can’t change the domain name, I plan to do my best to make this blog relevant to 20somethings and older generations alike. If you have other feedback please hit me up at david at moneyunder30.com.

  7. D Wolfe says:

    I was going to try it, but the website says $18/month or $45/year*. The asterisk points to a footnote that say the yearly subsription is billed quarterly. Looks like the same financial shenanigans to me…just say it costs $180/year. Don’t try to trick people.

    • Bo Lu says:

      D Wolfe – this is Bo from FutureAdvisor. My apologies, we’ll change this right back. I was not aware that one of our designers had changed this to say $45/year. It should say $180/year, billed quarterly because of regulations in the industry.

    • Bo Lu says:

      D Wolfe – this is Bo from FutureAdvisor again. We just fixed it; it should say $180/year now for the annual plan.

      Thanks again for the feedback. We know we aren’t always perfect, but we try to at least fix things quickly.

      Like I said on the other comment – we’ll honor the “No Credit Card Required” trial for everyone from MoneyUnder30. Just email me the email address you signed up with and we’ll make it happen. Thanks, -Bo

  8. It sounds interesting. I like the concept of customized advice as everybody has different long term goals.

    I might have to try the 14-day test drive just to take a look at the features.

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