[tjsix]

Having spent 6 years as a fully licensed Financial/Investment advisor as firms both large and small (independent), I can say that while I think this is a cool project, marketing it towards investment advisors likely isn't going to get much traction. This is because 99% of advisors (in the US) already have access to tools like this, except much more in depth and integrated with their trading systems. It's in every broker-dealer's (the companies whose investment products the advisors are selling) best interest to provide as much sales support and tooling as possible to their registered reps, so many of them provide things like this free of charge.

Aside from that, unless this has been vetted and audited by FINRA or a registered CRCP, the chances that any compliance officer (which every RIA is required to have), are virtually non-existent. I haven't dug into the platform to see what type of guidance you're offering/presenting, but you need to be really careful about what advice you give or state that you give. As in the US, anything even remotely related to any investment vehicle is highly regulated and providing guidance and advice without the required registrations, licenses and oversight can and will land you in very hot water, very fast.

All that said, I think with the right approach, something like this could be great for personal use as long as it integrated with multiple investment companies and could track and recommend based on all of them.

[geno149]

Are you saying all software used by RIAs has do be vetted and audited by FINRA or a CRCP? I don't believe this to be true.

We don't offer advice, only code.

Could you point me to a few custodians or broker/dealers that provide portfolio management & rebalancing software for free? We haven't found any, but def don't have the same experience as you, so maybe we're just missing something.

[tjsix]

No, I'm not saying software used by advisors HAS to be vetted. I'm saying that I don't know a single compliance officer that would green light a piece of software that provides any type of financial analysis, or recommendations to be used by their company as a whole without it being audited. Due to regulations, the risk is just too high. Now whether the individual advisors use it on their own is a different story. But the main issue there is that there are already an obnoxious number of channels, apps, systems that advisors have to use, the last thing most want to do is add another system into the mix, unless that system greatly simplifies things and integrates into their existing systems somehow, it probably isn't going to happen.

You're not offering advice, but you're offering the code which generates recommendations on position allocations. Any recommendation is considered 'advice' by FINRA and has to follow strict suitability requirements. Whether or not this would require any registration, licensing, etc on your part I have no idea, but it's definitely something I'd check into just to be safe. In general as long as you're not charging in some way for said advice there's no FINRA requirements, BUT that doesn't mean there wouldn't be any liability.

Every broker/dealer has their own management software/platform for client accounts, some more comprehensive than others. Though I don't know any of them that allow use by the general public, you have be be a registered rep of their firm to use them. The reason you don't see them publicly available is because of regulatory requirements regarding suitability for recommendations. Though companies like Fidelity and Schwab have some pretty in-depth tools for account management on their sites.

[geno149]

I see what you're saying. Agreed, there are barriers to entry and the market is competitive.

I think one place we haven't been clear yet is what wealthbot.io does. He doesn't actually generate recommendations on position allocations. He is a platform for advisors to set up their own risk questionnaire and tie that risk questionnaire to a portfolio of the advisors creation.

Questionnaire shows risk rating = 20? Assign portfolio with risk rating = 20

It's up to the advisor to create a risk profile questionnaire and the portfolios.

Otherwise, I think we're on the same page. This is a tough regulatory market and there are a lot of (confusing) options out there for advisors.

[vladko]

just to add a little... in a grand scheme of things wealthbot.io is not very different from excel. (except we do a few more things, which relate to an RIA's daily workflow).

at the end of the day we will generate a trade file (or signal) but that's it, it's up to RIA to ensure that final decision is correct. i would say that we encourage people to look at the rebalancer logic, adjust/modify and be aware of the flow in the system.

plus there's is a portfolio accounting system which ensures accuracy in all transactions performed by the custodian.

it's exactly the opposite of what is going on in fintech world. we offer complete transparency... and although you could think of our rebalancer as an "advice giving" tool, in reality it simply calculates and adjusts out of balance holdings. the final financial advice is on the RIA, as it is today. we simply give them tools, which they don't have today to manage their clients/portfolios free of charge (open source).

if an RIA only wants to use an on-boarding portion of the product and do their rebalancing the way they like to do it, that's completely up to the end-user.

[vladko]

you have some good points, that are definitely important.

as far as technology we do not offer any investment advice .. we offer a platform for wealth management. RIA's a primary target audience, but the core logic can be used in other implementations.

you are right that before going to production the system needs to be verified by a 3rd party in order to ensure that it measures up security-wise.. but this is no different than having a similar audit done for any ERP, (PCI compliance for ACH/ shopping carts, or any other software you can think that deals with financial data...)