A growing number of consumers are opting for pre-packaged, low-cost portfolio managers like Market Riders and Folio Investing, according to a recent Bloomberg article. Portfolio-to-go companies can, at least nominally, provide many of the same services as full-service brokerage firms, since the companies are registered as either investment advisors or broker-dealers. And minimal overhead and services allow them to offer those services without the “high” price tag at brick-and-mortar institutions.
Portfolios-to-go have exploded in popularity recently, bringing in over $3 billion in assets over the past three years. In a world where post-recession fears have almost everyone bargain shopping, are online portfolios-to-go the Walmart of investing, set to dominate the market and phase out traditional wealth managers? Or are these pre-packaged portfolios an opportunity in disguise?
Defining a ‘Portfolio-to-Go’
Companies offering pre-packaged investment portfolios claim to help individual investors diversify their portfolios without incurring high costs. Certain sites even allow investments of amounts as low as $10,000 and allocation of investments among one or more registered investment advisors who have a $1 million+ account minimum. Many portfolio-to-go sites provide regular e-mails that recommend rebalancing strategies.
As an example, Market Riders claims to help individual investors “build and manage a globally diversified low-cost retirement portfolio.” Steve Wallman, the CEO of Folio Investing, argues that “Individual investors have started to realize they can actually do some things as self-directed investors reasonably well, if they’re given a platform that allows them to invest more intelligently.”
Folio Investing offers a wide range of over 100 ready-to-go investment portfolios of individual stocks, mutual funds and exchange trade funds (ETFs) that consumers can buy, sell and customize.
The Downsides of Portfolios-to-Go
There are some notable downsides to portfolios-to-go. First, the sites are popping up on a daily basis. Where most brick-and-mortar institutions