A new online service touts itself as a social network for financially minded individuals. WalletHub, an offshoot of CardHub, which is an online store for credit and gift cards, launched the new service on Monday.
The site was in beta testing for a little over a year before its launch, founder Odysseas Papadimitriou told ThinkAdvisor on Tuesday.
“We identified a big vacuum in the market where there are no reviews for financial advisors online,” he said. “You can find a million reviews for the latest iPhone, but for the person who handles your retirement, you cannot find a single review.”
The site lists about a quarter of a million financial advisors and firms, according to Papadimitriou. The list is compiled through publicly available information.
Users can also compare rates on financial products like credit cards or loans, and can rate financial institutions. However, consumers can also rate and review individual advisors — even though the advisors themselves can’t participate on WalletHub.
“Unfortunately, the SEC has, according to some legal experts, overreached when it comes to how they have interpreted that law so they consider reviews testimonials as well,” Papadimitriou said. “That’s a problem in terms of advisors not being able to actively participate on the site, at least the ones that are regulated by the SEC. We are aware of this issue; however, we feel that it’s a higher priority to bring transparency to this market.”
Papadimitriou recommended that advisors featured on WalletHub who are concerned about running afoul of the SEC’s rules on using testimonials “consult with their compliance department to figure out whether they can play an active role or not. There are some that have taken the viewpoint that they can as long as there are no reviews, and if reviews do show up then maybe they will stop participating. Unfortunately, it would impact our credibility if we started removing reviews that consumers have written.”
He added, “We make an analogy that we are the Yelp of personal finance. We have all banks, all insurance companies, a quarter of a million of financial advisors and their firms and adding more as we speak. The vetting process will happen from the marketplace.”