nvestors are increasingly starting to realize the damage this does to them. In 2009, over $60 billion flowed into equity Exchange Traded Funds (ETFs), according to data from the Investment Company Institute. There are now almost a trillion dollars in ETFs. Most of this money is going into low cost index funds. The problem is that even with better tools, most individuals are not equipped to completely self-manage their money effectively.
FolioBoost, LLC, based in San Francisco, recently began offering a new kind of investment advisory service to help individuals invest better. It exclusively provides low cost portfolio "Reviews", correcting mistakes and highlighting opportunities. This directly challenges existing service models and will contribute to the evolution away from stock brokers and managed mutual fund accounts.
"Currently, the vast majority of investment advice comes from managers requiring a recurring percentage of assets, brokers who have conflicting interests, or financial planners with a much broader focus," said Craig Birk, Founder of FolioBoost who formerly worked for over ten years at a major investrment management company. "For some, these approaches are appropriate. However, there is a void for the millions of mass affluent and high net worth investors who don't want an expensive long term relationship, but would still benefit from high quality, objective help. Building an efficient portfolio is not difficult or complex, but almost every one we see can be improved."
Some of the major discount brokers, realizing commission based revenue is declining, have already begun expanding their advisory efforts and even began offering their own ETFs. However, their models remain burdened with the conflicts of their existing businesses. Netflix was able to revolutionize how we watch movies because they were independent and had nothing to lose. It is likely to be the independent companies who lead the way in changing how individuals get investment advice.
FolioBoost believes it is one of them. "For the price of a few nice dinners, we show people the exact steps they can take in their investment portfolios to get better results. The impact on long term wealth can be very significant. And we offer a money-back satisfaction guarantee, something we have never seen before in the industry. So far the response has been very positive for both those who self-manage and those who have an advisor but want a second opinion."
The company's website, http://www.folioboost.com, offers a free content designed to help individuals invest and plan for retirement more effectively. This includes a direct comparison and analysis of ETFs in major market categories.
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