Run … Where? Farmhouse?
It certainly is going to be interesting to see what happens both on the asset mgt side and on the advisory side. This is likely to lead to more job losses and more consolidation within the industry.
asset management side scares me the most. the buzz word is high fees.
these robot advisors are here to stay at the expenses of some jobs
The robo-advisors don’t concern me too much (on the retail side). Discount brokerages have been around a long time and the issue with fees I think is in part due to new regulatory reforms focusing on more enhanced fee transparency and a hacksaw stock market lately.
Crap! You mean we have to start adding value now???
I think it’ll affect the MFDA and retail channel the most. Your Investor’s Group advisor churning out 100k balanced portfolios with a 7yr deferred sales charge will be most affected. Your HNW clients with assets in multiple tax jurisdictions won’t be speaking to a robot anytime soon
^ I agree. The MFDA firm in particular. Many of the smaller dealers simply don’t have the financial resources to support the increasing tech related back office costs to keep up with all the new compliance rules and regulations being implemented.
Agree with bchad. Add value or exit the industry. Concern over this sort of thing reminds me of people in certain industries blaming outside parties for loss of jobs. No, the job loss is there because society has found a more efficient way of producing the same thing or societal demands/tastes have changed (*ahem* coal *cough*). If you are impacted, have a long-term Plan B in your back pocket. Start now. Programmers will be in demand…
+1, and programmers with finance background will be more in demand
soome issues with p2p lending are coming up, wonder if its a temporay hiccup
ohrly?
+1
was that sarcasm?
if not, im already seeing demand for programmers with background in finance increase.
instead of hiring a preogrammer and a finance person you can have 1 person fill both positions, and the pay is also nice. plus the flexibility of the person is a huge asset. if the business is slow the person can always assist with some of the programming stuff but someone who doesnt have that background cant really do much else to help.
I think it is temporary in the sense that it will pass, but it is not temporary in the sense that it is a real flaw in the models. I find ONDK and the non-public real estate guys scary and potentially destablizing for the market if they get too big.
I’ve long thought people like LC should be a bank (or partner with banks) and you are seeing the fintech industry (before this LC stuff) become more humble in their approach about working with or becoming banks, except for the SoFi guy, which still continues to sound ridiculous.
I’ve often wondered at what valuation would I want to buy LC at and started to do the work heading into 1Q results, since sentiment was so bad among the hedge funds and valuation seemed to be approaching reasonable. Now that the fireworks happened, I’m even more interested because I believe the majority of people do not understand the business model and are overly pessissmistic. But ultimately I think LC’s current model deserves a low multiple, similiar to a mortgage originator, due to how levered the income statement is and how volatile those earnings can be. The model doesn’t have to be set up this way, but it would require having more tight knit relationship with a bank. I’m hoping management will understand this eventually (LC would only speak to tech SS analysts because they wanted a tech multiple lol)
I’m currently adding “alpha” to my LC portfolio from the paniced sellers in the secondary market and getting some A+ credit at mid-teens yields. The net returns on these loans, if the platform doesn’t blow up into a million pieces, should be extremely handsome and should hopefully keep my portfolio earning higher returns with lower risk than the peer portfolios. Recently I was worrying as I watched my alpha fade, as my previous opportunistic increases in yields are fading. . . but that Frenchie sure knows how to give a gift that keeps compounding.
A+ credit at midteens is amazing! These must be a reason that the spreads blew out.
If i’m not mistaken, aren’t loan losses increasing at a faster rate than what was expected for their credit rating? Thus the market lost faith in the quality of loans?
how are any of these robo investment companies going to deal with the crybabies who complain about losing a little bit of money in their 10,000 dollar IRA accounts and threaten to sue?
It’s called “fine print”
I know this isn’t in the investing forum, but how do you feel about the LC stock?
I’m just learning about robo advisors, they sound really interesting!