WSJ reporter Murray Coleman writes about how advisers and planners are using online-advisory services like Covestor to reach more investors. From the article:
Since starting to charge for its asset-management services in 2010, Covestor says about 80 of its 139 portfolios are managed by registered investment advisers. The others are hedge-fund managers and professional traders. All are screened by Covestor, says Asheesh Advani, the firm’s chief executive. On the company’s board is James Cornell, a former president of Fidelity’s private wealth-management unit and John Sinclair, ex-research director at Fidelity.
Mr. Advani says Covestor tracks hundreds of different portfolio managers and invites the top performers to be a part of its online marketplace. It splits fees with managers, who charge anywhere from 0.25% to 2% a year to run their portfolios.
“People appreciate the fact that we’ve learned to work alongside online service providers to create a better investing experience,” he says.
Mr. DeShurko, who says he has been in the business for 26 years and has watched closely the advance by online advisers, is partnering with Covestor Ltd. The Boston-based firm offers online portfolios run by professional money managers that individual investors can follow and invest alongside with.
It’s a service that allows advisers with strong track records of running private accounts to bring their portfolio strategies to a larger audience, Mr. DeShurko says. He has blended a few of his existing account strategies to develop portfolios at Covestor that require minimum investments of between $10,000 and $20,000 each.
“Instead of turning away business from people with smaller accounts, we can put them into our Covestor managed accounts,” he says.
Barry Randall, founder and chief investment officer of Crabtree Asset Management, said he decided to use Covestor as his main avenue to market a technology stock-focused investment strategy. Randall manages the Crabtree Technology portfolio on Covestor. Randall told the WSJ:
“I had experience managing portfolios, but no real background in marketing,” Mr. Randall says. “So this is a perfect match. It lets me focus on what I do best.”