Tom White used to be a human financial advisor. Now he runs a fully automated virtual advisor called iQuantifi, and he’s embraced his new role. “We consider ourselves to be the only true robo advisor. We’re not afraid of that word because we’re here to help,” he said earlier this autumn during his allotted seven-minute presentation at Finovate, a conference in New York City showcasing the future of financial and banking technology.
Robo advisors are a growing breed of low-cost, online-based start-ups providing financial advice and investment tools aimed mainly at mass affluent investors. Some people believe they could put a big hurt on the traditional advisory profession, but White says iQuantifi exists to serve a niche most advisors ignore. “We’re targeting young families and millennials who advisors aren’t targeting because they’re not profitable,” said White, 43, in a sit-down chat after his presentation.
White previously founded and sold two RIA firms in the Nashville, Tenn., area. After he sold the second company in February 2013, he stuck around for a year during the transition before he bid adieu to 18 years as a client-facing advisor. He said he had been working on the idea that would eventually become iQuantifi since 2006. The site had its public beta launch this past March and officially launched in September. The Franklin, Tenn.-based company was co-founded by White’s wife, Karen, who serves as chief product officer. The small staff includes a three-member tech-development team.
Users of iQuantifi provide information about their finances and goals, and their particular situation is laid out on a time line showing when their goals could be accomplished––whether it’s buying a car or a house, saving for a child’s education or for retirement, or whatever else is on their list.
Regarding retirement, for example, iQuantifi’s software can provide detailed advice on how much a person needs to save for retirement and in what types of investment accounts. iQuantifi’s proprietary investment advisory algorithms, which White said he developed, take into account a user’s goals, time frame and investment experience before making investment recommendations. iQuantifi doesn’t custody any assets; rather, its MO is to help people allocate their resources to meet their specific goals.
The site enables users to update their plans as changes occur in their lives, and can show comparisons of different scenarios to illustrate how a change in one goal can impact the funding of other goals.
“iQuantifi deals essentially with level one financial planning,” White said. “It’s not for someone worth $2 million to $3 million, regardless of their age. That’s why I don’t see it as a competitor [to traditional financial advisors].”
Users of the site pay $9.95 a month or $89 for an annual subscription. White said iQuantifi attracted several thousand users in the beta stage. The company also has a B2B platform aimed at working with various institutional entities, such as 401(k) plan providers. “Our engine can take into account which funds are in that plan and can recommend a proper asset allocation to plan participants,” he said.
Being completely virtual with no human advisor is key to iQuantifi’s business plan. “Otherwise, it’s not scalable,” White said. "Now that we have opened up our technology to license to institutions, we aim for profitability in the next 12 to 18 months."
He noted it cost more than $800,000 to develop iQuantifi's algorithm and to build the platform, which includes the filing of 11 patents. The venture had been self-funded until last autumn, when White started getting money from angel investors.
iQuantifi seeks to cover both ends of the robo-advisor spectrum. “There’s a gulf between robo-advisors that do a great job with investments and those that do basic financial planning or budgeting,” said Grant Easterbrook, an analyst at New York City-based research company Corporate Insight. “iQuantifi is relatively unique by focusing on financial planning while also providing specific investment recommendations.”