SmartLeaf is betting that individual investors and brokerages would jump at 24/7 access to portfolio management adviceparticularly when it comes to keeping a bit more of their money from Uncle Sam. As a result, SmartLeaf Advisor (www.smartleaf.com), which is preparing for launch this fall, was created to give professional-strength advice on making buying and selling decisions. Unique to the product is that it has built-in tools to assess the affect of tax, risk and expense on holdings.The professional money manager might be using several applications and juggling thousands of accounts, points out SmartLeaf president and co-founder Jerry Michael. The problem here, says Michael, is that "there is rarely time to be sure that every decision can be double-checked for tax sensitivity. It's just too time consuming."
Too often, says Michael, the manager simply questions clients about general financial goals, and "investors are almost sorted into separate bins, in a manner of speakingthey might end up with similar portfolios. Smart Leaf Advisor can take that same customer information and customize recommendations for each individual client account."
In addition to buy or sell recommendations, SmartLeaf Advisor takes into account costs that can slowly chip away at a portfolio's value. Using analytical tools, the user can take a look at the consequences of certain buy or sell transactions in relation to the rest of the portfoliowhether or not the portfolio is overweighted in tech stocks, for example. Or it can give advice on whether a block of stock should be sold at a loss to enjoy the tax loss benefit, how much the client is losing to taxes on capital gains, or whether they are spending too much in expenses on mutual funds.
The premise for professionals, for instance a brokerage house, would be to be able to move from a transaction focus to a financial planning focus, to establish and maintain a relationship with their customers, says Shaw Lively, analyst, IDC Research. For the individual investor, "the service would do a lot of things for you that an experienced broker advisor would do." Lively calls the service "a nice complement to the movement toward self-directed investing," saying SmartLeaf could well find a niche among investors looking for more sophisticated analytical tools and advisory services.
SmartLeaf Advisor users will be charged a flat fee of $20 a month for individual usage. Fees for professional use have not been hammered out yet.