Ari Levy of Bloomberg wrote a piece entitled "Why you should consider taking financial advice from a computer" in which he profiled Jemstep, highlighting how Jemstep removes the bias typically associated with incentive-driven advice given by traditional brokers. Thanks to Ari for covering us and drawing attention to this nascent space.
I'd like to pick up on one point that struck me from the article. From our perspective, the objectivity of Jemstep's algorithmic-driven recommendations is a key factor, but is one of several that differentiates our service from traditional investment advice. However, the focus on objectivity as a major plus by writers and, perhaps more importantly, our users, has served to illuminate that the perception of product bias amongst brokers strongly persists. In fact, according to a Harris poll recently commissioned by Jemstep, 56% of U.S. adults who have a retirement portfolio do not think investment advisors work solely in their client’s best interest.
Even with the Dow scaling to all time highs, the fall-out from 2008/2009 is still being felt by many and the distrust of Wall Street that was engendered during that period will not be quickly erased. And with the existing incentive structures in place, conflicts of interest will be an evergreen issue. In this environment, and with consumers becoming ever more knowledgeable and self-directed when it comes to investment decisions, algorithmic-driven portfolio management services like Jemstep find themselves in an interesting space.