When I first shared the news with Josh Brown about BloombergBlack (behind the scenes) it created a much bigger stir than I ever anticipated, especially inside of the wealth management industry. Josh aptly dubbed Bloomberg’s movement into the online advice space, as Coming to Disrupt the Financial Disruptors.
Investment News, RIA Biz, and a few other outlets of course got all hot and bothered about our lead on this story saying, “This is a big deal.”
CNBC asked: Would it be a Bloomberg-lite type of system and cannabilize their terminal business? The answer is no, it’s not even close.
Investment News warned: Advisors who dismiss this are in trouble. No, they’re not — this isn’t it.
And I personally worried too — wondering if this new service would secretly monitor my soda intake while trading Nikkei futures overnight, or share my portfolio data with its reporters at some point. But I digress…
The point is/was enquiring minds want to know what this self-described, “next generation cloud based web & mobile products for an offering to help consumers in the wealth arena.” is all about. And fortunately kiddies, you need to wait no longer — I got an invite to see the goods — and here’s my takedown:
*Disclosure: I’m currently in discussions with technology partners to create rival products & services (which may or may not happen and/or be better) — given the nature of this endeavor, this review is not nearly as detailed or specific about ways to fix the problems I’ve found, for reasons I imagine you can understand.
What is it Exactly?
BloombergBlack is a fairly basic portfolio reporting system, combined with a risk-profiling portfolio-recommendation-engine, allocation recommendations are based on super basic financial planning assumptions, allowing you to execute trades at the broker where your money is held (by giving you a buy/sell list which you’ll manually input at your custodian), combined with online customer service and, of course, news & articles about the stuff you own.
Sign-up Process // Score 7/10:
The first thing BloombergBlack did right was trickle-in users based on a beta invite system. I love that. Why? 1) It’s a brilliant marketing strategy, creating a bit of buzz and clubby-ness & 2) it’s smart systems/operations management.
Staggering users allows them to develop their site through rapid iteration, watching how early users are engaging the site (or not). The signup process itself was straight-forward asking for the typical information: Name, Address, Email, User, Click to Agree, Credit Card information. The password fulfillment requirement was secure, password123 wasn’t allowed, neither was mrgiggles.
The actual data aggregation sign-up process is SLOW. Very Slow. I have 9 accounts sitting at Schwab under one of my logins and it took almost 5 minutes for the data to be captured. In internet land, that’s an eternity. Not an insurmountable obstacle by any means, but if you have two or three custodians and husband & wife logins I expect this to be at least a 30+ minute process to get all your accounts into the system — Bleh. Bloomberg does, however, use your mobile phone for verification texts, which is a nice security feature — nothing new, but still a nice James Bond feel to it.
They also do a decent job way-finding you through the initial setup & site tour. They do verify your identity to satisfy Know Your Customer banking regulations, so don’t put “Ex-Cog” as your name on the application like I did — you’ll have to fax or email in a copy of your driver’s license.
GOAL!!!! // Score: 4/10
After you do the initial sign up, providing your credit card information and syncing accounts, you set your goals. This should be one of the most robust parts of this service as-is, and it’s just not. It’s a really elementary exercise, too simplistic really to be any sort of real (or even adequate) financial planning tool.
They give you a basic list of a few obvious goals like: education or car or house, retirement, etc. to choose from — then ask for a timeline (five years, five to ten, etc.) and that’s about it.
There’s no consideration given to saving for or funding the goal outside of the portfolio growth itself or how much the goal will actually cost with any sort of advisor-like insight — just simply enter the name of the goal and the timeline. Then they provide you with a Monte Carlo snapshot of what kind of money you’ll have in XX years.
It’s not a total fail, but given their premium to market against other sites which are often free, this seems like a non-starter.
For example, right now I labeled $18k in monies as earmarked to buy a house in 16-25 years. At their projected growth I’ll have about $100k at the end of this timeline; where according to their WealthCheck service I’ll be successful, buying a house — for $100k. Where on earth I’ll be buying this palatial estate is beyond me (Amityville maybe), but according to their goal planner I’m in great shape and On Track.
The WealthCheck service also will monitor your portfolio for necessary changes on an ongoing basis, but the reality is, I don’t see how this isn’t a total GIGO (garbage in/garbage out) type of situation given the elementary nature of this online planning service.
Portfolio Recommendations: Choose Your Own Adventure // Score: 7/10
In this area you can tell Bloomberg is really trying, but the reality is they simply give the user way too much power/input over the process to do any good, and not enough flexibility to be truly powerful.
You complete a risk profile, which is an industry-standard, nothing truly original about their approach here sadly. Then you’re taken to the decision-making process for how you’ll manage your money.
The fund recommendation engine is in plain-english and fairly concise for someone knowledgeable, but also not really curated enough for someone who’s not.
It also makes you choose your religion fairly strictly — passive investing or active, it’s an improvement in passive-only approach over Betterment and Wealthfront, but even here, where active is actually considered a viable option, never the two disciplines shall meet.
The overall recommendations also seem pretty static — for instance, right now my “House goal” money is allocated as 90% stocks / 10% cash — Bloomberg’s service is recommending I place 40% of my money in bonds right now — which in the big picture may be smart — it’s just not exactly my idea of a timely portfolio idea in this environment. Again, I don’t have a problem with these limitations, but the price should reflect those shortcomings. All of these issues really are simply the inherent limitations of an online service using algorithms instead of a practitioner’s common sense.
(pictured below is retirement allocation recommendation)
The actual investment choices you’re provided with seem reasonable (over the long haul) but then you’ll need to manually do the trades at your custodian, much like MarketRiders service… which is a way cheaper, by the way.
You’ll also notice in the picture below, it simply says — sell “Some” of your Large Cap Equity holdings…. for $19k. No, specific recommendations or tax consequences laid out, which is kinda lame. And it tells me to sell Japan — which has been a decent trade this year, and I definitely don’t want to sell it yet.
Position Analytics // Score 2/10:
Bloomberg’s one-sheet on Apple:
A free account with Morningstar.com and combining the databases of Yahoo Finance & Google Finance would provide WAY more information than this service. I see no compelling proprietary database magic in effect with this product. And yet another reason I don’t see how Bloomberg arrives at their pricing structure. There also doesn’t seem to be any sort of Holy Crap monitoring alert system– like this stock just dropped 10% today, or anything like that, which Wikinvest offers.
Performance Reporting & Analytics // Score 5/10:
Benchmarking is severely lacking (see below) — although a “custom benchmark” is created when you select a goal for your money (and not until then); their custom benchmark is the 60/40 recommendation they made for my “house money” — again, lacking.
So, in yet another category — Performance Reporting — this service isn’t really powerful enough to command the pricing premium they’re asking for.
The risk analytics are cool (and arguably a feature they copied from another service I know about), but those analytics are also limited to only a portfolio-wide snapshot — so still not very powerful.
For you data purists, returns are presented as time-weighted.
There is no-intra day pricing, which is expensive to provide, but also makes this much less of a multiple-times-a-day check-in type of service, which you’d think you’d want for $100 a month.
Bloomberg does not calculate returns or portfolio metrics on the actual historical data of your accounts, they only provide a snapshot going forward. It’s an easier/cheaper process for them, “ensuring data integrity” — but it also makes the performance reporting aspect of this platform much less attractive to me, as a tool to see how I’ve been doing with my advisor or on my own. Because it only looks at your portfolio on an ongoing basis, you also cannot calculate fairly standard portfolio metrics based on your past data, things as simple as Alpha or a Sharpe Ratio elude this service.
Aesthetics // Score: 8/10
Bloomberg did a great job on the look and feel of everything, but there’s almost too much information buried in the site (lots of places to click), and like I said before the information itself is isn’t particularly in-depth, and what is provided is fairly ubiquitous or more useful in other places for free. Navigation is clunky at times because you can get so lost on a tangent of information overload. I found myself clicking on Home a lot, to just simply start over on my quest of whatever I was looking for.
The backtesting service (shown below) isn’t based on actual results, it’s solely based on your current allocation…
Bloomberg-Lite? Score: 0/10
This is not a Bloomberg terminal, it’s not even close. There are no ideation/research tools really to speak of, no analytics except basic Morningstar-like reports on the investments you own and a basic search functionality of other investments. No calendar of events even. Maybe more power is coming sometime soon, but as it is — it feels like the D team was on this project.
Customer Service Score: 6/10
They have a chat function with “Your Team” — it’s a nice feature, their staff responses were timely but not always right. The answer I got about how to create a new strategy felt like it was typed up from pg. 56 of the service manual — and it was incorrect. I imagine this will sort itself out eventually. My team is manned with ex-Fidelity/Schwab/TD advisors, which I imagine are congenial, experienced & qualified enough, and fairly inexpensive to hire. One neat feature is, every email and chat session I have with them is organized chronologically on the right-hand side of the screen. This is an obvious Wealth Management 2.0 feature in my mind, but this is the only service I’ve seen doing it thus far.
Content // Score: 7/10
It’s here that Bloomberg got pretty imaginative, it’s just too bad it’s still too noisy and watered-down, like most of the rest of the site. For each asset class in your portfolio you can drill down into content. Let’s say you want to explore news affecting Large US Cap stocks (or cash) — you’ll be taken to a homepage about such things, complete with an overview of Bloomberg’s take on the asset class, and relevant Bloomberg articles.
It’s really a beautiful layout, but it is also a ton of information to cull through. And because this information is only coming really from one source, Bloomberg, it’s not really enough to live and die by when it comes to forming an opinion about anything. Google Finance aggregating news on my positions is uglier, but way more powerful. So, again I don’t see it being worth the premium vs. just going to Bloomberg.com or using Google Finance or Yahoo.
Social Media // Score 0/10:
There’s absolutely nothing social about this product or offering.
Major Egg-On-Your-Twitter Fail…
Personally, after a couple of days with it I feel like it’s too much information and labor for someone who doesn’t know what they’re doing, and not enough real power for someone who does. They could cut the price in half and that would be a decent place to start, but probably much lower still would be more realistic based on younger hungrier companies that are coming to disrupt the disrupting disruptors.
It’s not a surprising first effort, but it is surprising that they’d missed so much with the trail so well-blazed thus far, and with such a robust product offering sitting inside their professional terminals. It seems like they designed by committee, and as a result I think they missed what users are really looking for by trying to do too much at once and not focusing enough; there’s nothing particularly special about anything they’re offering in this service. It’s unfortunately not even a sum of its parts value proposition as-is. And, It is definitely not the first of its kind type of service, as advertised; it’s more like the sixth me-too effort on the street right now — and most of the other simliar services are free or significantly less.
I’m really surprised there wasn’t more focus and effort behind this effort. But then again, does Bloomberg really want to piss off Wall Street firms anymore than they have recently? It’s a shame overall, but I guess we’ll see… I assume they’re investing for the long run like they’re recommending we do. As it is, I’m frankly imagining that not many of the executives of this project actually use this service as their go-to source right now.
If you get invited like I did & decide to sign up for this service for the free 60 days, I wouldn’t blame you — after that, caveat investor.
Score: 42/100 // Works well with others, lacks of attention to detail, needs improvement. Schedule review in six months.