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What it is – How it works
By Dr. David Edward Marcinko; MBA, CMP™
[Publisher-in-Chief]
Covestor, with offices in New York and London, is a web platform started by entrepreneurs Perry Blancher, Richard Tachta and Simon Veingard http://www.covestor.com. Their belief was that salaried mutual fund managers have no monopoly on investment talent and shouldn’t have a lock on the rewards that come with investment success. As financial services, and online netizens, they also believed in democratizing the investment management industry and helping proven self-investors compete with the large institutions. This is known as the power of “crowd-sourcing.” All core philosophies seem to be shared by this ME-P.
What it is
According to their website, Covestor is both a portfolio sharing service for proven self-investors and for those wishing to track them; where data is private, secure and anonymous. With Covestor, one can coat-tail successful investors and follow their real trade activity. Or, have their moves auto-traded for you by Covestor Investment Management. Members can also keep track of their investments andBuild a free track record comparable to professional mutual funds. Members earn fees for their hard work, and Manage a model that their clients can mirror thru shared management fees.
Profit Sharing Investors
Covestor investors sharing portfolios include professionals, full time amateurs and industry specialists. They are a serious bunch with an average reported portfolio size of over $200,000 (excluding cash). Positions are typically held in over 5,000 different equities; are based in 50 countries and span the full range of ages, backgrounds and styles.
Issues
As a doctor-investor, health economist and former certified financial planner, there are at least three issues needed to be raised about this firm.
The first is SEC/NASD/FINRA rules and applicable SRO and state regulations for brokers, RIAs, FAs and related others? The status of suitability versus fiduciary accountability for ERISA regulated plans is also questioned. The third [and least important] is the potential negative impact on traditional financial services “professionals.”
In other words, is this another example of how technology will flatten the “intermediary curve” and reduce the profit of middle sales-men and sales-women? Oh! What about medical specificity for our target audience?
www.CertifiedMedicalPlanner.org
Assessment
I am sure there are other issues as well. Your thoughts and comments on this ME-Pare appreciated; especially from financial services “professionals”, lawyers and FAs, etc, Give em’ a click and tell us what you think http://www.covestor.com?
Conclusion
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
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Filed under: "Ask-an-Advisor", Breaking News, Career Development, CMP Program, Ethics, Information Technology, Investing, Practice Management | Tagged: certified financial planner, CFP, CMP, covestor, Covestor Investment Management, ERISA, FINRA, NASD, Perry Blancher, RIA, Richard Tachta, SEC, Simon Veingard, www.CertifiedMedicalPlanner |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
About the Covestor Threat to FAs
Social Media for Investors and DIY[ers]
http://thebesttradingsystem.com/Home_Page.html
Disintermediate the middle man; yeah! This post reminds me of the one on Michael Burry MD; the hedge fund manager.
https://medicalexecutivepost.com/2010/03/24/video-on-hedge-fund-manager-michael-burry-md/
Many thanks, Dr. Marcinko and the ME-P.
Clayton
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This is an interesting twist on the active management strategy, in particular the role of manager-picking.
Beware of the high costs – both fees and taxes – inherent in most of the Covestor funds. Also, remember that when it comes to manager-picking, those who outperform in a given time period are likely, from a statistical standpoint, to regress to the mean going forward.
Brian J. Knabe MD CMP™
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Covestor
“While the concept of Covestor is interesting, giving trading authority to someone over your portfolio who is only required to be over 18 and meet some short-term portfolio auditing requirements sounds like risky business.
Mirror trading has actually been around in many different forms for quite a while. The advent of the internet has made it profitable for websites like covestor.com to easily monetize the practice.
For the prices charged, a physician investor may be better off hiring a portfolio manager that also regularly meets with the physician, understands the physician’s personal situation and financial goals, and maybe even has a few credentials and experience.”
David K. Luke MIM
Certified Medical Planner™ candidate
http://www.CertifiedMedicalPlanner.org
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More on Covestor,
This is a very interesting investing philosophy, indeed.
The mirroring of successful investing opens a whole new way of finding the right portfolio manager with a good pool of selection to choice from.
I am also impressed by the full transparency and control of their portfolio managers. This website helps small investors easily find successful road models to follow in terms of investing.
Best of all, if I can open up a $100k virtual account for a test drive; what more can I lose?
Ken Yeung MBA CMP™ candidate
http://www.CertifiedMedicalPlanner.org
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