Can Silicon Valley rewire the RIA business? eBay investors think KaChing is the answer
VC-backed start-up leverages the web to offer complete transparency; firm also has a back-end platform it's offering RIAs for portfolio management
James Levy
In June I blogged on SeekingAlpha, ̈Will Open Source Asset Management Disrupt the Mutual Fund Industry ̈. The blog examines the potential of KaChing and Covestor from the point of view of a 20 year veteran RIA. The link is below:
http://seekingalpha.com/instablog/202397-james-levy/76488-will-open-source-asset-management-disrupt-the-mutual-fund-industry
Elizabeth MacBride
James: thanks for adding the link to your blog. It’s interesting to see KaChing as part of a general movement toward open source everything.
Randy
Uggg. I’m the former CEO of a company that had the same business model TEN YEARS AGO, and we raised 10s of millions in VC backing from some of the largest names on the west coast. And we were competing against other more “established” players. In the first dot-com boom and bust, there were probably a dozen companies all pursuing some spin on this model – empowering largely self-directed investors to access the ranked/scored securities selections of others. Some worked through advisors, some tried to disintermediate those advisors, some tried to use the information to run one or more funds, some tried to turn amateur investors into quasi-professionals, some charged (with no success) while others gave it all away (with no revenue). All struggled to make a penny and find a business model that was relevant and generated any appreciable revenue. And they’re all gone.
And now Covestor and KaChing are back, “inventing” something new that’s about as new as soap, and both also failing to move the needle with investors, managers, or advisors. The industry dynamics that made that the case ten years ago have not changed now, and both Covestor and Kaching will disappear soon enough for reasons I won’t bother to enumerate here because it’s not worth the energy. I actually wish them luck and find intellectual merit in the effort and ideals behind them both. The asset management industry is ripe for innovation, but this isn’t the form of innovation needed or that will result in a successful or valuable business.
