Product Line or Service

On- or off-line, financial advisors and their advice are never measured. Whether you use a professional at Merrill Lynch or subscribe to one of the many online financial newsletters, performance metrics are unavailable. Individual investors grumble loudly over this flaw, yet little has been done. Investors want to know exactly how their advisors have performed historically. JoeAdvisor.com is creating the first unbiased, measured marketplace for financial advice. By applying metrics to advice similar to those Morningstar applies to mutual funds, JoeAdvisor.com is giving investors the tools required to select top-performing advisors that match their investing style and risk tolerance. Advisors leverage the Internet to reach thousands of new clients without cannibalizing existing channels. Investors have access to the very best financial advice priced at market level. JoeAdvisor.com takes a commission on all advice sold.

Deal Highlights

• Patent-pending business process that ensures investors are always able to achieve the same level of performance as that shown by their advisor. 
• A business model that is not subject to increasingly thin margins that plague most businesses on the Internet. The margins are large and sustainable. 
• The technology infrastructure, business organization and marketing for JoeAdvisor.com are already well underway. The service will launch at end of Q3 this year. 

Technology/Proprietary Rights

JoeAdvisor.com allows professional and amateur financial advisors to create portfolios. We comply with The Financial Adviser Act of 1940’s “newsletter exclusion.” The “newsletter exclusion” allows anyone to sell impersonal financial advice. We create an unbiased and transparent marketplace supporting a one-to-many relationship for the sale of financial advice. This allows advisors to leverage the Internet to potentially reach thousands of new clients. Anyone who creates and maintains a portfolio on JoeAdvisor.com is considered an advisor.

JoeAdvisor.com serves as an unbiased and transparent marketplace offering financial advice from advisors trading in most kinds of common exchange-based investments. While the site does verify performance records and provide statistics for all listed advisors, site operators do not offer any financial advice. JoeAdvisor.com only acts as a market for advisors and investors. Our patent-pending business process ensures that investors are always able to achieve the same level of return as that show by their advisor.

Subscribers to financial advice on JoeAdvisor.com choose advice based on their own investment objectives and tolerance for risk. We automatically track the performance of each portfolio so that investors have a clear, accurate and verified view of every advisor’s performance. JoeAdvisor.com measures advisor performance in the same way the Morningstar measures mutual funds, providing detailed metrics such as risk, volatility, trading frequency, complexity, and asset allocation on each portfolio. The aim is to provide the most transparent and complete comparison of financial advice available. 

JoeAdvisor.com has retained Ernst & Young to conduct periodic audits on a random selection of portfolios. E&Y will independently assess whether the results in the portfolios accurately reflect the results that would have been achieved had the advisor executed real rather than fictitious trades. These periodic audit statements will be published on JoeAdvisor.com to maintain investor confidence in the accuracy of the portfolios.

Market Opportunities

According to Forrester Research, 20 million households will receive financial advice online by 2005. According to US Bancorp, 11 million individuals trade online in the US and 43% report using advice or recommendations. Both in the US and internationally, market growth continues at between 10% and 30% annually. The market for financial advice and for JoeAdvisor.com will only continue to grow.

Marketing

Focusing on our advisor launch later this year, JoeAdvisor.com is beginning an aggressive marketing campaign with the initial focus being to stimulate advisor buy-in and portfolio creation. The second major marketing focus will support the site’s hard launch to consumers in January 2000. The campaign’s focus will continue to target advisors but will shift to include driving individual investors to JoeAdvisor.com. We are currently exploring strategic partnerships with cyberbrokers and financial newsmakers to ensure successful execution of our marketing efforts.

Competition

The online financial advice market is relatively new. DirectAdvice.com, FinancialEngines.com and iExchange.com are among the early entrants. Currently, no company is providing a measured direct analog to the traditional financial advisor. JoeAdvisor.com has first-to-market advantage in the area. Our closest competitor is perhaps iExchange.com, which allows users to showcase their stock picks. JoeAdvisor.com takes a significantly different approach by measuring and comparing portfolios of investments. With a variety of asset classes at their disposal and precise measurements of risk and return, we offer investors a source for professional quality advice that is highly credible and easy to use.

Financial Information

JoeAdvisor.com raised more than $700,000 in our first private offering, which has been used to develop the web site, underlying technology, and conduct preliminary marketing efforts. We are seeking $4.2 million of VC investment, with a second round of VC financing in the first quarter of 2001.