FutureAdvisor

FutureAdvisor
Private
Industry Investment services
Founded 2010
Headquarters San Francisco, California, United States
Area served
 United States
Key people
Products Financial services, asset management, portfolio management
AUM

$600 million [1]

[2]
Owner Sequoia Capital, Canvas Venture Fund, Devonshire Investors
Number of employees
 ~45 (2015)[3]
Website futureadvisor.com

FutureAdvisor is a digital investment manager registered with the U.S. Securities and Exchange Commission and based in San Francisco. Founded in 2010, the company is reported to have $600 million in assets under management.[1][2][4] Among its investors are Sequoia Capital, Canvas Venture Fund, and Devonshire Investors, the private investment arm of the owners of Fidelity.[5]

On Wednesday, August 26, 2015, FutureAdvisor announced its intent to be acquired by BlackRock.[6]

Product

Like other robo-advisors, FutureAdvisor automates portfolio management with software that adjusts for investors' age and risk appetite.[7] Robo-advisors apply modern portfolio theory, the Black-Litterman model and other algorithms to manage investments passively, much like a traditional financial adviser. They adjust asset allocation according to notions of a "balanced" portfolio, rather than pursuing "active" strategies like market timing, stock picking and value investing. FutureAdvisor manages assets directly across multiple Fidelity Investments or TDAmeritrade brokerage accounts and IRAs.[8]

College Investments

FutureAdvisor manages tax-advantaged educational investment accounts such as 529s, Coverdell ESAs, UTMA/UGMAs for free.[9] The company has a financial planning service that helps investors estimate the price of college tuition for their children. It also helps them select and create educational savings accounts online, and manage those investments until the day the funds need to be used for college or other educational expenses. In addition, FutureAdvisor automates the monthly contributions to those accounts, as well as the disbursement to schools when the child attends college.[10]

Methodology

FutureAdvisor uses index funds and low-fee exchange-traded funds to create portfolios that adhere to modern portfolio theory. Under MPT, the proportion of assets allocated to foreign and domestic equities, bonds and Real estate investment trusts should vary according to an investor's age and risk appetite.

History

Co-founders Jon Xu and Bo Lu

FutureAdvisor was founded by two former Microsoft engineers - Bo Lu and Jon Xu - in Seattle. The company graduated from the incubator YCombinator in 2010, took $1 million in seed funding, and raised $5 million in Series A funding from Sequoia Capital in 2012. Canvas Venture Fund led FutureAdvisor's Series B round worth $15.5 million in 2014.[11]

References

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