LendStats Filters Down

Bummer. From KenL, creator of LendStats:

My original goals with LendStats were to find out what the real returns were and to figure out how p2p lending could be profitable for lenders (remember people... there was a time when p2p lending was not profitable for lenders). Both of those goals and a whole lot more have been accomplished. So I feel no urgency to get the filters up and running again. Also with all the negativity out there aimed at LendStats, I'm really not that interested in keeping things going anymore. I was working on LendStats largely because I found it fun, but the fun has slowly disappeared and with that so has my motivation to keep working on the site.

and

I'm just tired of it, and I don't feel like wasting my time and energy anymore. And after 3 years if LendStats is still in an embryonic state, then I guess I really should call it quits.

It's too bad. LendStats has been a great resource for the community and helped me, personally, with my returns on Prosper and LendingClub. Additionally, LendStats has one of the best P2P forums on the net--with participants who are genuinely thoughtful and helpful.

Ken, thank you for all of the work you've put into LendStats. I have certainly appreciated it. I'm sad to see the feature go, but I certainly understand the desire to move on. Good luck in whatever you choose to focus on next!

Veritat Advisors: A Customer's Review - Part I: Trial and Free Assessment

"There are known unknowns. That is to say there are things that we now know we don't know. But there are also unknown unknowns. There are things we do not know we don't know." - Donald Rumsfeld

I've slowly come to realize that, in regards to my finances, I have no idea what I'm doing. Yes, I scrimp and save. Yes, I max out the company match on my 401k. But beyond the basics, I have many questions. Worse yet, the more I learn the more I realize that I know nothing.

So I seek advice. And after a long, grueling internet search for local financial advisors, contemplation about fee-only advisors and advisors from an investment house, and the idea to just ask on some intelligent financial forums, I decided to try the online firm Veritat Advisors.

I'm wary, though. While there are many articles covering Veritat's introduction to the internet, I was hard-pressed to find many reviews by actual customers*.

Veritat had piqued my curiosity, though, and the initial financial review, at $250, wasn't going to break the bank. So I decided to give them a shot and write about my experience as a paying customer. So, without further ado, part one of my review of Veritat Advisors:

14 Day Free Trial

Veritat asks a few simple questions before setting up
your free, introductory financial assessment, covering
goals, income, assets and investment experience.
If you don't write a lot in the free text boxes it's
probably a 5 minute exercise. 

Veritat welcomes potential customers with a 14 Day Free Trial. This is a time for the user to get acquainted with their website, submit some extremely basic financial information, pick an advisor and set up a 15-minute call to discuss the financial assessment they created based on that basic financial information.

The Website

There's not a lot of complexity to Veritat's website, and that's a good thing. The sections are broken down into Messaging, Tasks, Vault (which is a place for you to receive documents from your advisor and upload documents to your advisor), Fact Finder (where you'll add all of your financial information), and the Learning Center.

During the free trial, the most interesting thing you can do is to browse Veritat's Learning Center. I was pleasantly surprised by the documents there. They struck me as easy-to-understand jumping-off points for the topics they covered. They are organized both by topic and by life event. Covered topics include things like "How Much Life Insurance Do You Need" and "Alternatives to Using Long-Term Care Insurance." Covered sections include "Starting A Family"and "Caring For An Aging Parent." The articles here aren't particularly deep discussions of the topic, but I think many people will be able to find some good helpful hints in this section.

Financial Assessment

During your initial account setup, you'll be asked some basic financial questions in preparation for your free 15-minute financial assessment. If you're like me, warning bells go off when you read about the 15-minute financial assessment after entering only very limited information. It sure sounds like it's going to be a sales call.

I was actually pleasantly surprised. While the financial assessment document was not useful in itself, it was a good jumping-off point for a conversation about what sort of advice I was looking for and what the company offers. I was pleased with the conversation with my financial advisor and, more importantly, I felt like he was completely open about the scope of their services. When I asked about options beyond Veritat's scope of service there was no hemming or hawing. I was informed that they wouldn't be much help with those questions and, in some cases, I was guided to a better source to answer my questions.

The meat of the Financial Assessment. 

Before your financial assessment begins you'll get a financial assessment document. There's a fair bit of marketing in the assessment, with the only real meat being a quick overview of your status for a few key goals, like Retirement, Investments, Education and Insurance.

Honestly I would have liked to see Veritat go farther with the assessment. Obviously they can't make amazing judgements based off of the limited information they collect during the free trial period, but I would think that they could do a quick "you might benefit from..." or "you might try to avoid..." section. These sections could be personalized to discuss some of the common pitfalls people encounter while striving to achieve the goals the client picked during the assessment.

The Story So Far

After the free assessment I had a choice to make: did I want to pay Veritat to develop a full financial plan or did I want to be done with them? I was still curious and satisfied enough with my initial conversation with them that I decided to move forward and purchase the Financial Plan (a one-time cost of $250.) In Part II, I'll write about the process of coming up with a Financial Plan, including entering data into the Fact Finder, the Financial Plan I received, and the Execution Plan I've been asked to follow.

My summary of the free trial:

The Good

• Learning Center documents are helpful overviews of financial topics.
• The initial conversation with my advisor was direct and honest when he talked about what Veritat could and couldn't do for me.

The Bad

• The free Financial Assessment document seems like a waste of time. I'm certain they could do something better, even with the limited information they have.

The Ugly

• That worry that you're going to spend 15 minutes getting a hard sell.

*: I was able to find these reviews but, frankly, they hit on too many of Veritat's marketing points for me to trust. And this Go Girl Finance review gives a bit more information but is still marred by the free financial plan they received and their advertising relationship with Veritat.

Update: As I've been writing this review, Veritat has announced that they are being bought by NestWise LLC, a subsidiary of LPL Financial Holdings Inc. There's not a lot of information available, yet, on what will change along with the ownership, but in a letter sent to customers today we were informed that service will continue and our financial advisor will remain the same.

Lending Club Fixes Marketing Issue

In my previous post I commented on an issue Lending Club had with its marketing materials. In their latest update of the data (available here,) Lending Club has fixed the error:

1.14% + over 98.8% = over 99.94%, a fine and valid statement.

So my thanks: it was a minor issue, but it certainly makes me feel better as an investor when I know that you are doing everything in your power to present the numbers accurately.

Here's the new 400 Note chart, as well:

Lending Club's Marketing Falsehood

Update: Lending Club has refreshed the values for May and has corrected the issue. The original article follows:


It seems like a minor quibble, but I certainly worry whenever I see a company where I invest money make mathematical mistakes in their marketing materials.

Today I was browsing Lending Club's Diversification page, looking at the graphs for 100 notes and 400 notes. Both contain a similar inaccuracy:

Lending Club states that "Over 98.98% of all investors with 100 or more Notes have experienced positive returns" and yet they show that 1.03% of investors have <0% returns.

It's the word "over" that is inaccurate here, and the inaccuracy comes down to a rounding issue. But "over" is a marketing word that translates to a specific mathematical meaning: greater than 98.98%. And that simply can't be true if the number of <0% returns rounded to 1.03%.

Following conventional rounding rules, the minimum percentage that the 1.03% of <0% returns could actually be is 1.025%.

Being generous with the word over, let's assume in this case that there are 98.98% positive returns.

98.98% + 1.025% = 100.005% which is, of course, impossible.

Lending Club's statement is false. Under 98.98% of all investors with 100 or ore Notes have experienced positive returns. If they want to use the word "over" they must change the value to over 98.97%.

Yes, it's small, but it's a way to demonstrate that everyone in the organization, right down to the marketing folks, really understand the importance of the numbers to us lenders and are committed getting us great returns that are mathematically sound, not ones that just sound good.

Lending Club's 400 Notes image suffers from the same issue: