In today’s low-interest-rate environment, the pressure is on for advisors to add value when it comes to fixed income allocations. Yet unfortunately, some of the most appealing segments of the fixed income markets to generate higher yields – such as peer-to-peer (P2P) investing – have little or no means to fit into the typical financial advisor investment platform.
But that may soon change, as peer-to-peer analytics and management solution NSR Invest prepares to launch the first integration of P2P investment platform Lending Club to ‘traditional’ advisor portfolio analytics solution Orion Advisor Services. The ultimate goal – to make it feasible for financial advisors to manage client investments in P2P loans, including allocating capital into individual loans (in a diversified manner), managing cash flows in and out of P2P investment accounts, and facilitating consolidated performance reporting of P2P investing and the client’s other portfolio investments. All done in a manner that advisors can even bill for their services.
Of course, the caveat is that peer-to-peer investing still has significant risks to accompany the higher yields it offers, from a material risk of default (which can only be partially diversified away) to significant illiquidity if clients unexpectedly need to sell their allocations. Nonetheless, the relatively new sub-asset-class within the fixed income environment remains appealing for yield-starved clients, and NSR Invest’s technology may finally make it feasible for, at least, independent RIAs to begin to allocate client dollars to P2P investment opportunities!