The Investment Advisor For The 99% Who Need It: MarketRiders

photo_mitchEarlier this year I spoke with Mitch Tuchman about his company MarketRiders, which now helps individuals manage over $4 billion in assets. I wrote a detailed MarketRiders review a while back, but wanted to add more detail and find out what really sets MarketRiders apart so I called Mitch. Much of the success of MarketRiders is due to his leadership and foresight. In fact, MarketRiders was one of the early movers in the online personal finance space and has been helping people manage their money since 2007.

Here’s his profile from their website:

“As co-founder and CEO of MarketRiders, Mitch conceived of and built a service for do-it-yourself investors to manage their own retirement portfolios. Those investors have saved over $40 million in yearly fees and have enjoyed less risk in the process, a testament to Mitch’s desire to help working Americans retire with more. Mitch Tuchman’s experience pioneering MarketRiders helped him define and codify the retirement needs of working Americans. Mitch has over 25 years of experience in venture capital, public finance, and technology. He was a subadvisor to Apex Capital, LLC, on its $200 million technology and special situations portfolio and managed its venture capital fund. A frequent guest on CNBC, CNN, and Fox Business News, Mitch is regularly featured in major financial publications, including The New York Times, Barron’s, and Forbes Magazine. He also is a regular columnist for Forbes and MarketWatch.com.”

 

What is MarketRiders?

MarketRiders is personal investment management software company that brings the philosophy used by professional managers to the ordinary investor. What does this mean exactly? It means that instead of chasing hot stock tips, you’ll be using the same investment philosophy that Harvard and Stanford use for the massive endowment funds. As Mitch said it, the institutional investors speak a totally different language than what we are fed by most media outlets. The team that manages the endowment for a major university isn’t discussing which stock is going to get hot. They are discussing the future performance of asset classes and whether or not they should adjust their holdings in that class. They may talk about certain money managers that have a good understanding of a specific market and whether they should give that manager some resources, but they definitely aren’t talking about Mad Money stock picks.

The MarketRiders team has a lot of experience in asset management. Besides Mitch, who has 25 years of experience in venture capital, public finance, and technology, MarketRiders has been heavily influenced by the work and writings of Burt Malkiel, Charley Ellis, and Jay Vivian. These men literally wrote the book on institutional investment management and spent years advising their clients on how to use low-cost, diversified index funds to create risk-adjusted portfolio.

How much does MarketRiders cost?

MarketRiders is still only $149/year. You can also opt for a monthly plan that costs $14.95. There are other costs related to your brokerage trading fees and the ETF fund fees. You’ll be investing in low cost funds so the fee will be only 0.17%.

MarketRiders Total Costs Including 3rd Party Fees

Portfolio Size$25,000 $50,000 $150,000 $500,000 $1,000,000
ETF fund fees (0.17% average)$45$90$270$900$1,800
Trading commissions$160$240$480$480$480
$14.95 monthly subscription$180$180$180$180$180
Total yearly fees$385$510$930$1,560 $2,460
Yearly fees as a % of portfolio1.54%1.02%0.62%0.31%0.25%
Number of ETFs in portfolio46121212

What has changed since MarketRiders began?

MarketRiders was the first into this space and has a lot of experience now. They have tweaked their advice and improved their software. Each version (Mitch says this is version 6) has fine-tuned the software and added additional features. The company now helps individual investors manage more than $4 billion.

Much of what made the company great has stayed the same though. You still do-it-yourself with MarketRiders. The first step is to go to their site and answer a few simple questions about your age, your risk tolerance, your investment experience, your time horizon, and how much you want to invest.

Based on that, MarketRiders constructs a portfolio of ETFs for you to invest in. You go to your discount stock brokerage account buy them yourself and then tell MarketRiders what you did. Finally, their software will track your investments and tell you when and how to rebalance your portfolio in order to keep you on track to achieving your goals.

What sets MarketRiders apart?

MarketRiders differentiates itself in a few subtle but important ways. First, they’ll tailor your portfolio of ETFs based upon the broker that you already have, meaning that if you have an account with Charles Schwab, they will give you a portfolio of Schwab ETFs. This is a great feature and can save you a lot in fees if you are with the right brokers. The MarketRiders software will also recommend the funds that best suit your needs and are also the lowest-cost.

Another unique feature of MarketRiders is the ability to alter the recommended portfolio. More advanced investors may want to take the results provided by MarketRiders and then alter it. Well, MarketRiders provides ETFs by asset class as additional options so you can go through and find a different ETF in the same asset class.

MattThe Investment Advisor For The 99% Who Need It: MarketRiders