We’ve heard this for some time, now. The P2P lending marketplace just can’t seem to crack through to financial advisors. That said, we think many “alternatives”, post Jobs Act passage, share the same plight. Marijuana investments, digital currency trading & mining, crowdinvesting – how does a responsible finacial advisor migrate these types of alternatives into a client portfolio? In fact, the P2P marketplace has some massive players within it, such as Prosper, OnDeck and Lending Tree, but there is still some mystique around the genre. Couple that with the Lending Tree debacle of 2016, and it makes it hard for many financial advisors to get onboard with P2P investments. We suspect it is only a matter of time before this changes, though, as clients demand more alternatives – and higher returns – for their portfolios over the long run. (Cindy Taylor/Publisher)
‘In a time such as this – with depressed savings rates and a great deal of uncertainty in the markets – one might imagine that peer-to-peer/marketplace lending would be seen as something of a silver bullet for financial advisors. Some of the leading platforms have managed to post consistently strong net returns across a period of five years or more. AltFi Data’s returns index, which is fuelled by granular loan level data from Zopa, Funding Circle, RateSetter and MarketInvoice, shows that the average net return of these four platforms has hovered between 4.5 and 6.5 per cent for the entire lifetime of the industry.
And yet the fact remains: financial advisors and peer-to-peer platforms simply do not get on…….So what’s behind this disconnect?
“Having firstly identified the appropriate suitability for an investor, advisors, quite rightly, want to be prepared for when the regulator taps them on the shoulder should something not have gone to plan,” said Tim Slesinger, founder and CEO of LendingWell. “They need to be able to say that they’ve looked at the market as a whole, and then to demonstrate how they’ve whittled down the options to the one or two or three players in the market that they have selected. Then they need to show that they have reviewed like-for-like research on those various opportunities. Then they need to be able to say why they chose the particular spread across those platforms.”’