Qplum Review: An A.I. Powered Wealth Manager

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Qplum, launched in 2016, is an independent investment advisor. They are one of the few online wealth managers to work with multiple brokers like Apex, Interactive Brokers, and TD Ameritrade. That means more options for you.

The company is headquartered in Jersey City, NJ.

UPDATE: Qplum is no longer in business. Their site now says this: 

The P.I.E. Approach

Online investing can be intimidating and time-consuming, especially if you’re new to investing. But, qplum makes things easy with their P.I.E approach to investing – Plan, Invest, and Engage.

Step 1: Planning

Planning is probably the most important component of investing. This is why qplum asks more questions during the onboarding process than many other robo-advisors. They focus on identifying the right risk level and designing an action plan that can take advantage of all market conditions for you.

At qplum, there are two ways to kick off the process. You can get a one-on-one walkthrough with a dedicated financial advisor by phone, mail, live chat, or in-office.

Alternatively, you can chat with qplum’s bot online.

The bot leads you through some simple questions, analyzes your responses, and provides an actionable plan. The bot can also answer any questions you have about qplum’s services. The chatbot also has a human fallback mechanism. If you ask a question the bot doesn’t recognize, the qplum support team will step in to assist you.

Your qplum financial advisor or the qplum chatbot will suggest the appropriate portfolio(s) for your risk tolerance, time horizon, and tax situation.

Of course, you also have the option of selecting portfolios on your own from their Investing Dashboard.

Step 2: Investing

When you invest with qplum, you invest in a portfolio customized for your risk preferences. You can invest in one, two, or all the portfolios they offer across various risk profiles.

Each qplum portfolio has a different risk-return profile and therefore is suited for different investment needs.

Qplum portfolios are fully automated through AI-based algorithms. They dynamically invest in a universe of 80+ ETFs diversified across asset classes, sectors, and geographies. You can view the complete list of ETFs here.

Tax loss harvesting and risk management to defend you against market crashes are two of the benefits all investors get with qplum.

Step 3: Engaging

You want a financial advisor who can re-evaluate your investment plans as market conditions fluctuate and as your life priorities change.

The qplum team is fairly proactive and regularly contacts you with information about your investments. However, you should feel comfortable reaching out to them with questions or concerns. They are very patient and helpful.

Active Trading for a Flat Fee

Many advisors take your money and put it into a fixed portfolio with 60% invested in stocks and 40% invested in bonds, or some variation on that theme. The younger you are, the more of your money gets invested in risky stocks. The older you get, the more of your money gets pulled from stocks and re-invested in stable bonds. The idea here is that younger people want to take on greater amounts of risk. Plus, they have more time to recover from potential losses. And older people…don’t.

The problem with the above method is there’s no magic formula for investing. Sometimes, younger people are extremely averse to risk. Sometimes, older individuals are willing to embrace risk. Unexpected things happen in life all the time, and market conditions are constantly changing. Therefore, your investment plans should be active and constantly be changing too.

Most people stay away from active investing because it takes a huge time commitment, is very difficult to do, and can be very expensive. In fact, active investment portfolios were only available to extremely wealthy individuals and hedge fund managers just a few years ago!

Using A.I. and in-house technology, qplum is able to offer actively traded portfolios for a flat yearly fee of 0.5%. No trading, execution, or other costs.

Each portfolio invests in a number of ETFs and has an asset allocation that changes over time depending on many factors. With a menu of portfolios to choose from, both passive and active, you can be sure your qplum portfolio will take advantage of all market conditions.

Risk Management

The 2007 Financial Crisis taught everyone that risk management is important. Yet, most online investing solutions don’t provide risk management.

Another unique benefit qplum offers is systematic risk management. In the event of a drop, you get automatically pulled from the market. When the market starts to rebound, you are automatically reinvested according to your personal risk tolerance. Here’s what the process looks like:

The bottom line is, loss is painful. As human beings, we react much more intensely to losing money than we do to gaining it. But there will always be risk involved with investing, and we will always need to invest.

With risk management in place, qplum provides a defense for your investments against a market crash.

Tax Saving Investment Portfolios with Tax Loss Harvesting

Any discussion about investing would be incomplete without talking about taxes. The wrong tax treatment can make or break your investment returns.

qplum offers tax-loss harvesting. It reduces your current tax liability by booking losses (when possible) against your gains. However, they warn that investing with multiple robo advisors, each optimizing for taxes, could result in a wash-sale violation.

Fees

qplum charges 0.50% per year for your assets they manage as a ‘wrap fee’. You don’t pay any trading costs and there aren’t any hidden fees.

Lock-In

There are no lock-in periods with qplum. You can withdraw your funds at any time without penalty. Of course, if you pull funds from your IRA prematurely, you might be subject to early withdrawal penalty as applicable, based on IRS rules.

Account Minimum

For individual and joint accounts, the investment minimum is $10,000. For traditional, ROTH, and SEP IRAs, the investment minimum is $1,000. Compared to some wealth managers who need several millions to get started, this seems very low. Compared to some robo advisors, it’s rather high. But I guess qplum is targeting investors as opposed to savers.

The Bottom Line

Not long ago, big banks and hedge funds were the only ones investing like qplum. They could afford to hire rainmakers or star traders like Paul Jones, Bill Miller, Alan Howard. These portfolio managers had their own distinctive methods and reasons for success, like Jones’ global macro style based on technical analysis or Miller’s ability to pick stocks and get positive returns for 10+ years. But the thing is, the skills of these managers were not transferable to others. Their sources of return, not easy to replicate.

Today, this is all changing because of systematic, quantitative trading platforms like qplum. Using emerging technologies and the huge amount of available data, qplum is making it possible for everybody to benefit from the talents of “star traders”.

Qplum offers only fully managed investing services. If you are looking to trade by yourself, choose a broker and not an investment advisor. Overall, qplum is a good investment option for people looking to invest their money and grow it over the long term.

Source: biblemoneymatters.com