A new kind of service is being launched by Prosper today. Prosper Premier is billed as “having your own Prosper concierge” that basically does all your investing for you.
Unlike most regular readers of this blog some investors don’t like deciding which loans to invest in. They like the idea of p2p lending and the returns that are possible but are not interested in doing any research or analysis themselves. Prosper Premier is targeted at these investors because it gives them a chance to invest in Prosper notes by just filling out a simple form.
In an email that is being sent to investors today this is how Prosper is explaining this new program:
With Prosper Premier, you can personalize your investments according to your investing style, without sinking the time and attention it usually takes. Here’s how Premier works:
- You select your desired asset allocation based on risk ratings and loan terms.
- Prosper analysts execute your orders based on your desired portfolio allocation, including reinvestment of payments received (if instructed).
- And, you get priority access to a dedicated, knowledgeable Investor Services manager.
Prosper’s Answer to Lending Club PRIME
This does sound a lot like the Lending Club PRIME service that allows investors to invest in Lending Club notes in a completely automated way. The only difference is the emphasis on a dedicated “Investor Services manager” at Prosper.
Like Lending Club PRIME, Prosper Premier will have a $25,000 minimum investment and have a 0.8% one-off fee for setting up the account. But this fee is being waived for a limited time so new investors getting in now will pay no fees. Investors can choose a percentage breakdown by loan grade as well as by loan term.
Another Good Move by Prosper
I have heard many times from Lending Club about how popular their PRIME service is and I know several people personally who have taken advantage of this service. Even though Prosper has Automated Quick Invest (AQI) there has been no equivalent service for Prosper investors that allows a completely hands-off approach. Until now every new Prosper investor has had to setup their own investments. Having a completely automated investing option will likely be very popular.
One question that is sure to be on many regular investors minds is how this will work in practice. I have been told this it will function like Automated Quick Invest but it is not clear if Premier investors will get priority over regular investors when the loans first come on the platform. Somehow I doubt it because even though this is a premium service the investors are not interested in any one particular loan or even group of loans.
No one will complain that they missed out on a loan that was snapped up by Worth-blanket2 or other large investor. So, it would make sense to run Premier investors after processing AQI accounts because often these AQI investors are focused on a very small number of available loans. I expect this question will be answered shortly and when I find out for certain I will share it with you here.
In the mutual fund industry index funds have been popular for many years in part because it is an easy way of investing in a broad market. Prosper Premier provides a similar kind of opportunity – investors can just invest in a broad cross section of Prosper loans and gain similar returns to the overall Prosper market. Or investors can target the higher risk or lower risk sections of the market if they want to narrow their focus.
What do you think? Is this is a good idea from Prosper? Let me know in the comments below.