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Review of Prosper’s New Quick Invest Feature

by Peter Renton on July 7, 2011

Prosper Quick Invest

On Tuesday this week Prosper discontinued Automated Plans for investors. This was a way for investors to create selection criteria for loans and then automatically invest in all loans that met that criteria. I have been using these plans for the majority of my Prosper investments. No more.

Introducing Prosper Quick Invest

Prosper has replaced Automated Plans with something they call Quick Invest. Those of us who follow Prosper closely have known this change was coming for several months (it was first announced in their March 2011 S-1 filing) and all investors received an email last week announcing the change.

This is how Prosper explained the move in their email to investors last week:

Although Automated Plans offer the convenience of investing in multiple loans at once, we recognize that investors also want more control over their investments, including the ability to review loan listings individually. With these valuable features in mind, we are introducing our newest lender tool, Quick Invest.

How Quick Invest Works

Like Automated Plans, Quick Invest allows you to use Saved Searches as the basis of your selection criteria for loans. Unfortunately there is no migration of Automated Plans over to Quick Invest so if you haven’t created a Saved Search you will need to create one now if you want to imitate an Automated Plan going forward. For those investors who have always invested in loans manually, you will notice no change whatsoever to how you invest.

What Quick Invest does well is it allows investors to invest quickly (hence the name I guess) in just a couple of clicks. Investors can select either detailed or basic selection criteria (you need to at least choose one or more Prosper Ratings) and then Prosper will automatically create a portfolio of notes from that criteria. It defaults to $25 per note (at least in the amounts I am investing) which is good so investors will get the most diverse group of loans.

Once you have created your selection criteria and clicked the Find Loans button you are presented with a Quick Invest Results screen like this.

Prosper Quick Invest Results

As you can see it gives you a visual breakdown by loan rating as well as your total invested and estimated return. What is new is revealed when you scroll down. What Prosper does with Quick Invest is give you a listing of all the loans it has selected based on your criteria. You can click on each loan and read through the description and decide whether or not to invest in that loan. There is a one-click remove feature that many investors will find useful. Or you can just click Invest Now and you are done.

My Initial Thoughts on Quick Invest

I have just placed my first order with Quick Invest and here are my initial thoughts. I like the interface, they have made it attractive, uncluttered and simple. I can see how new investors will find this tool easy to use.

The big difference for me is that you can’t just let a Quick Invest plan run like an Automated Plan. You have to actually login to Prosper each time you want to invest, unlike Automated Plans that would always invest in new loans that met your criteria whether you logged in or not. Mind you Automated Plans had to be renewed every month, so it is not a huge change. But it is a simple system so once investors get used to Quick Invest I expect they will be able to invest their money in less than a minute.

I login to Lending Club and put my accumulated cash to work there every week. Now, I will just be doing the same for Prosper. I am sure there will be investors that will complain about this change but spending an extra minute or two each week is really not that big a deal in my opinion.

Why The Change?

The official line from Prosper as to the reason for the change is that it gives lenders more flexibility with their investments, which is somewhat true. Investors can now choose to view each loan individually that meets their criteria or not.

I suspect there are a couple of reasons behind the change. First, I think Prosper wanted a tool that would allow investors to easily invest their money effectively with just a couple of clicks. Quick Invest achieves that. But I believe there is also a more significant reason behind the change. My guess is that this has something to do with pleasing government regulators. Prosper cannot be seen to be providing investment advice and automated plans may have been construed that way.

If Automated Plans were completely fine with regulators then why not just enhance them with some of the features of Quick Invest? Those investors who want to login each time and review loans could still do so and those who wanted to continue their Automated Plans could do so with no interruption. So, I am concluding that this change was made to appease government regulators.

While I will somewhat miss my Automated Plans I don’t see much downside with Quick Invest. I like to login to Prosper regularly anyway to check on the status of my loans so I will just use the Quick Invest feature now every time I login. So it will not make much difference to me. What do other Prosper investors think?

{ 14 comments… read them below or add one }

Larry V July 7, 2011 at 8:49 am

This is interesting, because Lending Club seems to be going in the other direction. LC is offering free PRIME account (I’m guessing to only a certain percentage of investors?) which sound like the previous Prosper Automated plan. I havent looked much at Prosper, so I could be waaay. off.

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Shawn July 7, 2011 at 10:31 am

For the features of quick invest itself, I think it’s fine and will do well. I like being able to review the individual loans, cancel easily, and still change how much to invest in each one (last time I checked LC only allows $25 increments which always left me with some leftover cash). I really DON’T like getting rid of the automated plan feature where I can “fire and forget it.” Typically I invest manually, but there are times when I want to have a plan go by itself. For example, going on vacation, and soon I’ll be deployed where I can’t check every day/week/etc to keep my money gainfully employed. This will reduce my returns and have cash sitting idly.. not to mention I might miss good loan opportunities. So, overall, I don’t like the changes.

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C. Jensen July 7, 2011 at 11:20 am

I’m a bit underwhelmed. I was hoping for a notification system that would fire off an email or SMS when a loan fitting specified criteria hit the site.

I’ve noticed that some of the most desirable loans fund in a matter of hours. The automated plan or a notification system would have let users find out about these loans without having to log in constantly. Of course, loans may not fund as fast now that automated plans are gone.

This doesn’t seem to differ a whole lot from filters either. Its a bit more efficient, but that’s all.

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Tyrel July 7, 2011 at 11:55 am

This change has something in common with other changes Prosper has made lately: The removal of the auction process and the introduction of other loan lengths. Those changes and this change all make Prosper much more like Lending Club.

I suspect that either they see Lending Club’s model as a better one and are attempting to emulate it so they can do as well as Lending Club, or they are doing so with anticipation of merging with Lending Club at some point in the future.

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Peter Renton July 8, 2011 at 6:34 am

Thanks for your comments everyone.
@Larry, Lending Club have been offering a PRIME account for some time but I wouldn’t equate them with Prosper’s Automated Plans. The LC PRIME account is completely hands off in that LC handles all the investing for you – you never have to login if you don’t wish to. You might find my review of Lending Club Prime that I did back in February useful.

@Shawn, That has always been one of he advantages of investing with Prosper – you can invest any amount you like greater than $25. And Quick Invest keeps this feature. But you bring up a good point about people who will be away for a while. Prosper should allow an option for active duty military to keep their cash at work while they are away. I will do some digging on this for you.

@C. Jensen, A notification system would be great I agree. I would really like that because I have such strict investment criteria that sometimes I go for several days without seeing a loan that meets my criteria. I will mention that to them the next time we chat.

@Tyrel, Yes, with the changes at Prosper in the last few months they have moved closer to the Lending Club model. Although, as I mentioned I believe that this change was done in response to concerns with government regulators.

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Fred July 8, 2011 at 6:20 pm

I relied on Prosper’s Automated Plan heavily, and now I am going to miss it.

For me, Automated Plan are no different than “Program Trading” that is used heavily by investment banks / hedge funds.

What’s more troubling is that Quick Invest requires the money to be available when you setup your criteria. This is not the case with Automated Plan, where I could set it up so that it will get the eligible loans with money coming from repayments of existing loans (i.e., zero money during the plan setup).

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Peter Renton July 11, 2011 at 9:21 am

@Fred, You raise a good point about Quick Invest that I haven’t considered. That is another drawback – that you have to actually have the funds available at the time you want to invest.

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Geoff July 11, 2011 at 4:38 pm

The biggest annoyance for me is that I tend to drop a large amount of money into Prosper, enough that it takes a month or so to fully invest with the criteria I’ve chosen. The automated plans are great for this as I set my criteria, dump in the money and let it go. Now I need to constantly check for new loans that meet my criteria if I want to keep my money working efficiently. I hate it. I’m now writing an application I can have running on my server to emulate automated-plans (search for loans that meet my criteria and bid on them) so I don’t need to micro-manage my account. What a waste of my time.

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Peter Renton July 11, 2011 at 7:24 pm

@Geoff, Well that is a great idea and may not end up being a waste of your time. I think others (including myself) would be willing to pay for an application like that. Let me know if and when you get it working.

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Geoff July 17, 2011 at 6:46 pm

I have developed a Python script which can query open listings, apply a filter, and then bid based on criteria you set. I am somewhat loathe to productize it further since any bugs could result in inadvertent bidding.

In the end, I made it available here, and I may improve upon it some in the future, but anyone attempting to use it should understand the risks and carefully evaluate it before any production use. I make no guarantees of its functionality, and cannot be held responsible for any loss incurred when using it:
http://code.google.com/p/p2p-lending-autobid/

Some day I would like to incorporate some of the knowledge from papers like these to generate a more intelligent bidding algortihm: http://courses.media.mit.edu/2008fall/mas622j/Projects/CharlieCocoErnestoMatt/

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Peter Renton July 18, 2011 at 12:36 pm

@Geoff, I am very curious to give your Python script a try and I am sure other investors would be as well. For many people it is a pain to login to see if there are any available loans. I know some of that I invest in are popular and usually fund in a matter of hours in which case I am now missing out on these loans a lot of the time. Thanks for mentioning this – I will contact you offline to discuss it further.

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Scott July 22, 2011 at 6:57 pm

I have been using QuickInvest now for several weeks and I am really frustrated. I personally don’t like to spend much time on this particular part of the portfolio and QuickInvest has caused me to increase the number of times I have had to login to manage free cash. It is not simply that the automated investment function is gone, but also that when loans expire, are cancelled or otherwise fall out of the process the balance of my buy request is thrown out of whack and replacements are not automatically sought. This means I have to login, check the outcome of the last buy, inspect which profile elements were not fulfilled and seek to re-buy those missing. Again, this may not be a problem for those that enjoy reviewing activity on a regular or frequent basis. But I had come to appreciate the semi-passive nature of my prior Prosper relationship. I don’t have an account with Lending Club, but I think I will move there.

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Peter Renton July 23, 2011 at 6:01 am

@Scott, I agree with you that QuickInvest is a step down from automated plans. It does mean you have to login to invest which I know is a pain for some people. That is why I am curious to see how automated scripts like the one written by @Geoff will work. I am going to be testing it out next week and will report back here.

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Peter Renton October 27, 2011 at 6:13 am

For everyone who expressed frustration at this change by Prosper there is good news. Last night Prosper introduced Automated Quick Invest. They are basically the same as the old automated plans – you can set them up and Prosper will invest in loans automatically. Read more about it here:
http://www.sociallending.net/investing-lending/automated-investing-returns-to-prosper/

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