PortfolioPilot, an automated financial advisor, has quickly amassed $20 billion in assets since its launch two years ago. The service, created by San Francisco-based startup Global Predictions, has added more than 22,000 users. The company recently raised $2 million from investors, including Morado Ventures, to fund its growth.
Alexander Harmsen, founder of Global Predictions, believes that people are tired of cookie-cutter portfolios and want personalized insights and recommendations. “If we think about next-generation advice, I think it’s truly personalized, and you get to control how involved you are,” Harmsen said. The startup uses generative AI models, machine learning algorithms, and traditional finance models to forecast and assess user portfolios.
It focuses on three main factors: matching investment risk levels with user tolerance, risk-adjusted returns, and resilience against sharp declines. Users can get a report card-style grade of their portfolio for free, while a $29 per month “Gold” account provides personalized investment recommendations and an AI assistant. Global Predictions targets people with between $100,000 and $5 million in assets, with the median user having a $450,000 net worth.
The startup currently gives paying customers detailed directions on tailoring their portfolios but may offer custody of user funds in the future. Harmsen created the first version of PortfolioPilot to manage his own wealth after selling his first company. He was frustrated with the standard approach of financial advisors and wanted hedge fund-quality tools for risk management and portfolio management.
PortfolioPilot’s rapid growth and scrutiny
The company’s rise has attracted regulatory scrutiny, with the Securities and Exchange Commission accusing Global Predictions of making misleading claims on its website in 2023. The company paid a $175,000 fine and changed its tagline as a result.
Harmsen predicts that many traditional providers will be left behind by the transition to fully automated advice. “I think that is such a huge jump for the traditional industry; it’s not incremental, it’s very black or white,” he said. “I don’t know what’s going to happen over the next 10 years, but I suspect there will be a massive shake up for traditional human financial advisors.”
The global artificial intelligence (AI) in asset management market is projected to reach $14.1 billion by 2030, growing at a compound annual growth rate (CAGR) of 22.1%.
The Machine Learning Technology segment is predicted to reach $7.9 billion by 2030 with an 18.6% CAGR, while the Natural Language Processing (NLP) Technology segment is set to grow at a 28.7% CAGR. The U.S. market, estimated at $935.5 million in 2023, and China, forecasted to grow at a 21.2% CAGR to reach $2.2 billion by 2030, show significant growth trends along with other regions like Japan, Canada, and Germany. The growing integration of AI in asset management necessitates addressing regulatory and ethical considerations to ensure transparency and fairness in AI-driven decisions.
Asset managers need to acquire skills related to data science and AI to succeed in the digital and data-driven market of the future. PortfolioPilot recently closed a $2M seed funding round, backed by Morado Ventures, NEA Angel Fund, Unpopular Ventures, and several prominent Silicon Valley angel investors. The company plans to use the new capital to enhance its AI capabilities and bring personalized investment insights to the market.
In August 2023, PortfolioPilot was approved by the SEC to act as a Registered Investment Advisor, allowing it to provide completely automated financial advice. The platform supports a wide range of financial assets and connects to over 12,000 crypto wallets, banks, and brokerages, maintaining 256-bit encrypted bank-level security.
