We have previously looked at a view of the future of on-line finance. In that analysis we looked a range of scenarios:
One of the scenarios being Rock Stars. We described the Rock Star scenario as:
Rock Stars – Retail investors seek advice from communities of other investors and are willing to pay. Investors make their trading accounts transparent on-line. Successful investors open their accounts to act as virtual fund managers. Virtual fund managers and community owners split a management fee paid by investors. Winners – Covestor, KaChing.
Last week Dan Carroll and the team at KaChing announced their new offering - and started to show how this scenario may play out. There was a feature in the NY Times which described the business model.
Customers will be able to open a brokerage account with Interactive Brokers and link their account with their choice of investors on KaChing. KaChing charges customers a single management fee of 0.25 percent to 3 percent, set by each investor. KaChing keeps a quarter of the fee, and the investors get the rest.
Each time the investors make a trade, KaChing will automatically make the same trades for the customer. Customers can log on whenever they want to check their portfolio’s performance. They can send the investor private messages and receive alerts if the investor does something unusual. With the click of a mouse, customers can stop mirroring an investor.
KaChing has an A-list team of investors behind them. The on-line finance space has a lot of interesting experiments going on - but we think this is a particularly interesting one. A lot of us will be watching closely how KaChing goes.
Disclosure: I met Dan and Jonathan from KaChing at the FinovateStartup09 event in San Francisco in April 2009. We had the stand next door. Good guys, smart guys - doing interesting things.