Investing is difficult. You need to keep an eye on the markets, pick and choose your investments, buy or sell them at the right time. And that’s investing at its most basic. These days basic investment doesn’t cut it.
There are smart quants and supercomputers watching every market action. They have the time and the technology to act intelligently on that data…before you do.
How is an everyday investor supposed to compete with them?
(Related – Money tips for immigrants in the USA)
The situation gets even stickier for immigrant families in the US. For immigrants working here, and raising a family, the need for solid wealth management tools is even more pronounced.
But it can be difficult to find a financial advisor who has the expertise, technology and a healthy understanding of the unique challenges faced by immigrant investors in the US.
I recently got the chance to sit and chat with qplum co-founder and CEO, Mansi Singhal. She discusses how her online financial advisory service uses AI methods and best trade practices, tempered by personalized service, to provide immigrant families with customized financial solutions.
SB: Hi Mansi. Can you start by sharing a little bit about yourself, and how you came to launch qplum?
Mansi: I came to the US for graduate school. I attended UPenn, where I got my Masters in Computer Science. That’s where I met qplum’s co-founder Gaurav Chakravorty.
It would take many years for Gaurav and me to build up the experience and capital to get qplum off the ground. But today, we are helping hundreds of clients manage their money in a systematic, quantitative fashion.
We’re one of the few robo-advisors using AI to build and optimize portfolios for our clients.
We’ve helped many immigrant families decide whether to invest in the US or their home country; plan investment options in preparation for their return to their home country; and, strategize how and when to send money back home to extended family.
Our firm is integrated with multiple brokers like Interactive Brokers and TD Ameritrade. Many brokers have limitations as to which visa types they accept given the extra paperwork and due diligence involved.
For example, some will accept an H1B but not an H4. That’s why we’ve integrated with multiple brokers – so we can accommodate an entire family’s needs.
SB: What are some of the major problems faced by your clients, especially immigrants?
Mansi: Many new immigrants in the US don’t invest here because they think it will somehow conflict with their immigration status.
People here on H1B (or other temporary visa types) ask themselves “What if I need to go back?” And not knowing the answer, they hold off on investing.
In many cases, they send money back home or invest there because it feels familiar and familiarity is comforting in a way.
This gets further complicated by foreign banks and brokers targeting immigrants with marketing campaigns that promise: “You can earn so much more money by investing in your homeland. Opening an account is fast and easy.”
So you open an account and discover there are extremely poor visibility and liquidity for your investments. Getting your money back to the US (also known as repatriation of funds) is much harder than you initially thought.
And tax filing becomes more complex and expensive since you now have overseas investments to disclose, and in many cases must file taxes in 2 countries.
I can’t overstate the importance of this last point, that taxpayers living in the US can get hit with steep penalties if they have a bank or investment account in another country and fail to report it to the IRS.
SB: What tips do you have for immigrant families trying to build long-term wealth?
Mansi: Whether you are planning to settle back to your native country or hoping to call the US your final home, you should start investing where you are.
The immigration journey can be long and hectic, and you shouldn’t let it come in the way of investing.
You want to invest where you are working and raising your family. This will make it easier to monitor your investments and gain access to them should you need to make a major purchase, like buying your first home.
For many families, the goal is to build up early on for their child’s education. Every year, this goal gets harder to achieve thanks to the ever-increasing costs.
A financial advisor can help you look at your entire financial picture, including what other goals you are saving for (like retirement), so your college savings strategy makes sense for your family.
You should consider your employer’s tax-advantaged retirement savings plan.
This is something I suggest to every client of ours. A 401(k) can be a great way to start building a portfolio, especially if your employer offers matching funds.
Also, you might want to consider investing in a traditional Individual Retirement Account (IRA) or a Roth IRA if your employer doesn’t offer a retirement plan.
SB: Let’s shift gears and talk about how qplum works with clients. What is your process?
Mansi: Our process typically starts with a conversation. This gives us an opportunity to learn about the client and identify ways to help them.
We pinpoint your short and long-term financial goals and create a balanced agenda for meeting them that’s aligned with your risk tolerance.
We charge a fixed, flat fee of 0.50% of your total managed funds. You don’t pay any trading commissions to the broker. We take care of that for you.
We provide all of our clients with solid risk management plans, so your portfolio has a proper plan for market downturns.
Once your plan is in place, we start the process of investing. We work with multiple brokers and remain an independent advisor that serves clients’ interests first.
Our entire onboarding and account opening process is paperless, and we provide an online platform where it’s easy to watch the progress of your investments.
SB: Last question, why can’t I do all this myself?
Mansi: Investing in itself requires a lot of technology and efficiency. And that’s where an online financial advisor like qplum can be a huge advantage.
Costs are important. It is crucial that you choose a financial advisor that keeps net cost of investment low. However, there is an imperceptible cost of not using an advisor.
Any experienced investor will know the amount of work it takes to invest and the indecision brought by trying to do everything oneself. Don’t do this alone when you can hire a data science team to work for you at a fraction of the cost.
Readers, I am an immigrant, now in my 12th year in the USA. I still remember those days when I was so happy that my savings account generated 4% interest (back in 2006/07). I wish I had an advisor from the very first month I started earning in dollars.