You rate your Uber driver. You scour Yelp for hair stylists. You carefully read about a new doctor online before making an appointment.
So why isn’t there a place to read about a financial advisor you’re looking to hire?
Trust in financial advisors is incredibly low, something that is concerning since they are professionals looking after a retail investor’s money and wealth-generating opportunities. But just looking at credentials doesn’t give an investor any real sense of whether or not a person is trustworthy enough to deal with your money.
“We were finding that people were frustrated with their advisors, but they weren’t leaving [them] because they didn’t know what was the norm,” Atlanta-based entrepreneur Stephen Tanenbaum told Hypepotamus.
Tanenbaum wanted to change that for the 35% of Americans who currently work with a financial advisor. He and his co-founder, Daniel Sims, launched the Atlanta-based startup Rainbook in 2021 as a way to add clarity to the often-murky world of financial advising.
Rainbook initially launched its Wealth Hub, an investment account aggregation tool, but quickly found that investors needed more insight into their financial advisors themselves. To help more users, Rainbook just launched its new Advisor Analyzer tool for retail investors.
The Analyzer looks at data provided by Morningstar, an independent research and rating platform, as well as specific financial advisor surveys to come up with six distinct factors that impact a financial advisor’s quality. Advisors are scored based on risk and performance, fees, credentialing, statement quality, investment offerings as well as engagement and trust built amongst other clients.
Looking holistically at all of these factors is important, particularly because there isn’t a “one size fits all” plan that an investor is looking for, Tanenbaum explained. Some will want a hands-on advisor that is keeping them up-to-date frequently, others might want an advisor who is aggressively looking at alternative investing opportunities to add to a portfolio mix.
The goal is not to say a simple yes or no as to whether someone should work with a specific advisor.
“There are 300,000 financial advisors out there. There are a lot of great ones, but there’s a lot of not so great ones. We’re trying to shine a light on both. If you have a great advisor, Rainbook wants to empower you with the knowledge and insights to leverage that existing relationship with your advisor. And if you don’t have a great one, we want to provide a seamless way to match you with a new advisor,” Tanenbaum added.
Not Your Grandpa’s Advisor
Tanenbaum and Sims are building Rainbook at an interesting moment in history. Baby Boomers are transferring a record amount of wealth to younger generations (upwards of $70 trillion over the next 22 years). Alongside this wealth transfer is an interesting generational shift. Tanenbaum said that Gen Z and Millennial retail investors are diversifying their portfolio with alternatives and are seeking out financial advisors at a record pace.
“There’s a ton of different platforms online where you can go and get [financial] advice, but the trend is still going towards working with a financial advisor. And that’s where Rainbook comes in,” he added.
Younger and digitally-savvy generations expect transparency, something that has been sorely lacking to date in the financial advising world. Rainbook is designed to help clear up some of that secrecy so that retail investors can compare cost of services, the range of investment options available, and the quality of their relationship with their advisor to make sure that person is the right fit.
Meet The Team
Tanenbaum is no stranger to the entrepreneurial world. He co-founded UGallery out of undergrad and grew the curated online art gallery to be a formidable global ecommerce brand. Moving from the art world to the financial world is less of a jump than one might expect, Tanenbaum explained to Hypepotamus.
“The art world is an older industry and not really at the forefront of technology or innovation. The wealth management space has been that way as well,” he said. “I look at everything through the consumer’s eyes. So with Rainbook, it is about looking through the end investors’ eyes.”
The Atlanta native moved back to the city at the very beginning of the pandemic and has been building Rainbook since 2021.
Sims, a Georgia Tech graduate, is a seasoned software developer and CTO. He most recently served as CTO at Belwood Labs, a custom software development and design company.