Frequently Asked Questions
About Pefin
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1
What services does Pefin offer?

Pefin offers AI Financial Planning and Advice to clients. We use AI technology to understand your complete financial situation, including your goals - like buying a home, having kids, sending them to college, and retiring in comfort, as well as your current spending patterns, your debt and investments, the economy, markets, social security rules, federal and state taxes and much more. From there, we generate a complete financial summary for you, which includes advice on how to improve your financial life on an ongoing basis, so that you can achieve your goals. Pefin recommends a savings and investment strategy that is completely tailored to you, and offers portfolio management services to ensure that your investments are managed in line with your financial plan.

Note that all investment-related advice and portfolio management services are offered via Pefin Advisors, a subsidiary of Pefin registered with the SEC. SEC registration does not imply a certain level of skill or training.

2
Is Pefin, and its subsidiary Pefin Advisors, acting as a Fiduciary?

Yes, we are! Being a fiduciary means that we always provide advice that is in your best interest. All of our advice is based on the information you share with us about your life, and your plans and is curated by our AI technology to offer more detail than even a human advisor could provide. When it comes to implementing this advice, we put your best interests above ours. You can count on us to:

  1. Tell you the truth about whether it makes more sense for you to save or pay down debt rather than invest.
  2. Give you the option to invest through us, if investing is appropriate, but also be okay with you taking the advice and investing elsewhere. We are not trying to sell you investments, and that is because we are a real fiduciary.
  3. Manage your investments under $5000 for free, so you don’t end up paying more in fees than you’ll make through investing.
3
What is Pefin's Mission?

Our mission is to look after the financial best interests of each of our customers in a way that embraces the unique individuality of their lives. See more about what is important to us.

We believe that in many respects, the Financial Services industry has lost its way. It hasn’t always focused on improving the lives of the people they were meant to serve. We believe that helping our clients improve their lives and achieve their goals is the only reason to be in this business. To that end, we have built an AI-based system, which ensures that you receive the best, unbiased and fiduciary advice available, at a fraction of the cost.

4
How is Pefin different from a human advisor?

Pefin provides a greater level of detail than a human advisor could possibly achieve. Using AI technology, we create a comprehensive analysis of your life. This is a much more in-depth analysis than the old school software used by human advisors.

Pefin provides fiduciary advice, at $10 per month. The average cost of a one-time standard financial plan is typically between $2,000 - $5,000 for a human advisor. These plans are static and so, are obsolete almost as soon as you receive them. That doesn’t work in our ever-changing lives. To receive quarterly updates from a human advisor would cost even more in fees, and even that is not frequent enough to be relevant. Your life changes minute to minute.

In contrast, Pefin’s ongoing advice and proactive feedback keeps you in the loop, 24/7.

When managing investments, many human advisors also require at least $50,000 in assets under management (most require even more,) and charge at least 1% a year in fees. These costs are prohibitive for everyone but the wealthiest of investors. Pefin charges 0.25% for a fiduciary portfolio management service that adjusts dynamically as your plans change, with no minimum balances. We also waive fees on the first $5000 in balances to help you get started. You can better understand our pricing here.

We built Pefin to help anyone understand their money, make the plans they want, and confidently know how to save and invest to achieve those plans. We’ve designed a system that understands and can respond to all of life’s ups and downs - one that adapts and evolves with the realities of the market, and one that learns from your actual behavior. This is far more sophisticated than what a human advisor does. More importantly, we are making this level of financial guidance easy and affordable. That’s the power of AI.

5
How is Pefin’s AI Financial Advisor different from a Robo-advisor?

Pefin is a Fiduciary and thoroughly examines all aspects of your financial life in recommending a savings and investment strategy and managing a portfolio for you.

Robo-Advisors are unable to offer a full financial plan, instead focusing their efforts on recommending a generic portfolio (one of 10 or so static investment portfolios,) primarily based on a risk level you pick. The portfolios remain relatively static and are disconnected from how your financial life evolves. Shouldn’t buying a home, or sending your kids to college or increasing your savings rate, affect how you invest? Of course it should and at Pefin, we make that seamless.

We believe investing should be tailored and in sync with your financial situation and priorities - the unique aspects of your life. At Pefin, we start with financial planning and design our investment methodology around your plans. We believe long-term investing becomes more meaningful when you’ve first planned for what matters to you. We adapt your investment portfolio as your plans change, so you are always able to achieve your goals. For example, if taking too high a risk might derail plans in the short term, like buying a house, we help you dial it down. Our AI helps you set risk exactly to what you need, aided by your preferences.

6
Why does Pefin use AI?

In many ways AI can equal, or surpass humans. AI replicates human knowledge and decision making, and Pefin has specifically harnessed its abilities to build the best quality AI powered Financial Advisor. Pefin provides financial advice to anyone who needs it, handling a wide variety of complex decisions to guide you smoothly along life's path. You can find out more information about our AI here.

7
How does Pefin provide AI based financial advice?

At the core of Pefin is its AI brain, which mainly consists of a feed-forward neural network. The best way to picture this network is like a web. It takes inputs, has a series of interconnected nodes in the middle which process these inputs, and produce an output.

The nodes of our neural network understand financial rules and relationships. The network starts with your current finances and projects how they change over time with market conditions, inflation, taxes, government rules, and your plans. Between all these factors, there are hundreds of connections to be made. For example, if you have a child, are you eligible for a tax credit going forward? If you take time off from work today, how does that change your Social Security benefits when you retire? For any given user, to create a single projection that spans 80 years, the network evaluates anywhere from 2-5 million data points, depending on the complexity of their financial situation.

Any time the data that is input into the network changes (such as market conditions, tax rules, your account balances, or your monthly spending,) your financial projections and plans are automatically updated to reflect the most current and accurate information. Much of our AI technology is proprietary and patent-pending, and has been built and tested by a core team over the last five years.

8
Can Pefin’s AI take my money, or otherwise do things that could be harmful to me?

No, Pefin’s AI is not able to take action or make decisions beyond what its objectives are - which is to provide world-class fiduciary financial advice, savings strategies and investment decisions. We understand that there have been a lot of science fiction stories about AI coming alive and taking over the world, but none of that is applicable to Pefin's AI. Pefin was designed, developed and tested to offer the best fiduciary financial advice, nothing more, nothing less. It cannot access your accounts, give instructions to withdraw your funds, or actually execute the investment transactions. Being fiduciary means that Pefin's AI will only act in your best interest.

9
What is a financial plan? Can I see a sample?

A financial plan is a way to show you how to achieve your life and financial goals. We are very happy to provide you with a sample to review so you can see how it works.

10
What is Pefin’s pricing?

Pefin is a subscription service. For only $10/month, you receive a comprehensive financial plan and ongoing advice. See our pricing page for more details. Furthermore, if you would like us to manage an investment portfolio for you, our Investment Advisory subsidiary offers portfolio management services for 0.25% for Assets under Management – the first $5,000 of assets under management are always managed for free.

11
How is Pefin different from a bank savings account or online savings plan?

Saving and budgeting are important parts of a sound financial life, but they are only a part of the whole picture, which must include an understanding of your investments, debt, goals, commitments and so much more. A bank savings account will not provide advice on how best to save, whether to pay down expensive debt, or how to achieve your long-term financial goals. Similarly, online savings and budgeting tools are not comprehensive and do not integrate important dimensions such as the impact of taxes, social security and investments, or your long-term plans. It is essential that a holistic approach to your finances is taken - one that looks both at your needs today as well as your future goals, and puts all of that into the context of your current and future earnings, investments, market conditions and life changes.

Please note that bank deposits are FDIC insured, but there is no insurance against risk of loss in your Pefin Advisors account (as with investment accounts in general). All investments involve the risk of loss, and you may lose some or all of the amounts invested.

12
How secure is my personal information and identity when I use Pefin?

Security and privacy are of utmost importance and we do everything to keep your personal information safe. Our security infrastructure is audited and tested by Synopsis, which was recognized by Gartner in 2017 as a leader in Application Security Testing. Please reference the following for more information on our Security Policy and Privacy Policy.

13
Is my data ever shared?

Pefin never shares or sells your data to any other commercial party. The only time we share data is in very limited circumstances where necessary to service your accounts. We only work with service providers who have signed strict non-disclosure agreements with us- and only in order to provide services like Account Aggregation, or to open Investment Brokerage accounts to enable an easier account management process. Regulators may also request data from us which we are legally obligated to provide. We take protecting your data very seriously. Learn how we keep your data safe.

14
Will Pefin give me tax advice?

Pefin is not a tax accountant and we do not give tax advice. We do, however, incorporate important federal and state tax information into our analysis, and will provide estimates of the taxes we expect you will be paying. This can be a helpful double check for you as you fill out your taxes. Everyone’s personal tax situation is complex, and you need a qualified tax professional to best help you with it.

15
How does Pefin help me plan for retirement?

Check out a sample retirement plan here!

16
How does Pefin help me plan for college expenses?

Check out a sample college plan here!

17
How does Pefin help me plan for having a baby?

Check out a sample baby plan here!

18
How does Pefin help me plan for buying a home?

Check out a sample home buying plan here!

19
What is it like to work at Pefin?

Learn more about what it’s like to work at Pefin here. You can also see more about what it’s like to work at Pefin on Instagram at pefinteam.

20
If I get a financial plan from Pefin, do I need to invest with Pefin?

You never need to invest with Pefin to access our world-class fiduciary advice. We make sure your interests always come first. If you decide to invest with us, Pefin Advisors, our SEC regulated subsidiary, will make sure that you are in the right investments for your goals, risk profile and unique financial situation. The advantage of investing with Pefin, is that we make sure your investments are always in sync with your life plans.

21
What are all of the legal requirements to be a Pefin customer?

Access our legal requirements here.

1
How does Pefin know whether investing is right for me?

Pefin works differently than human or Robo-advisors. It works for you and with you, so you can achieve your life goals. We act in your fiduciary interest and are never just trying to sell you investments. Investing is a means to an end, not an end in itself.

Therefore, before you start investing with Pefin, you need to understand how much you need to save, what risk level is right for you and how investing fits into the larger picture to help you achieve your life goals. You need to open a Pefin account to get those answers. Once it is established that it is the right time for you to begin investing, you can either choose to manage your investments yourself, through an investment broker of your choice or have Pefin Advisors, our SEC regulated subsidiary, provide fiduciary portfolio management services for you.

2
How does Pefin personalize a portfolio for me?

Pefin always starts with a comprehensive understanding of your life goals and your planned events, such as when you want to buy a home, start a family or retire. From that understanding, Pefin’s AI technology develops a set of possibilities about how much you will need to save and what kind of risk is appropriate for you. We then construct a savings plan that works for you.

Once we have a savings plan, we create an investment portfolio using Pefin Advisors’ financial models, which employ the most current and sophisticated investment tools, typically only available to Ultra High Net-Worth or institutional investors. We adapt your investment portfolio as your plans change so you are always able to achieve your plans. For example, if taking too high a risk might derail plans in the short term, like buying a house, we help you dial it down. Our AI helps you set risk exactly to what you need, aided by your preferences.

For more details, please have a look at our Client Brochure.

3
Can I transfer my existing investments to Pefin?

As of today, you can only transfer cash to fund your account at Apex Clearing Corp., the custodian of your investment account. We are working with them to permit transferring securities to your accounts and this feature will become available soon!

4
How does Pefin manage my portfolio?

Pefin Advisors provides Clients with Portfolio Management Services based on the Black-Litterman model, which is more advanced than Modern Portfolio Theory (MPT) that most Robo-advisors use. Fischer Black won the Nobel Prize for the Black-Scholes model and went on to create the Black-Litterman model.

Traditional Modern Portfolio Theory (MPT) was first conceived in the 1950s. One of the primary weaknesses of the methodology is that it requires future investment returns and correlations to be known ahead of time (i.e. a perfect vision of future markets). Traditional MPT does not account for the uncertainty around these future views, or for modifying these views in light of the actual market activity.

To account for these problems, the Black-Litterman model (BL) was first built and used by institutional investors like Goldman Sachs for global asset allocation. This complex model incorporates the uncertainty and biases in forward projections to construct more resilient investment portfolios.

Pefin Advisors uses this very same technique (BL) in constructing investment portfolios.

5
How are the investment models updated?

We update our investment models at least once per year - more often if appropriate. This means we incorporate the latest and best assumptions on the various asset classes that we would recommend for investment. Over the course of the year, we dynamically rebalance your portfolio, by making sure it most closely matches your intended risk target.

6
Why does Pefin Advisors select only Index Exchange-Traded Funds (ETFs) and not active mutual funds?

We are a fiduciary and do not get any payments from third parties for recommending any investments to you. This ensures that we have no conflicts of interest and are always making recommendations solely on the basis of what is best for you. We use ETFs because:

  1. 99% of mutual funds underperform their benchmark. We don’t think we are good at picking the 1% over time, and we don’t think anyone else can either. Index ETFs are passive indexes that consistently outperform mutual funds, making them a much better investment vehicle.
  2. Low fees – we select well-established passive funds with the lowest fee and these low costs are passed on to you.
  3. We invest for you over an average of five days, and using only closing prices. This avoids the impact of high-frequency traders and enables the best execution for your investments.
  4. ETFs span an extremely wide array of asset classes, making them ideal for creating suitable and highly tailored portfolios for our individual client's unique needs.
7
Is Pefin Advisors a regulated financial institution?

Pefin Advisors is an SEC registered Investment Advisor. SEC registration does not imply a certain level of skill or training. Check out our Form ADV to learn more.

8
What is Apex Clearing Corporation? Why do I need to open an account with them?

Apex Clearing Corp. is a large broker dealer firm founded in 1978, that holds client accounts securely away from the Investment Advisor. They manage over 750,000 client accounts, including many Robo-advisors as well as large traditional investment firms. They have very strict rules and risk management practices to ensure your money is safe with them, and your account with them is insured by the Securities Investor Protection Corporation (SIPC). Pefin Advisors acts as the investment advisor on your account as authorized by you, and directs them on which trades to execute for your portfolio.

You can learn more about them at http://www.apexclearing.com.

9
What happens to my money if Pefin closes or is acquired?

Your funds and securities are held with Apex Clearing Corp., Pefin Advisors’ custodian. All accounts with Apex are SIPC insured, which means that up to $500,000 in total value per account is covered, including up to $250,000 for cash. Please visit sipc.org for more information. In all instances, regardless of whether Pefin closes or is acquired, your funds are yours and are always held in a separate account that you can access.

10
How does Pefin perform a credit or identity check?

Pefin will ask for certain forms of identification, and financial information, to help Apex Clearing Corp. open your account. Our practices are in accordance with Anti-Money Laundering requirements of the USA Patriot Act.

11
Does Pefin Advisors support accounts for minors?

We do not support accounts for minors. To open a Pefin Advisors account, you must be able enter into a legal agreement, which means you must be at least 18 years old.

12
Does Pefin Advisors work with third party entities?

Apex Clearing Corp. is the custodian and broker dealer. You can read the Apex account agreement here. Pefin also works with Plaid as a Automated Clearing House (ACH) fund transfer provider. Please see the Plaid Privacy Agreement, which is referenced in the Pefin Privacy Agreement here.

13
Can I open an IRA or 529 Plan with Pefin?

We look forward to allowing IRA transfers by December 2017. We expect 529 plans in 2018. More details soon!

1
What are the steps I need to follow to get started investing with Pefin?

First, you need to set up your Pefin account to get your comprehensive financial plan and start receiving advice. This ensures that the investments you make are always in line with your objectives. If the advice you receive includes investing, you will be directed to Pefin Advisors to set up your account, if you choose to invest with us.

To set up your investment account you will need to answer some questions to establish your risk profile and investment objectives, and then you will need to fund the account.

2
How do I fund my account?

We make it easy to connect your bank account, and make transfers. When you get started with investments, we will guide you through the simple process. We use Plaid as our ACH provider to make the actual transfer. Your money and your account information remain secure. Please see more about our security here.

3
How do I withdraw my money when I want it?

Withdrawing funds from your Pefin Advisors account, is a simple process. Just notify us in the Pefin App how much you want to withdraw, and we will take care of the rest. To better understand the timing of when you receive your funds, and more about the process, please go here.

4
How do I know my money is safe when I invest with Pefin?

Keeping your money safe is our top priority, and we have selected Apex Clearing Corp. as the custodian for your account. Apex is a member of the Financial Industry Regulatory Authority (FINRA) and SIPC.

Pefin Advisors cannot access your cash. All instructions to transfer cash from and to your account, are provided directly to Apex to act as per your instructions. We are only an agent on your behalf for the purposes of transferring cash.

Furthermore, we keep your information private and secure. You can read about our Privacy Policy here and our Security Policy here and our Business Continuity Policy here. We have invested a great deal in world-class security, and ensured that our third-party vendors have as well to make sure that your funds are as safe as possible.

5
How much does Pefin Advisors charge me to invest my money?

We charge %0.25 for assets under management, with the first $5000 managed free for life. You can find that information here.

6
Can I transfer my IRA to Pefin Advisors?

Not at this time- we will notify you when that changes.

7
Is there a minimum balance to start investing with Pefin Advisors?

There is no minimum balance to open or maintain in your investment account.

8
I live outside the US - can I use Pefin Advisors services?

If you have a US residence and accounts with US financial institutions, you can. Our AI algorithm calibrations and regulatory permissions only apply to the US market at the moment. We plan to extend that to global markets soon.

9
Can I link more than one bank account to my Pefin Advisors investment account?

At the moment, you can only have one bank account linked with your investment account, from which all transfers will occur.

10
If I am a securities affiliate employee, what do I need to do to sign up for Pefin Advisors?

As a securities (FINRA) affiliated person, you will need to upload a written letter of approval from your (or your family member’s) compliance officer in accordance with FINRA Rule 3050 as part of the Pefin Advisors investment account opening process. The letter must be signed by the chief compliance officer of the affiliated person on company letterhead and explicitly grant you permission to open a Pefin account.

1
How can I reset my Pefin password?

We are happy to help you do that. Please go to the login screen and select “Forgot my password” link. Instructions on how to reset your password will follow by email.

2
What accounts can I connect to Pefin?

You can connect over 18,000 institutions including the top banks, credit, cards, investment accounts, mortgages and loans to Pefin.

3
When/how does my account data get updated on Pefin?

We use MX™ to aggregate your account information every night and update the information in Pefin. MX is a large data solutions provider (www.mx.com), providing aggregation services that securely keep your passwords and account information. They are used by many large banks, and other financial institutions, to provide account information.

4
What do I do if I have trouble adding an account?

If you cannot find your institution, check to make sure you are typing in the correct institution name - for example, if you are trying to link a Visa card, you’ll need to enter the institution that issues the card (e.g. Chase).

If you are having trouble with your credentials, check the bank site and make sure the credentials you are using work there. Please note that due to factors outside our control, including approval from the banks themselves, we cannot guarantee that your bank will give us the access to view your accounts via Pefin.

5
Can I cancel anytime?

Of course. All your account information and plans will be deleted from our servers, and you will no longer be charged. If you rejoin, we will ask for this information again. You can request cancellation by emailing us at support@pefin.com. We typically respond within 1-2 business days. Please note, that if you have a Pefin Advisors investment account, you will need to close that account as well when cancelling your Pefin subscription. We believe that to manage your portfolio to a fiduciary standard, we need to understand your plans and overall life situation. In the future, we may offer investment services that are separate from financial planning services.

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