Review of Prosper’s New Quick Invest Feature

Prosper Quick Invest

On Tuesday this week Prosper discontinued Automated Plans for investors. This was a way for investors to create selection criteria for loans and then automatically invest in all loans that met that criteria. I have been using these plans for the majority of my Prosper investments. No more.

Introducing Prosper Quick Invest

Prosper has replaced Automated Plans with something they call Quick Invest. Those of us who follow Prosper closely have known this change was coming for several months (it was first announced in their March 2011 S-1 filing) and all investors received an email last week announcing the change.

This is how Prosper explained the move in their email to investors last week:

Although Automated Plans offer the convenience of investing in multiple loans at once, we recognize that investors also want more control over their investments, including the ability to review loan listings individually. With these valuable features in mind, we are introducing our newest lender tool, Quick Invest.

How Quick Invest Works

Like Automated Plans, Quick Invest allows you to use Saved Searches as the basis of your selection criteria for loans. Unfortunately there is no migration of Automated Plans over to Quick Invest so if you haven’t created a Saved Search you will need to create one now if you want to imitate an Automated Plan going forward. For those investors who have always invested in loans manually, you will notice no change whatsoever to how you invest.

What Quick Invest does well is it allows investors to invest quickly (hence the name I guess) in just a couple of clicks. Investors can select either detailed or basic selection criteria (you need to at least choose one or more Prosper Ratings) and then Prosper will automatically create a portfolio of notes from that criteria. It defaults to $25 per note (at least in the amounts I am investing) which is good so investors will get the most diverse group of loans.

Once you have created your selection criteria and clicked the Find Loans button you are presented with a Quick Invest Results screen like this.

Prosper Quick Invest Results

As you can see it gives you a visual breakdown by loan rating as well as your total invested and estimated return. What is new is revealed when you scroll down. What Prosper does with Quick Invest is give you a listing of all the loans it has selected based on your criteria. You can click on each loan and read through the description and decide whether or not to invest in that loan. There is a one-click remove feature that many investors will find useful. Or you can just click Invest Now and you are done.

My Initial Thoughts on Quick Invest

I have just placed my first order with Quick Invest and here are my initial thoughts. I like the interface, they have made it attractive, uncluttered and simple. I can see how new investors will find this tool easy to use.

The big difference for me is that you can’t just let a Quick Invest plan run like an Automated Plan. You have to actually login to Prosper each time you want to invest, unlike Automated Plans that would always invest in new loans that met your criteria whether you logged in or not. Mind you Automated Plans had to be renewed every month, so it is not a huge change. But it is a simple system so once investors get used to Quick Invest I expect they will be able to invest their money in less than a minute.

I login to Lending Club and put my accumulated cash to work there every week. Now, I will just be doing the same for Prosper. I am sure there will be investors that will complain about this change but spending an extra minute or two each week is really not that big a deal in my opinion.

Why The Change?

The official line from Prosper as to the reason for the change is that it gives lenders more flexibility with their investments, which is somewhat true. Investors can now choose to view each loan individually that meets their criteria or not.

I suspect there are a couple of reasons behind the change. First, I think Prosper wanted a tool that would allow investors to easily invest their money effectively with just a couple of clicks. Quick Invest achieves that. But I believe there is also a more significant reason behind the change. My guess is that this has something to do with pleasing government regulators. Prosper cannot be seen to be providing investment advice and automated plans may have been construed that way.

If Automated Plans were completely fine with regulators then why not just enhance them with some of the features of Quick Invest? Those investors who want to login each time and review loans could still do so and those who wanted to continue their Automated Plans could do so with no interruption. So, I am concluding that this change was made to appease government regulators.

While I will somewhat miss my Automated Plans I don’t see much downside with Quick Invest. I like to login to Prosper regularly anyway to check on the status of my loans so I will just use the Quick Invest feature now every time I login. So it will not make much difference to me. What do other Prosper investors think?

  • Peter Renton is the chairman and co-founder of LendIt Fintech, the world’s first and largest digital media and events company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series. Peter has been interviewed by the Wall Street Journal, Bloomberg, The New York Times, CNBC, CNN, Fortune, NPR, Fox Business News, the Financial Times, and dozens of other publications.