Last week Lending Club quietly removed a feature that had been present in their system for some time. You used to be able to compare your p2p lending portfolio with other investors but they have now taken that feature away (well not entirely – see below). But I think this is a good thing.
First, though, let me explain what I am talking about here. Below is a snapshot I took of my Lending Club Roth IRA account from a couple of weeks ago (on the left) and one from yesterday (on the right). You can see the lack of a compare link in the newer screenshot.
Lending Club Has Made a Good Move Here
I never liked the Compare feature. I think it was misleading for investors because of one key factor – it didn’t take into account the age of a portfolio. So someone with a month old account (and therefore no defaults) is compared with a similar account that is two years old. If both accounts are invested in the same grade notes then the newer account will almost always appear to be doing better.
Which brings me to my next point. It also didn’t compare you with investors who have a similar portfolio. If you were an investor primarily in the A- and B- grade notes then you were being compared to investors with much higher interest notes rather than with people who have a similar risk appetite. So, people who may have been doing reasonably well and were comfortable with their risk level always ended up with a lower percentile.
Here are two of my accounts with different investment strategies – you can see the very big difference in my investor percentiles.
I have chatted with Lending Club about this Compare feature several times and they agreed it was misleading which is why they removed it. I was hoping they would replace it with something better and that may be coming but it is not the case today. Here is an official response from Lending Club, which explains their reasoning quite well:
You can still access the compare returns page but because of the increasingly various and diverse investment strategies employed by our over 40,000 investors — we believe that the data provided on that page has become less relevant. The page compares one account (yours) to the platform average, rather than comparing your specific outcome to other investors with similar strategies and age of accounts. As a reference point, an investor who invests primarily in A Grade 36 month loans can expect a very different outcome than the platform average and should not feel they are returning “below average”.
The Lending Club Compare Feature is Still Available
As stated in the official response above the Compare feature is actually still available – just not with a link from your main account screen. As long as you are logged in to your account you can access it here:
https://www.lendingclub.com/account/lendersPerformance.action
I received emails and comments from many of you about this change (thank you) so feel free to add your thoughts below. What do you think? Is this a good move by Lending Club or should they have kept the Compare feature front and center? As always I like to hear your comments.
