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Post by Yorkie on Mar 10, 2014 12:23:27 GMT
Although I am newly registered, I have been lurking on this board (and others) for quite a while.
I have significant sums invested in P2P and P2B, distributed over four organisations. My smallest investment is with Wellesley. I would like to increase this investment as I like what they promise, but I have one major concern with their business model. So far, I have made two investments with Wellesley; the first was invested in a loan pretty much straight away (100% on loan), but the second has been sitting there for a month now without being invested (0% on loan). From their website and from this forum I understand that I am getting interest on both investments anyway, but it cannot be good business practise for Wellesley to have money sitting in their accounts which has not been invested but over which they have to pay interest. They would rapidly go out of business if they have insufficient loans on their books to cope with a major influx of funds. The fact that one of my investments has been sitting there without being allocated to a loan for a month concerns me. I did phone them a few weeks ago to ask what was going on but the lady I spoke with was rather dismissive, saying that a large number of loans were coming through their system and that my funds would very soon be allocated to a loan. But this has so far not happened. I would like to invest more with them (a large bond is maturing soon for which I need to find a new home) but for the time being I remain very cautious about Wellesley as it seems to me they have a big problem with their business model which encourages a major influx of funds on which they are obliged to pay out interest whilst they may have insufficient loans on their books to invest all those funds. Just my opinion, of course.
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Post by yorkshireman on Mar 10, 2014 13:15:14 GMT
Although I am newly registered, I have been lurking on this board (and others) for quite a while. I have significant sums invested in P2P and P2B, distributed over four organisations. My smallest investment is with Wellesley. I would like to increase this investment as I like what they promise, but I have one major concern with their business model. So far, I have made two investments with Wellesley; the first was invested in a loan pretty much straight away (100% on loan), but the second has been sitting there for a month now without being invested (0% on loan). From their website and from this forum I understand that I am getting interest on both investments anyway, but it cannot be good business practise for Wellesley to have money sitting in their accounts which has not been invested but over which they have to pay interest. They would rapidly go out of business if they have insufficient loans on their books to cope with a major influx of funds. The fact that one of my investments has been sitting there without being allocated to a loan for a month concerns me. I did phone them a few weeks ago to ask what was going on but the lady I spoke with was rather dismissive, saying that a large number of loans were coming through their system and that my funds would very soon be allocated to a loan. But this has so far not happened. I would like to invest more with them (a large bond is maturing soon for which I need to find a new home) but for the time being I remain very cautious about Wellesley as it seems to me they have a big problem with their business model which encourages a major influx of funds on which they are obliged to pay out interest whilst they may have insufficient loans on their books to invest all those funds. Just my opinion, of course. Am I missing something here or have I just been lucky so far? I have placed modest amounts with Wellesley including a small amount in the last week and there has been no delay in investing. I have simply allocated the money to the term I wished to invest for and, hey presto, it’s been allocated immediately.
Other than late interest payments in January which to be fair, were quickly addressed after I commented on this forum (rudely, I was told) I have no criticism whatsoever of Wellesley and on performance to date, consider them to be one of the better P2P / P2B outfits.
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markr
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Post by markr on Mar 10, 2014 13:18:24 GMT
You beat me to it, I was thinking exactly the same and was about to post! I put money in about a month ago and split it equally into the 6, 12 and 18 month markets. So far, only the 12 month funds are lent, so Wellesley are making a thumping loss on my investment so far. I was planning to invest again this month but think I'm going to hold off for now.
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Post by yorkshireman on Mar 10, 2014 13:46:09 GMT
You beat me to it, I was thinking exactly the same and was about to post! I put money in about a month ago and split it equally into the 6, 12 and 18 month markets. So far, only the 12 month funds are lent, so Wellesley are making a thumping loss on my investment so far. I was planning to invest again this month but think I'm going to hold off for now. Most of my money including last week’s has been for 18 months and invested immediately.
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Post by Yorkie on Mar 10, 2014 13:49:16 GMT
Interesting; yorkshireman's experience is opposite to mine, but markr's experience is similar. For clarification, both of my investments (£5k each) were in the 18 month market. One on loan within a day, the other not on loan after a month. And if this has happened to me and markr, there must be others... Perhaps a representative of Wellesley can comment on how this business model will evolve to make it profitable.
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Post by mrclondon on Mar 10, 2014 13:57:13 GMT
One thing to bear in mind is that the underlying loans at Wellesley appear to be secured against very similar asset classes to Assetz Capital where the rates are typically 10-13%. So assuming that Wellesley's borrowers are paying similar sort of rates, there should be an inbuilt cushion to fund the instant interest accruals (as well as the provision fund).
This thread does raise the interesting possibility that for the 1 month term, interest may be received without the money ever being on-risk.
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Post by Yorkie on Mar 10, 2014 14:11:09 GMT
One thing to bear in mind is that the underlying loans at Wellesley appear to be secured against very similar asset classes to Assetz Capital where the rates are typically 10-13%. So assuming that Wellesley's borrowers are paying similar sort of rates, there should be an inbuilt cushion to fund the instant interest accruals (as well as the provision fund). Fair point; their profit margin is substantial and thus they should be able to cover investment gaps for short periods of time. It is worrying though that yorkshireman's 18 month investment made last week was on loan straight away while my 18 month investment made last month is still not on loan. Maybe I should give them some more time to sort things out, but for the time being my funds are going elsewhere until I feel more comfortable that Wellesley is going to be around for the long term.
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Post by Yorkie on Mar 10, 2014 14:26:40 GMT
This point has pretty well been covered on the other thread. I am in the same position, not having had my now 1 month old funds invested. Bridging loans are always lumpy, so I don't see a problem, especially as interest is being paid. Once funds have been lent, Wellesley will of course be charging their client/s a considerably higher rate than they are paying lenders, so 4 weeks interest payments will be a fairly insignificant sum with regards to the bigger picture. There is a subtle difference in the point being made here: it is not about whether we get paid interest whilst Wellesley have our funds (even if not yet allocated to a loan), it is about the viability of their business model. It is nice that we get interest even if the funds are not allocated, but that model is not sustainable in the long term. I disagree that a month of interest payments is insignificant. Overheads, provision fund, accounting for splitting up loans for a large number of small investors, website development and maintenance, etc., must cost a fair bit, and we need this company to be in business long term (they have only been running for a few months!). I will keep a close eye and report back when my funds have been allocated to a loan. Until then, my new investments will go elsewhere. As an aside, I was underwhelmed with the dismissive, aloof attitude of the telephone 'help' I received. Customer service in this market is of paramount importance to build reputation and confidence.
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oldgrumpy
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Post by oldgrumpy on Mar 10, 2014 14:55:08 GMT
I have money (five figure sum total) from 17 and 19 Feb not lent out yet(3,4,5 year). When I had communication early in our "relationship", the rep from Wellesley even charmed old grumpy!
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Post by westcountryfunder on Mar 10, 2014 17:26:16 GMT
Although there is a difference of views, I think generally sensible points are being made here by contributors. I would now like to see a prompt response from Wellesley addressing this perceived issue; I'm surprised they haven't jumped to it already!
Having today dipped in half a foot by committing funds and considering substantially more, it would indeed be pleasing to have confidence that the model is viable, and not here today, gone tomorrow.
Re funding the holding account. I see the T&C refer to the possibility of using debit cards, but I see no option to do this in practice. Have I missed something?
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Post by yorkshireman on Mar 10, 2014 17:40:38 GMT
Although there is a difference of views, I think generally sensible points are being made here by contributors. I would now like to see a prompt response from Wellesley addressing this perceived issue; I'm surprised they haven't jumped to it already! Having today dipped in half a foot by committing funds and considering substantially more, it would indeed be pleasing to have confidence that the model is viable, and not here today, gone tomorrow. Re funding the holding account. I see the T&C refer to the possibility of using debit cards, but I see no option to do this in practice. Have I missed something? You haven’t missed anything, I fund my P2P accounts by debit card whenever possible and like you I have yet to find the means of doing so on the Wellesley site.
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Post by wellesleyco on Mar 10, 2014 23:09:06 GMT
Good Evening Everyone, Firstly we would like to apologise for taking longer than usual to respond to all of the well articulated and valid points raised on this thread. The member of staff who normally manages our forum was busy today and therefore we had not spotted these posts till now. There are several themes that have been raised and I will aim to answer each of these with as much detail as possible. The Wellesley business model has been created to provide our lenders with certainty over how much interest they will earn and as such we are the first and only firm in the industry to pay interest regardless of whether the customer's funds are matched to a loan or if they sit un-used in our segregated client account. We have taken this move on the basis that we feel that we have a sufficiently large pipeline of new loans going through our credit committee and secondly because we believe that we have enough margin to handle the cost of having funds sitting un-used sometimes. With respect to the experiences shared by Yorkie, please accept our apologies if a member of our team sounded dismissive, I can assure you that we only hire the most charming of people and as such it must have been an off-day for her. I would be delighted to explain a little more about the loans that we have coming through. Our credit committee has made formal loan offers totalling approximately £20,000,000 since the start of January and we are in the process of seeing this draw-down over the coming weeks and whilst we appreciate that there were no draw-downs last week, there will be this week and indeed we have just released approximately £500,000 to our Solicitor in anticipation of the next drawdown with another £1,500,000 scheduled for the next 7 days. Further to this, we have a likely £5,000,000 of loans due to draw in the next 3 weeks and as such we are making the preparations to ensure that we have sufficient cash to meet the demand. I can totally understand why it is unsettling to see funds sitting there un-lent however please rest assured that we want more funds and these short periods where we carry excess cash really are symptomatic of out business model. We monitor the cost of paying interest on un-lent funds very closely and assure you that if we were concerned about the viability or short term cash flows we would not continue to market ourselves on google, moneysupermarket.com and other such places. It has also been seen on this thread that some people have been matched quickly and others have had money sitting un-lent for perhaps a month and i feel that it is important to explain how our software works at present. When we assign our P2P lender funds against loans it is a semi-manual process whereby we spread the funds across as many loans as we have available on the given day. However as this is a manual process we do not have an order priority process which explains why one investor can have funds still un-lent and a more recent investor will see all funds fully matched. This however we completely agree is an inefficient way to manage this process and as such we started designing a major software change in early January which will be set live within the next 3-4 weeks from now. This is a timely opportunity for us to explain how it works and please note that there will be a series of customer communications sent out closer to the go live date. We have written an algorithm which will run once every week and will automatically match all lender funds to our entire loan book on a volume weighted basis. This means that every lender will have a proportionate amount of exposure to every single loan in the Wellesley loan book. The platform will be updated to show how many loans and the value of each loan the lender is matched against. We believe that this will give the lender the best diversification at that given point in time. However, as many of our lenders are sensitive to wanting their money spread across as many loans as possible, we felt that whilst such a change would be an improvement, it would still result in some clients drip-feeding money to us so as to be spread across a greater cross-section of loans. Therefore, we decided to add one extra feature to the algorithm which is that during the same weekly process, we will also re-match existing customers. This will work by un-matching every customer from every loan and then re-matching them back to the new, larger loan book. We believe that this not only gives our lenders the best diversification, it also gives them improved diversification as our loanbook grows. As we have taken the opportunity to mention this early, i would be grateful for any comments or questions. To follow up on the point raised by MONEY, i would like to confirm that our average loanbook interest rate sits at around 12%-13% and as such whilst we have decent margin to accommodate paying interest on un-lent funds and also funding our provision fund, we sadly do not make as much as 4% per month. That being said, your logic is completely sound as to why we can afford to run our business in the way we do. westcountryfunder you are completely correct that we mention debit cards in our T&Cs and I apologise because we have been slightly delayed in providing that service as a result of the significant transaction costs associated. That being said, i have been speaking with a well known highstreet clearing bank who has made an offer to provide this service and we are now in the process of providing the necessary paperwork. We will advise on this forum when the feature is ready. We do hope that all of these responses help and please feel free to come back to us with any areas that we have missed. kind regards Wellesley & Co
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Post by westcountryfunder on Mar 11, 2014 9:20:17 GMT
Thank you, Wellesley & Co for the long and informative reponse.
My initial thought was that I would now wait another three or four weeks before adding further funds in order to allow your new sytem to get going. Then I read that you have "decided to add one extra feature to the algorithm which is that during the same weekly process, we will also re-match existing customers. This will work by un-matching every customer from every loan and then re-matching them back to the new, larger loan book".
That looks good to me. So no reason to delay, provided this measure will include earlier investments. No doubt other contributors will have their views on your posting which I look forward to seeing.
I am plesed to note your comments about debit cards. When this is implemented I imagine it will be popular though not if there is a charge like on RateSetter.
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oldgrumpy
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Post by oldgrumpy on Mar 11, 2014 9:38:55 GMT
".........The Wellesley business model has been created to provide our lenders with certainty over how much interest they will earn and as such we are the first and only firm in the industry to pay interest regardless of whether the customer's funds are matched to a loan or if they sit un-used in our segregated client account............"
Fascinating and helpful information - thank you.
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markr
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Post by markr on Mar 11, 2014 10:45:40 GMT
Thank you for the informative reply, I will certainly be putting my next lump in this month (my aim is to drip feed each month, not for diversification but simply so that eventually I will have an amount maturing every month which I can re-invest or spend depending on which part of my house is falling down that month).
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