Friday, September 29, 2023

RobinHood tried and failed. Entrepreneurs, Build a Simpler Investment Platform for Millennials and Generation Z

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Shreya Christina
Shreya has been with for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider team, Shreya seeks to understand an audience before creating memorable, persuasive copy.

When you talk to millennials and Generation Z adults about investing, their answers and confidence are everywhere. This article here, Bit Coin there, throw in some social media meme stock and maybe add Robinhood to the conversation mix. That’s not the answer. Robinhood announced an additional 23% layoffs of employees yesterday; that comes on top of a 9% layoff last quarter. What was supposed to be the great savior of investing for the next generation of investors is failing. Why? Well, millennials and Gen Z are challenging populations when it comes to investing.

Millennials and Gen Z still lack confidence or knowledge of investing due to all their knowledge of technology. According to an Yahoo Money article referring to a Pew Research survey, only 37% of millennials feel they are knowledgeable about their investments. According to an March 2021 Survey by, Gen Z investors were nearly five times more likely to report receiving financial advice from social media as adults aged 41 and older, with 28% turning to friends and online influencers for advice. Unwilling to invest the time and education to grow and protect their money, they turn to social media and influencers for critical advice. Now we know why they invest in meme stocks or based on “whispers” from friends and yet know so little about the company, industry or trends. Why is this so complicated and complicated? Do they know nothing about passive investing?

Looking at the rise of passive investing over the past 30 years, why aren’t more millennials and Gen Z investors simply opting for market index funds that track the Dow, the NASDAQ, and the S&P 500? Don’t they want decent returns with medium market risk and not worry about individual stocks? Why not take stock of 500 of the largest companies traded on the US stock exchanges in one fell swoop and sleep at night?

You could if you simply invest in an S&P 500 index Exchange Traded Fund (ETF), which simply tracks the performance of 500 of the largest stocks weighted by market capitalization traded on the Nasdaq and the New York Stock Exchange (NYSE). Sound simple? It is. According to the investment company The furry fool, the S&P 500 index has delivered a compound average annual growth rate of 10.7% per year for the past 30 years. That’s a pretty good annual return and you don’t even need to know any of the 500 companies in the index. A recent Los Angeles Times article cited that passive investing using ETFs or mutual funds is now up to a 43% market share.

So Robinhood has been trying to target these emerging investment populations and is really struggling. Other early market entrants such as Betterment and Wealthfront were both sold to larger investment firms in recent years. All in all, with billions of venture capital investments over the past 12 years, the market share of these new robo-advisors is still less than 10% of the total investment market. The opportunities for innovative or disruptive entrepreneurs are therefore enormous. You just need to design an easy-to-use platform that a six-year-old could use.

Keep in mind the following features, listed below, to design a much simpler approach to investing for millennials and Gen Z; one that does NOT involve them being trained or even allowed to trade stocks. Not at all. Forget what they want, give them what they really need. A simple investment platform based on risk or return.

Time. These two populations are smart about many things, but they simply don’t invest the time it takes to learn about investing. So design something so simple it won’t take much of their time.

Easy. Keep the new investment platform as simple as letting them deposit their money and make two choices based on risk or expected return, weighted by risk. That is it. Do not allow transactions. Simply invest their money for them in the best passive market ETF indices.

Knowledge. Build the new platform with the architecture of an onion. That is, build it in layers where the first layer is the investment platform and if no one went beyond that layer it would be fine. For people who want to learn more, let them choose their investment education modules themselves. Do not write investment articles based on fads, trends, recessions or booms. Just provide simple, straightforward education.

Mobility. This new platform should be so simple that they can manage their entire investment portfolio from their smartphone. This way they have access anytime and anywhere. Even if you really don’t want them to do anything.

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