I started trading stocks on the internet when I was 14, in the early 2000s. My first purchase was a few shares of Microsoft, which I bought with some of my Bar Mitzvah money. I used an online broker, and paid a whopping $7.95 for the transaction. I vividly remember using a school computer to refresh the balance of my three-digit portfolio, (which would fluctuate by about eighty cents, minute-to-minute), when I really was supposed to be completing an online assignment for Hebrew Language class.
Fast forward more than ten years, and I look around and am a little jealous of the plethora of finance apps and services that are specifically tailored to teenagers and millennials. It’s fascinating to watch companies address the different kinds of finance needs that millennials have — or the same needs as their parents, but in slightly different ways. Some startups and companies that come to mind are:
Venmo: PayPal, but for people who were born when PayPal was originally released. (It’s now owned by PayPal)
Robinhood: Commission-free investments (now including cryptocurrencies)
Stash: Micro-investing, with a healthy dose of investment education*
Finimize: Like the Skimm, but for folks who love finance.
Other than just adding a sans serif font and a share button to traditional financial services, a lot of these services exist at the nexus of mobile-only (at least at the beginning), social, inexpensive/cheap, and, as I’ll get to later, educational.
So, for instance, one of Venmo’s main hooks is that there is a scrolling social feed of emojified descriptions of why one Venmo user paid another. It’s very obvious that Venmo is not your grandfather’s mobile payments app.
With Stash, the focus is really on education. It offers things like explainers of ETFs, and simplified purchases of securities. Notice two of the four bottom buttons are “Discover” and “Learn.” Trading is almost a second-tier function.
Another interesting entrant is a daily finance newsletter (in the mold of the mega-successful Skimm) called Finimize, which I somehow got signed up for when I entered a contest to win a free iPad. Here’s what it looks like:
As you can see, Finimize gives the Wall Street Journal the emoji treatment, providing explainers and tweet-ready pull quotes. To its credit, it keeps the conversation fairly high level (it doesn’t shy away from talking about bond yields and defense contractor share prices).
It’s obvious that Millennials – in some ways – spend differently from their parents, regardless of whether or not they go all out on avocado toast. But what’s interesting is how much financial education is part of both user acquisition and actual product. An excellent CB Insights post from October addresses how, several years ago, Mint used a savvy content marketing-and-distribution strategy to line up users for its finance management software. The strategy predicated on writing content that helped answer commonly-searched queries about things like credit card debt and student loan refinancing.
It makes me wonder why there’s such a strong trend of financial literacy services. Do millennials know less, or more, about finance than previous generations? Are they more curious? Are they more involved in investing? Or are they less involved, and so therefore need more information? Does the emergence of the gig economy – and its corresponding lack of traditional employer-provided benefits like 401Ks and stock options – mean that an Uber driver needs to find these things out for herself?
I don’t think that there’s necessarily one answer. But I do think that there’s a sort of democratization of finance, and that it’s easier than ever to invest in the stock market, and to understand the mechanics behind what goes on on Wall Street. And that democratization is pretty good for most people.
And for startups, it seems obvious that now is a good time to enter the personal finance space, particularly if your product has an educational bent. There’s clearly a lot of “green field” where startups can streamline or service the finance habits and needs of millennials.
I think back to myself, around 2005, and I wish that there had been services that would have taught me a bit more about things like index funds or dollar cost averaging or dividend investing. I also wish that I’d been able to trade shares from my phone, rather than having to wait until Mr. Schrieber’s class to use a school computer. I probably still would’ve bought Microsoft. But I might’ve also tried to buy a few shares of Apple. You know, for the emoji. 🍎
*(Thanks to my friend Daniel Rubin, who recently showed Stash to me. I somehow missed it earlier).